PLA conducted an in-depth analysis of 14 key macroeconomic and industry-specific indicators to assess their influence on pallet demand and pricing, determining the seven most closely tied to changes in the recycled pallet market. Here’s how each of these indicators performed in Q1 2025, what experts are predicting for the rest of the year, and what these results and forecasts can tell us about recent and upcoming pallet market trends.
Key Takeaways: Q1 2025 Recycled Pallet Market Insights
Our analysis of the seven key macroeconomic and industry-specific indicators’ Q1 performance reveals a nuanced but largely upward trending outlook for recycled pallet demand and pricing:
- Manufacturers’ Inventories rose for a sixth consecutive month in Q1, signaling sustained pallet demand. Mixed forecasts suggest stable to slightly elevated pressure on pallet prices in the near term.
- Imports surged 36% (annualized), fueled by tariff-driven front-loading. Expect strong pallet demand through early summer, with a potential tapering in the second half as import volumes normalize.
- OCC/Recycled Paperboard Pricing continued its upward trend with another quarterly increase. Ongoing price hikes suggest likely increases in pallet pricing throughout 2025.
- Retailers’ Inventories edged down slightly in Q1 but remain elevated year-over-year. If inventory drawdowns persist, they could reinforce upward pricing pressure for recycled pallets.
- Consumer Spending on Goods grew modestly, with strong March activity driven by non-discretionary purchases and tariff anticipation. Steady demand for essentials points to stable pallet usage.
- Lumber Prices climbed 2.9% in Q1 and are up 8.5% year-over-year. Reduced supply and anticipated tariffs are expected to push prices higher, indirectly supporting higher recycled pallet prices.
- Retail Sales rose 2.2%, buoyed by a strong March. While some short-term softening is possible due to pulled-forward purchases, full-year growth expectations remain solid, supporting continued pallet demand.
Bottom Line: Recycled pallet demand and pricing will likely remain strong through the first half of 2025, with potential moderate softening in H2. Continued inflationary trends, inventory movements, and tariff impacts will shape pricing dynamics, but essential goods sectors (like food and household products) are expected to sustain steady pallet usage.
Q1 Analysis and 2025 Forecast
Manufacturers’ Inventories measures the total value of goods factories have on hand at the end of each month and is one of the strongest indicators of pallet demand. Read more about the relationship of this indicator to the pallet market here.
Q1 manufacturers’ inventories rose 2.1% (annualized) as manufacturers reported a 6th straight month of inventory build in March. The future outlook is a mixed bag: 27.6% of firms in the National Association of Manufacturers’ Q1 survey expect inventories to fall over the next year, 26.0% predict increases and 46.4% see no changes.
What this means for the pallet market: If the recent increases in inventories continues, this would support continued demand for pallets and upward pricing pressure.
The Imports metric measures the inflation-adjusted value of what the U.S. buys from other countries. Rising imports often reflect strong consumer or business activity, while declines may signal slowdowns or supply issues. As such, import volumes are a good indicator of pallet demand. Read more about Imports’ relationship to the pallet market here.
Q1 Imports rose 36% (annualized), the largest increase since Q3 2020 during the COVID-19 pandemic, as businesses front-loaded imported goods ahead of impending tariffs. Experts predict this trend will continue into Q2, but that this momentum will ebb and eventually reverse by the end of the year as tariffs take effect.
What this means for the pallet market: pallet demand tied to import activity is expected to remain strong through early summer. However, this demand is tied specifically to the unusual import climate instead of reflecting strong underlying demand, as has historically been the case with import activity. As such, we would expect a slight increase in pallet demand in H1 and a slight softening in H2 as a result of import volumes, but do not expect a significant disruption in either direction.
OCC/Recycled Paperboard Pricing measures the weighted average of prices for recycled paperboard charged by mills. Read more about OCC pricing’s correlation with the pallet market here.
