Imported waste paper prices hit record highs: Europe OCC at $200, USA DSOCC at $250, amid reduced demand and production cuts, says Paswara Papers’ director

Imported waste paper prices hit record highs: Europe OCC at $200, USA DSOCC at $250, amid reduced demand and production cuts, says Paswara Papers’ director

Key Highlights:
- 45 days MSME rule for payment has forced MSME industry to reduce their stock in pipeline or total purchases 
- Overall demand for imported fibre has now reduced since the paper mills are now going on frequent shutdowns and cutting productions
- Future of export of paper from India remain very skeptical specially from North India

The Pulp and Paper Times spoke to Mr. Deept Agarwal, Director, Paswara Papers Limited, Mr. Agarwal shares his though about the present state of Indian Kraft Paper Industry, Export scenario and Red Sea crisis. Here are his full views:

The Pulp and Paper Times:

Q: What main reason do you think is behind this Kraft Paper demand crisis? In the comparison of 2023

The demand for Kraft paper has reduced due to mainly following reasons- Firstly, the demand for consumer goods has reduced which has caused low demand for packaging paper. Secondly, every year existing plants increase their production which is not being set off by subsequent growth rate in consumer demand. Thirdly, the 45 days MSME rule for payment has forced MSME industry to reduce their stock in pipeline or total purchases which might have also put an affect on demand of Kraft paper as it is used in packaging of all consumer goods.

Q: India has become overproduced in the kraft paper segment; new paper capacities have increased by 30 to 40 % in last three to four years. Do you feel that the paper business will no longer be profitable? If ‘NO’ then why? 

Paper industry in India specially Kraft paper industry is currently a loss making industry and currently operating under immense pressure. The only way to reduce cost of operations and achieve economies of scale is to increase plant capacities but this increased production is not being set off by equal growth in consumer demand. Also the import of paper from foreign countries is putting pressure on domestic industry because of which we are not getting optimum prices for our indigenous product.

Q: How do you evaluate the export market? With new massive paper production capacities in South East Asia and Brazil producing packaging paper on a large scale, don’t you think that the Export of paper from India will remain decreased in future?

Export of paper from India was never a long-term business. It was a phase when the Chinese paper industry got disturbed during their pollution drive in which several small industries got out of operation. The future of export of paper from India remain very skeptical specially from North India as the freight cost in itself is very high due to distance from sea ports and constant disturbances in sea such as terrorist attacks in red sea or other world war matters.

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

The suspension of vessels in the Red Sea has affected the Indian paper industry very negatively. Due to the closure of the earlier used shorter routes through Suez Canal, the shipping time has now significantly increased by 15 days. This has adversely affected the importing costs of waste paper as the longer routes caused the shipping lines to charge higher sea freights. The working capital is now blocked for longer period and higher freight costs has caused the sudden rise in prices of Kraft paper for which the market was unprepared. Higher costs has now caused less demand in overall market.

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?

The price for imported fibre is currently at highest levels if we compare with the historic prices. At present, the Europe OCC Is at approx.. 200 USD levels and the USA DSOCC is at 250 USD levels, the highest level of prices which has ever been in the industry. I do not see any further increase in prices as the overall demand for imported fibre has now reduced since the paper mills are now going on frequent shutdowns and cutting productions. Everyone is trying to not further increase the foreign exposure in case of sudden market crash and rather manage their finish quality produced by using more of indigenous waste paper.

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

Due to low demand in the market and over production situation the prices currently are very volatile. I am not expecting any significant price rise until the overall demand for paper improves.

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

The planning should be done to reduce dependency on import which is one way to support the local industry. The basic custom duty should be increased from existing 10% to minimum 20% which will motivate domestic manufactures to shift some of their production to manufacture imported paper and ultimately easing the domestic manufacturers crisis.

About Paswara Papers 
PASWARA PAPERS LIMITED is a PASWARA GROUP Company based in India and engaged in the manufacturing of Multi Layer Kraft Paper and Kraft Paper Board, used for making packaging boxes, cartons, paper bags, etc, to cater the Specialty Paper Market in India and abroad. Currently, the group has 550 Tons Per Day capacity of high RCT Corrugated Paper, used for making packaging boxes, cartons, paper bags, etc. to cater the packaging industry in India and abroad. Products include Kraft Paper, Test Liner, Fluting Medium Paper, Speciality Papers in GSM Range of 100 to 550 with Burst Factor of 18 - 40BF in different shades over 3 production lines.
 

Web Title: Imported waste paper prices hit record highs: Europe OCC at $200, USA DSOCC at $250, amid reduced demand and production cuts, says Paswara Papers’s director