GPMA: The demand position has improved and the market sentiment reversed

GPMA: The demand position has improved and the market sentiment reversed 

-Excess production leads to a price drop of finished paper

The sluggish demand scenario and surge in the price of key inputs like Coal, chemicals, etc. The Pulp and Paper Times takes a sneak view of the current situation and puts our questions before Mr. Sunil Agarwal, President of Gujarat Paper Mills Association (GPMA). Here is his view of the situation:

August 2022 | The Pulp and Paper Times:

Q. What is your current Kraft paper market review? Demand is sluggish in core sector, and prices of finished paper have dropped. Paper Mills are taking a silent shutdown to balance their production with demand. How do you take this situation?

Yes, Market Demand is sluggish in the Core sector and prices of finished Paper have dropped. But it is due to excess production. In my view this market depends on sentiments. Before one-month Sentiments were negative but after 5th July 2022 market sentiment reversed, and demand position improved. And now there is no issue of demand. I am of the opinion that only Sentiments Play major role. Now finished prices are also corrected.

Q: The domestic & imported waste paper price has come down due to sluggish demand for the finished paper, how do you see the next three months for waste paper prices? Would it see a 'surge' again?

Waste paper price comes down drastically in the whole world. In the Month of March - 22 Suppliers said that there is no waste paper material and in my view a major role played by the shipping line. Container availability was low and container freight was high. Now container availability is high and also freight price is down. In the last three-month Paper Mill bear heavy loss due to higher price of imported waste paper. Next three months the Market will be good due to the Festival seasons.

Q: Spike in coal prices, chemical and logistics has escalated the operating cost of paper mill, how does member paper mills of GPMA managing day- to- day operations amid the low demand?

Coal prices are very high from June - 21 till today, chemical and Logistics are also very high. Due to this Conversion cost is drastically high, and Members of GPMA incurred huge losses during this Period.

Q: The EU Commission has issued the proposal for the new legislation on the export of waste (Proposal for regulation by the European Parliament and the Council on shipments of waste), which will also rule the exports of waste paper. This proposed regulation is expected to be implemented by 2025 with certain trade obstacles. It will restrict waste paper export to India and other countries. The situation is going to be worse. Recycled paper mills are heavily dependent on imported OCC. What solution do GPMA think about this problem?

If Waste Paper is banned, the Indian Paper industry will face a problem. In India Our Collection rate of waste paper is very low. But our Government will also try to improve the collection rate of waste paper. This rule will be implemented in 2025. We have three years in our hands. We request our government to improve the collection rate of waste paper to overcome the above situation. Also, the paper industry buys an imported waste paper from USA & Other countries where this rule is not applicable.

Q: Single-Use Plastic ban has been effective from July, amid the paper import monitoring system; do you think India has enough capacity to meet the demand of paper arising out of the ban? Is this benefiting the Kraft paper industry also?

Yes, the Single-Use Plastic ban definitely benefits Kraft Industries, and India has enough Capacity to meet the demand. Right now in a western Region our capacity is around 5 Million tons and total demand including export of kraft  is around 3.5 million tons, so we have excess capacity of 1.5 million tons which can be utilized due to this ban.

Q: Any other comments, you would like to mention here for Traders, Raw Material Suppliers, and Corrugators?

Paper Industry future is very bright So traders, RM Supplier and Corrugators I request them to Support Paper Industry. If the paper industry does well it is better for all in my view, I always think to do business in a win-win position.
 

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