DS Smith reports 20-year low in European corrugated packaging demand

In its interim statement for the period since 1 November 2008, DS Smith revealed that demand for European corrugated packaging had fallen by 5% in quarter four and the slowdown has continued into 2009.

According to the company's statement, the largest annual fall in the past 20 years was around 2% in the early 1990s.

DS Smith has consequently broadened its cost reduction and cash-generation programme with a new target cash benefit of £25m.

This follows the news that demand for corrugated case material (CCM) has dropped in line with the drop in demand for corrugated packaging, however lightweight CCM "continues to be strong" thanks to its limited supply.

Despite the drop in demand, box prices have remained robust in the UK, but less so in mainland Europe where they are directly linked to the price of CCM.

It was revealed that the company has taken "further downtime" in UK paper production to reduce stocks and box production is also being adjusted in line with slowing demand.

DS Smith also completed the modification of its New Thames Mill at Kemsley and started production of lightweight CCM on schedule on 12 January, 2009.

Demand for plastic packaging, meanwhile, has weakened across all markets.