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Shortage of Waste Paper may shrink Corrugators' margins and disrupt Kraft Paper Production

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Waste Paper Scenario in India, Raw Material Crisis for Indian Paper Mills

Shortage of Waste Paper may shrink Corrugators' margins and disrupt Kraft Paper Production 

New Delhi | 22 November 2020 | The Pulp and Paper Times:

After festive seasons, the less generation of waste paper in the local market is creating a ‘severe’ shortage of raw material for paper mills, waste paper price is touching Rs. 16 per kg in most of the parts of India and is anticipated to go on Rs. 17 to 18 in the coming days. Paper mills have no option but to shrink corrugators’ margins by increasing the finished paper price. 

Paper mills are facing challenges in running their production process smoothly; the import of high-grade OCC waste is badly disrupted due to the imposition of lockdown in Europe. The situation may lead to worse as import of paper will be disturbed for at least next two months. Paper mills may operate at lower capacity or choose to shut down the production for a few days in a month. 

Finished kraft paper price is already touching Rs. 26 to 28 per kg for low-grade paper. 

“The price of waste paper has gone up from Rs 9 per kg to Rs 15 per kg since October. This has prompted paper mills to enhance the price from Rs 20 per kg to Rs 28 per kg of the low-grade paper and up to Rs 35 per kg of the high-grade paper,” said Surinder Jain, president, HP Corrugation Box Manufacturers’ Association, who runs Devashish Food Packaging Unit in Nalagarh to The Tribune.

Talking to The Pulp and Paper Times, Mr. Naresh Singhal, President, All India Waste Paper Dealer Association said that, we are currently having the worst time in waste paper industry. Shippers are struggling a lot with the shipping lines in order to get the empty containers. Prices of the material has already been on the rooftop, The price of imported waste paper is already hovering around 185 to 200 usd for the various grades.                                                    

“In the current market turbulence, Kraft paper mills are leading & driving the paper market with local and export orders. Imported raw material availability is very less due to 2nd wave of Covid in Europe leading to demand of RCP in domestic market,” 

“It is almost clear that consignment of imported waste paper will not be easily available at least for next two months. The mills will have to be dependent on domestic waste paper suppliers,” Mr. Singhal says.

“Duplex mills have raised their finish product price by Rs. 1 per kg, as there is no increase in raw material prices of duplex mills. In fact they have reduced some of the top grade raw material prices,” Sources said.

Domestic Kraft waste paper prices are under pressure due to export of finish Kraft paper and non-availability of imported waste paper. Domestic waste paper is sufficiently available to fulfill the domestic finish paper demand.

Despite the rise in its price, adequate kraft paper is not available in the market. “For the first time, corrugation units have been forced to refuse supply orders from consumer goods units as well as kitchen appliance and pharmaceutical manufacturers, as there is no kraft paper available,” said Surinder Jain.

One of Waste paper supplier says that, until, we get a clear picture with regards to what we should book at what price it is difficult for us to give any further offers. This continuous change in the freight charges and cancellation in the current empty bookings are giving us the worst time ever.     

Few Kraft manufacturing mills in Utter Pradesh have reduced the credit limit of their products finish Kraft paper from 30 days to 15 days to their buyers. Waste paper suppliers are suggested to review their payment terms with their mills.

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