Secular Headwinds to Paper Profits
Paper demand should be strong in China and weak in the developed world.
Paper is ubiquitous in our everyday life. In any given day, consumers use paper products to read, to publish, to clean, and to package. Indeed, paper has been with us for over two millennia, and while consumption of certain kinds of paper faces undeniably stiff headwinds, society's demand for paper isn't likely to vanish overnight. In fact, for certain categories of paper and in certain corners of the globe, the outlook for paper seems downright bullish.
China versus the United States
For the most part, paper and paper products are disposable products. As a nation's middle class grows in size, the convenience and need for paper products likewise expands. Figure 1 shows how American paper and paperboard consumption grew steadily from the 1960s through the 1990s and how just recently, China has surpassed the United States in terms of total paper and paperboard consumed.
Thomas Mullarkey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.