Covid19: Coated Paper Price Increased by 8 to 10%, Imports decline & Raw Material scarcity push the price upward

Covid19: Coated Paper Price Increased by 8 to 10%, Imports decline & Raw Material Scarcity push the Price Upward

‘Indian Paper Industry’ Scenario Under Corona Epidemic

Consumption of paper will decrease approximately by 1.2 Million MT in 21 Days.

Market analyses and views are personnel in the below article. The article is written by Mr. Amit Gupta, Managing Director, Vrinda Papers Pvt. Ltd. for The Pulp and Paper Times

New Delhi | 15th April 2020| The Pulp and Paper Times:

Coronavirus seems to have benefitted paper companies, especially those such as Ballarpur Industries and JK Paper, which manufacture coated paper. The market prices of the product have increased by 8-10 %. According to paper dealers, China had been dumping its supplies into the country prior to the outbreak but due to the epidemic, the paper industry suffered from a huge decline in imports and had to face the shortage. The epidemic hampered the production and supply chain of paper in Europe & America, which ultimately changed the market scenario.

Prices of other varieties of paper used in various processes such as writing, printing, and copier have not increased as compared to coated paper. This shows that we are independent of other countries in the Uncoated & Paper Board segment.

The decision taken by the Government of India on January 31st which prohibits the import of stock lots of all categories of paper has also allowed domestic manufacturers to increase their production capacity to grow.

Stock lots are those imports in which odd sizes and unsold old stock of paper are imported at cheaper rates. As a result, mills have started to increase the prices of coated paper at a rapid pace. In a recent statement by A S Mehta, President & Director, JK Paper downplayed the impact of coronavirus, saying, “Prices have gone up marginally in the last couple of months because imports of coated paper from China have been hampered due to port congestion. As a result, the price of coated paper has increased but most other varieties are subdued.”

We are dependent upon Europe and the USA for pulp, but the production of pulp is also hindered due to CoronaVirus. After all these discussions we can certainly say that the price of paper will increase due to the Import issue & scarcity of raw material. The impact on prices is also due as there are no supplies of stock lots from America & Europe. Hence, the shortage of material across the country is inevitable.

Paper Price scenario after lockdown:

We are dependent upon Europe & USA for pulp but the production of pulp is obstructed due to CoronaVirus. Lockdown is also a promising opportunity for digital educational organizations to promote the digital transformation of education. This will decrease the demand of Writing & Printing paper partially. If we talk about the fact, we are consuming paper at the rate of 1.6 Million MT per month according to IPMA which means that in this lockdown period, consumption of paper will decrease approximately by 1.2 Million MT(in 21 Days).

We can expect a decrease in the consumption of paper due to online or cloud classes taking place due to CoronaVirus. The price of paper will also increase due to the unavailability of Pulp from the International Market. If the cost of paper increases, publishers may also go with Digital Books which will hold back the paper market internationally.

Impact On Paper Export & Import:

As we all know, the production of pulp has been set back because of the epidemic, so we can say that this will also hinder Export & Import.

Segment-wise performance of Paper:

Writing & Printing - We are independent and self-reliant in this segment but we are facing challenges in raw material supply. Raw material is an essential product and exports are high due to Lockdowns in other countries currently.

Specialty & Coated Grade - In this constituent, we are reliant mostly on Imports, therefore we will face availability issues in this grade. Its demand would be very high as limited stock is accessible in the market and there are no other alternatives available.

Duplex & Packaging Grade - In this constituent, we are one of the largest producers & are using recycled pulp. Supplies of these grades are lesser than other Coated & Specialty Papers and hence marginal challenges will be faced by the Indian Paper market. Mill owners will decide their prices according to the requirement of the market. They may charge higher or run their machines with limited capacity, but it's quite sure that the prices would be exorbitantly high due to the non-availability of waste and transportation as well as orders from FMCG.

World Paper Industry Scenario & Pricing

If we talk about America, they are facing acute shortages of pulp due to the lockdown; therefore, mills are not getting any raw material. Also, waste paper prices increased from 90 USD to 190 USD f.o.b. Due to high domestic demand and the non-availability of tissues and towels, softwood pulp, mills are consuming the product itself. Hence, they are not in the position to sell the product or export it to other countries. Their domestic prices are exorbitantly high. The outbreak has also hindered pulp production in Italy and the Netherlands (the main suppliers of Europe). This has resulted in acute shortages in its availability in Europe. China's backlogs of containers at the port are creating delays in obtaining raw materials.

Lockdown -2, impact on Paper Industry:

Those who are depending on this industry face lots of challenges and because of the lockdown, around 2.4 Million MT paper market will hamper and thousands of people will suffer from unemployment.

Finished goods stock with paper mills:

Most of the mills have ready stocks to fulfill the domestic demand for 15-25 days. But after that, they too will face challenges to avail of raw material to produce paper.

Waste Paper supply chain:

The supply chain of every industry has obstructed not only the paper industry due to complete lockdown but has also posed a big challenge for everyone due to availability issues.

Future growth of the Paper Industry:

You cannot escape from it. The growth of the industry is not clear right now. We have to wait to smoothen the economy first. Only then we can calculate the growth. For the time being, we can say that the chances of growth are very low. We have to minimize the workforce & maximize the output. This is the only way to tackle this in the initial stage.

But in contrast, how will we manage to postpone the economic demands of about 130 crore people for essential commodities for a longer period when there can be a shortage of the product?

 The biggest advantage that the paper industry has is that it has huge potential for employment generation, both direct & indirect. So, the government should make a strategy for a new capacity building in this industry by policy intervention and by providing high liquidity to run the business.

Buy Paper Trade Directory 2019 (Latest Data of 500+ Indian Paper Mills) Avail Discount upto 25%

Web Title: Covid19 Coated Paper Price Increased by 8 to 10percent Imports decline Raw Material scarcity push the price upward