Kraft Paper Mills’ Input cost increased; finished paper price is bound to surge

New Delhi | 25th September 2020 | The Pulp and Paper Times:

The lockdown-led disruption has hit the supply chain of paper mills badly. The price of local waste paper has increased by 45 to 50 percent in the last two-three months which is mounting pressure on the finished paper prices to be hiked by the paper mills. 

Kraft paper mills all across India are bound to increase the finished paper price by 20 to 25 percent on an immediate basis, to compensate their input and conversion cost.   

“Margins are on the risk, local waste paper price has been increased by 50 percent in last three months, currently, waste paper is being supplied to paper mills at Rs. 14.50 per kg, which was at Rs. 9 to 10 per kg in May and June. It is almost 50% steep hike and we are not getting the propionate price realization of our finished paper,” said Mr. Hardik Patel, Director at Om Sree Papertek in Hyderabad. 

He said, we immediately demand to increase the price of paper by 20 to 25 percent to compensate for our margins.

During the last two-three months, paper mills have gradually increased Rs. 3 per kg on finished paper, while the input and conversion cost is still exceeding over the finished paper price which requires more hike up to 20 to 25 percent. 

Both domestic and imported waste paper prices have gone up by Rs 4,500-5,000 per tonne during the last couple of months due to disruptions caused by the COVID-19 pandemic. Also, the impending Chinese ban on waste paper has pushed Chinese mills to lap up whatever supplies of waste paper and finished products are available in the overseas markets.

“The price of finished paper is hovering around at Rs. 22 to 22.50 per kg. despite this, the waste paper's price is touching to Rs. 14.50 per kg. We are not getting the desired price from the market to cover up our conversion cost which is stood at Rs.10 per kg,” Said Mr. Deept Agarwal, Director at Paswara Papers Limited.  

“Survival of a paper mill is very much important in this scenario, we are also seeking price increased on the finished paper. Domestic demand is being plummeted and paper mills are more or less dependent on China’s orders also,” said Mr. Manoj Patel, Director at Sukraft Group.

Mr. Hardik further said, “We are not against the corrugators and totally support them in this hard situation, but we must see our viability first. Our expenses should be fulfilled,”

“We support immediate Rs. 1 per Kg. price increase on the finished paper” Mr. Manoj Patel said.

The corrugated box industry, which mainly comprises micro, small and medium enterprises (MSMEs), are reeling under surge in prices of kraft paper and other conversion input costs -- increasing the cost of end products by 15-20 per cent depending on the strength of the packaging boxes, Indian Corrugated Case Manufacturers' Association (ICCMA) Vice President Harish Madan told PTI.

In this Corona situation, demand for finished Kraft Paper has been dropped by 40 percent and most of the paper mills are selling their paper at par in order to sustain their operations in continuity.

 According to sources, Paper mills in Muzaffarnagar and Meerut are likely to increase the price by Rs 2 per kg in next 8 to 10 days.

Imported waste paper price is hovering between $ 165 and $ 190 per tonnes, if the local market gets demand in coming months for finished paper, waste paper price will automatically zoom up.   

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