Recycled Paperboard Pricing rose 1.1% in Q1 over the prior quarter, its fourth straight quarter of increases, driven by January and February price hikes. Pricing was flat in March and April as demand remained stable vs. the “typical spring seasonal uptick.” Still, large producers have announced increases slated for May and expect to continue raising prices through the year, reflecting broader inflationary pressure.
What this means for the pallet market: Increased Recycled Paperboard pricing for the rest of this year would generally indicate recycled pallet price increases as the two are highly correlated.
Retailers' Inventories tracks the value of goods retail businesses have in stock each month. High inventories may signal slower sales or overstocking, while low levels suggest strong demand. Read more about the Retailers Inventories metric’s correlation with the pallet market here.
Q1 retailers inventories fell 0.1% from the prior quarter but up 5% year over year. Inventory levels have been steadily rising for the past two years as retailers found equilibrium with demand, and Q1 saw a pull forward of imports paired with increased retail sales, as both retailers and consumers sought to get ahead of tariff impacts. With imports set to decline significantly in the second half of the year, retailers will have to rely on existing inventories (both in their DCs and at manufacturers) to support sales.
What this means for the pallet market: In general, declining retail inventories correlate with rising recycled pallet prices, and rising inventories with declining pallet prices. If the inventory burn continues, we would expect to see continued upward pressure on pallet prices.
Consumer Spending measures the goods and services purchased by people in the U.S. Our analysis removes spending on Services to more closely align with pallet-related demand. Read more about Consumer Spending’s relationship to the pallet market here.
Q1 consumer spending on goods was up 0.5% (annualized), driven in large part by strong spending in March as consumers purchased durable goods, such as automobiles, ahead of tariffs. Compared to a 6% increase in Q4 2024, the Q1 figure reflects the impact of rising inflation and declining consumer confidence. The largest contributor to consumer spending growth has been the General Merchandise Stores category, as growth appears to be driven by staple purchases vs. discretionary spending. Experts predict a moderate but still positive trend for consumer spending for the balance of the year, particularly in non-discretionary categories.
What this means for the pallet market: Stable demand for food and general merchandise will drive continued demand for pallets from producers and manufacturers through the retail supply chain.
Lumber Pricing (we use the Producer Price Index for Lumber) takes the weighted average of prices charged by lumber mills. Read more about how Lumber Pricing relates to the pallet market here.
Q1 lumber pricing was up 2.9% over the prior quarter and is 8.5% higher than it was in Q1 of last year. After several years of volatility, pricing began to stabilize last year. Though high interest rates have had a cooling effect on the housing market (~70% of US lumber demand comes from residential construction), prices have risen over the past two quarters as mills reduce production. With additional 25% tariffs on Canadian lumber looming and the housing market still driving demand, experts predict additional increases in lumber pricing through 2025.
What this means for the pallet market: Although new lumber pricing’s impact on recycled pallet pricing is indirect, movements in its pricing very closely correlate to movements in pallet pricing. Increasing lumber prices would indicate increased demand and pricing for recycled pallets.
Retail Sales is a strong indicator of the volume of palletized goods moving through the supply chain and therefore pallet demand. You can read more about this relationship to the pallet market here.
Q1 Retail Sales increased 2.2% over the prior quarter. While January and February were soft (-1% and 0.2%, respectively), sales in March exceeded expectations. As noted in our Consumer Spending analysis, spending on staple goods and general merchandise was stable. Many analysts suggest the strong March sales might be due to consumers "pulling forward" purchases in certain categories, such as sporting goods and electronics, ahead of tariffs. If this is the case, we would expect a softening in April and May in tariff-impacted categories. Still, the National Retail Federation maintains its prediction of 2.7% - 3.7% growth in retail sales for the year, down only slightly from 3.6% in 2024.
What this means for the pallet market: While sales volume for some categories is expected to be negatively impacted by tariffs, demand for the majority of palletized product categories, such as food and beverage and household products, should remain stable.
