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 Q2 2025, how Q3 is shaping up, what experts predict for the rest of the year, and what this insight can tell us about recent and upcoming pallet market trends.
Key Takeaways: Q3 2025 Recycled Pallet Market Insights
PLA analyzed seven high-impact indicators ranging from manufacturing inventories to lumber pricing, each closely tied to recycled pallet demand and pricing. Here’s how each performed in Q2, what early Q3 data show, and how trends are likely to shape the pallet market through year-end.
- Manufacturers’ Inventories rose slightly in Q2, yet early Q3 data suggest leaner customer-side stocks, a potential downward risk for pallet demand.
- Imports remain elevated from July’s tariff pull-forward but are expected to fall in Q4, dimming import-driven pallet demand.
- OCC/Recycled Paperboard Pricing jumped ~2.4% in Q2 and remains firm, supporting continued pallet price strength.
- Retailers’ Inventories rose modestly in Q2, but declining sentiment points to expected drawdowns and tariff balancing ahead of the holiday season.
- Consumer Spending on Goods rose +0.5% in Q2, though discretionary categories weakened; staples still underpin demand.
- Lumber Prices were essentially flat, but steep new tariffs on Canadian lumber suggest upward pressure on recycled pallet pricing ahead.
- Retail Sales were nearly flat in Q2; early Q3 data show modest growth, anchoring pallet flows (especially in essential categories).
Bottom Line: Near-term (Late Q3) tariff-driven import surges and strong OCC pricing will push pallet demand and pricing upwards. In Q4, imports and manufacturing inventories are expected to normalize, which may ease high demand. However, retail inventory drawdowns, elevated OCC costs, and lumber tariffs should counterbalance, supporting stable-to-slightly higher recycled pallet prices into year-end.
Q2 Performance Analysis and Remainder of 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.
Inventories ended Q2 at $945.6B in June, up 0.16% from March’s $944.1B. The movement was similar on a quarterly average basis, up 0.14%. This marked the sixth consecutive quarter of gradual inventory accumulation. ISM’s July Manufacturing Report showed the Inventories Index at 48.9 (contraction) and Customers’ Inventories at 45.7 (“too low”), pointing to some downstream drawdowns. The National Association of Manufacturers Q2 Outlook Survey found one-third of manufacturers expect to reduce inventories over the next year, as tariff costs reinforce caution.
What this means for the pallet market: Q2’s gradual inventory build supported pallet demand. If drawdowns materialize in H2, pallet usage could soften. Since manufacturers’ inventories are a historically strong positive driver, a shift to lower levels would reduce upward pallet price pressure.
Imports measure the real value of goods the U.S. buys from other countries. Rising imports typically reflect strong consumption and business activity, boosting pallet demand in ports and DCs. Read more about Imports and pallet pricing here.
Q2 Imports were down 35% (annualized) and -8.6% vs. Q1, reflecting a reversal of Q1’s tariff-driven surge. According to the NRF/Hackett Global Port Tracker, July imports surged to 2.3M TEUs (a high for this year), but this was another round of tariff-driven front-loading, but forecasts show a steep drop starting in September. NRF expects imports to fall 5-6% for full-year 2025 compared to 2024, with weakness concentrated in Q4.
What this means for the pallet market: Import-driven pallet demand was strong in July but is expected to weaken into Q4. Since imports are a moderately strong positive driver, the slowdown could ease pallet price pressure later in 2025.
OCC/Recycled Paperboard Pricing tracks mill pricing of recovered paper. OCC pricing has a direct correlation with recycled pallet prices, and we explain the link here.
Recycled Paperboard Pricing rose 2.4% in Q2 over the prior quarter, its fourth straight quarterly gain, reflecting continued upward cost pressure in packaging materials. July’s pricing ticked up again, and mills have announced additional hikes in response to higher fiber and energy costs, suggesting pricing will remain elevated through year-end.
What this means for the pallet market: OCC pricing is highly correlated with recycled pallet prices. The sustained increases signal continued upward pressure on recycled pallet pricing through late 2025.
Retailers' Inventories Retailers’ Inventories measure the value of goods held at the retail level. Unlike manufacturers’ inventories, this indicator is inversely related to pallet pricing. We discuss this inverse relationship here.
Retailers inventories ended June up 0.5% from the end of Q1 (March); the quarterly average also rose slightly. ISM Services data shows inventory sentiment shifting lower (“too high” easing), suggesting some trimming. With imports slowing in Q4, retailers are expected to lean on existing inventories, reducing stock levels.
What this means for the pallet market: In general, when inventories decline, recycled pallet prices typically rise. Continued drawdowns in late 2025 would add upward pressure.
Consumer Spending measures the value of purchases 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 (Goods)’ relationship to the pallet market here.
Q2 consumer spending on goods was up 0.5% vs Q1, 2.1% annualized. The increase was front-loaded in April, while May-June showed weaker discretionary demand. July Retail Sales rose another 0.5%, and though The Conference Board expects tariffs to weigh on discretionary categories in H2, experts predict spending on essentials should remain stable.
What this means for the pallet market: Q2’s modest increase supports pallet demand into late Q3. If discretionary weakness spreads in Q4, pallet demand could soften slightly, but staples (food, household products) will keep baseline pallet usage steady.
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.
Q2 lumber pricing was down slightly (-0.2%) over the prior quarter but 7.3% higher than it was in Q2 of last year. Prices peaked in March and have been easing steadily each month thru July. In early August, the U.S. doubled tariffs on Canadian softwood lumber, bringing total duties above 35%. Increased tariffs are expected to lift lumber prices in Q4 despite uneven housing demand.
What this means for the pallet market: Lumber’s Q2 softness capped upward pallet price pressure, but higher tariffs into late 2025 are likely to create firmer recycled pallet pricing through substitution effects.
Retail Sales track the dollar value of goods sold by U.S. retailers each month. Because most retail products move on pallets, this is a direct demand indicator. We explain the relationship here.
Q2 Retail Sales were basically flat (+0.2%) vs. Q1. March’s strength carried over into April, but sales softened in May before stabilizing in June. Overall, Q2 growth was minimal. July retail sales rose 0.5%, keeping year-to-date growth around 3.7% year-over-year. The National Retail Federation projects full-year 2025 growth of 2.7-3.7%, with essentials leading vs. discretionary items.
What this means for the pallet market: Q2’s flat sales limited incremental pallet demand growth. But steady Q3-to-date sales and full-year projections support stable pallet usage, particularly in essential categories like food, beverage, and household products.
