1. We expect containerboard capacity additions to exceed demand growth over the next five years. a. We expect a slowdown in U.S. demand growth given that we are that much later in the global economic cycle. b. Based on announced capacity additions to date (there could be more announced in the months to come), ~4.5M tons of capacity will hit the U.S. containerboard market from 2018-2021 (including capacity "creep" of 1%/yr, or 1.5M tons total), which would average 1.1M tons/yr. By comparison, our production estimates imply U.S. containerboard production will increase by ~550,000 tons/yr., such that we expect supply to grow by about double the rate of demand. 2. Containerboard prices declined in 2014-2016 following significant capacity additions in 2013-2015, and we think a similar or worse scenario could unfold this time around.
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