Export merchants count losses as freight surcharge triples for Indian paper exports

Export merchants count losses as freight surcharge triples for Indian paper exports

- An increase of 50$ will be visible in imported recovered fiber
- The silver lining is, in coming few weeks, freight charges are looking to come down a little bit which will boost some morale of Mills and channel partners

The Pulp and Paper Times provides a brief analysis of the Red Sea Crisis and its implications for the paper sector. India is a significant importer and exporter of various paper goods, including pulp, finished paper, waste paper, and other types of paper. This crisis could have an effect on the market's price structure and put the sector in disarray. We conducted in-depth analyses of the Red Sea situation and spoke with a number of prominent figures in the paper sector. here are the opinion of Shrey Verma, Director- Aadharshree Paper Mills Pvt Ltd.: 

Q: How this suspension of vessels in the Red Sea will impact the Indian Paper Industry?

The Indian paper industry is largely based on waste paper and best of it is sourced from USA, Canada, Europe and UK. With the suspension of vessels, it's started showing its effect and waste paper prices are now going up.

Q: Will the price of imported recovered fibre for India see a rise in price in the coming time? Any assumption of price per tonne?

Definitely yes. It's going to shoot up the price and it's already started to show up. I assume that atleast an increase of 50$ will be visible.

Q: Domestic waste paper and finished kraft paper may have a price impact due to this crisis. May the market see the price rise?

Yes, it's directly proportional. Over the years, I've seen both the international and local market prices of recovered paper go hand in hand. Moreover, it will be right to say that local waste paper prices go up if there is rise in imported waste paper. Kraft Paper prices too will see a price rise.

Q: Do you think this could turn into a win-win situation for some of the big paper mills in terms of price and market monopoly? 

I think integrated pulp and paper mills can benefit from it as Mills based on recovered fiber will see a rise in cost and have to increase price, which will further push the price of virgin fiber Mills without bearing a significant rise in their manufacturing cost.

Q: Any other important comment for the paper industry? or any planning and strategy to be followed.

Indian Paper Industry in the past 2 years has seen a great up and down wave. The best planning one can do is be aware of what's happening around the world and speculate in real time which will help in overall procurement and saving oneself as much as possible. Another strategy goes without saying is continuous innovation and upgradation in products and processes.

Currently, ongoing war of Russia - Ukraine and Israel- Palestine have affected the global economy in adverse ways. Each and every country has ties with other countries throughout the world, and also the existence of rebel groups who support one of war countries cause disruption which show a cascading effect. More than 100 container ships rerouted from Suez canal to avoid Houthi attacks. This added further 4-5 weeks transit time and additional 6,000 Nautical miles to the route. All over the world, shipping freight has shaken the trade. In paper Industry, negative effect has started to show as well ! 

Paper exported from India, now sees three times the surcharge just in freight. Export Merchants are facing losses and Mills too have to continue their support to dealers and merchants in the tough times.

Waste paper prices have started going up, pulp prices going up, fuel cost also going up which in the end will shoot up the price of finished paper but neither the mill, nor the channel partners can benefit from it. Silver lining is, in coming few weeks, freight charges are looking to come down a little bit which will boost some morale of Mills and channel partners and I'm sure, both will sail through this maritime disruption.
 

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