By Jim Thompson
Interest rates are rising and the President of the United States has Amazon in his sights...does this spell trouble for the ten year bull market in US containerboard expansion?
Possibly, but I don't think so. Amazon may be the leader in near-instant gratification, but they are not the only duck in the pond, so to speak. And near-instant gratification requires corrugated boxes, lots of them. If I were to bet on bricks-and-mortar stores or
containerboard, I would still bet on containerboard.
As for interest rates, there are plenty of containerboard assets funded at rates higher than the current rates, indeed higher than the wildest predictions for interest rates in the next year or two. So, the ROI goes down fractionally, that is not going to have much of an effect, especially if there is a demand for the boxes.
Then there is the ace in the hole--China's stringent new standards for incoming waste paper. This has been the big news in the last six months, causing a nearly complete collapse in the price of recycled raw materials.
So, I am not much for predicting, but my guess is, for the near term, say the next five years, business is going to be much like it has been in the past ten years--likely strong growth will continue.
