Lockdown 4.0: weak demand drags down the hike in kraft paper prices

Lockdown 4.0: Weak demand drags down the hike in kraft paper prices

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

The poor demand and discontinuity in the market activities have crippled the kraft paper mills’ productions. The price for paper has come down. Paper Mills are blaming this price shrink to the non-opening of the entire supply chain.

 â€œInitially, there was a spike in kraft paper price when lockdown imposed in India and it went on Rs. 28 per Kg for 18 BF. After the relief in lockdown systematically over the period, more paper mills came in production which leads to a paper price correction. Now the price for 18 BF is Rs. 25 per KG. We are expected to have a further reduction in price up to Rs 2 per kg,” said Mr. Hardik Patel, Director at Om Sree Papertek in Hyderabad.

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 â€œPrices for kraft paper were up due to less production in April, only a few paper mills were operating during lockdown, but now more paper mills are in production catering corrugators’ demand. Yes, the price has been dropped significantly for 18 BF paper. We are selling our paper for the same BF at Rs 20 per kg for last one week” Mr. Ashok Bansal, MD of Nikita Papers at Shamli, Uttar Pradesh said.

 â€œDue to poor demand in the corrugation market, we have been selling 18 BF paper below to pre-lockdown price. We hope the market condition will improve in July and it will largely depend on waste paper prices, whether finished paper prices will go up or not. The anticipation will work on cost, if paper mills are getting Rs. 10 conversion cost than it is reasonable for us. Also, the export market doesn’t get a boost than price will remain more or less same” Mr. Dinesh Goyal, MD, Ramaa Shyama Papers at Bareilly (U.P.).

 Mr. Naresh Singhal, President, All India Waste Paper Dealer Association said, “In Meerut, Muzaffarnagar, and Hapur, the price of local waste paper is revolving between Rs. 10.50 and 11.40 per kg in various paper mills. Paper mills are selling normal 16 BF finished paper between Rs. 19.50 to 20.50 per kg in the region,

 â€œThe demand for corrugation boxes is very low, major sectors like textile, auto and heavy consumable goods are still not operating. The second factor is that our input cost also gets reduced due to price correction in the local waste paper which is hovering around at Rs. 12 per kg, earlier it was on Rs. 15 per kg. We are further assuming that the price of local waste paper will settle around Rs. 10 per KG,” Mr. Hardik anticipates.

Mr. Sunil Aggarwal, President of Gujarat Paper Mills Association said that “Box maker is the only buyer for a kraft paper mill. The corrugation units are getting only 30 percent business from the market. They are not able to pay us and place a new order frequently. Usually, a corrugator gets box manufacturing order from different sectors like Automobile, Electronics, Pharmaceutical, Textile, and FMGC, but lockdown situation has shrunk the market’s demand to a poor level,”

 â€œIn Morbi, Surat, Rajkot, and Baroda, the price for the local waste paper is up to Rs. 11.50 per kg,” Mr. Singhal informed through their network of waste paper dealers.

 Mr. Hardik also shares his concern over the imported waste paper and says, we are worried about the price correction in imported waste paper. The prices are still touching to the higher side. We have imported waste paper at 100 $ per tonne before lockdown, but now, the price is 180 to 190 $ per tonne until today. There could be a price hike in a finished paper in next month if imported waste paper’s price doesn’t settle at a suitable level.

 â€œThere has been an acute labour problem in corrugation units. Even though, they have not started their operation properly. The tumbling demand in box manufacturing has been forcing paper mills to take shut down for 2 to 3 three days in a week,” Mr. Bansal said.

 A major kraft paper producer in Karnataka, Orchid Laminates is running only for 2 to 3 days in a week. “Entire south India paper mills are operating their plants only 2 to 3 days in a week due to labour shortage and a significant decrease in demand,” said Mr. Pramod Tantia, MD of Orchid laminates.

 â€œThe prices dropped drastically in last one week and the situation may become worse if demand doesn’t arise in coming months,” Mr. Bansal told

 â€œThe price of paper during the lockdown has been increased by Rs. 3 per kg., but a sudden drop in demand forced us to roll back Rs. 1 per kg more and we are further anticipating a down in price up to Rs. 1 per kg” Mr. Tantia said.

 According to sources, in Gujarat, Paper Mills already brought down the price for 18 BF up to Rs. 2 per Kg from Rs. 26 in last week, and they are also seeking to reduce one more rupee in coming week.

 â€œThere has been no fresh booking for imported waste paper from March to May. Waste paper consignment usually takes a three-month process to touch the Indian port. We are just getting Rs. 2 per kg extra on finished paper due to the fluctuation in dollars price before lockdown. We booked our imported waste paper at Rs 73 per dollar but we paid Rs. 76 per dollar and 90 paise more for freight,” Mr. Pramod Tantia informed from Karnataka.

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