Paper industry faces correction as virgin grades prices rise due to global pulp surge and red sea crisis

Paper industry faces correction as virgin grades prices rise due to global pulp surge and red sea crisis

- The imported virgin grades Pulp Prices are under recovery path and expected to go up to 15-20%
- International pulp prices have surged significantly, with an immediate impact ranging between USD 60 to USD 70
The Pulp and Paper Times | 16 April 2024

Virgin grades Paper prices are seeing a correction. With recent developments affecting Indian Paper industry. International pulp prices have surged significantly, with an immediate impact ranging between USD 60 to USD 70. The price hike announced against the backdrop of a Red sea Crisis and increased freight. 

There have been price hike circulars issued by Emami, Shreyans Industries, and JK Paper the increase looks significant; from Rs 1,000-3,000 a tonne for various virgin grades, including boards.

ITC’s mail to its partners said, financial year 2023-24 has been particularly difficult in terms of all round challenges facing our business. The year started with significantly high inventories with our customers and end users, leading to tepid demand in Q1. We did some recovery in Q2, driven by the festive requirements however, this did not last long and challenges continued through the second half of the year. Not only have we seen higher paperboard volumes coming into the market, scenario has been equally difficult on the input side with prices escalating for pulp wood, imported pulp and other inputs, partly driven by the red sea crisis.

“We would like to inform you that there is inordinate rise in cost of raw material mainly in Pulp & wood. Moreover, the geopolitical tensions in the Red Sea region have also impacted global trade routes resulting in increased freight. These unforeseen challenges have resulted in substantial cost pressure” JK Paper said in its intimation to wholesalers, Strategic Partners, Esteemed Customers.

Despite its best efforts to mitigate this rising cost internally, JK Paper find it imperative to pass on some part of increase cost to maintain sustainability of its products, therefore compelled to increase prices of packaging varieties like SBS Grade (JK Ultima/JK Ultima High Bulk/JK Platina by Rs. 2000/- PMT and Polycoated Grades by Rs. 3000/- PMT. price increase will come into effect on 16th April 2024.

International pulp prices have surged significantly, with an immediate impact ranging between USD 60 to USD 70. Additionally, the Red Sea crisis has led to increased freight rates, affecting the cost of imported raw materials, including Pulp & Chemical.

Emami Paper Mills informs in its circular to all channel partners and Dealers that to mitigate these challenges and sustain our operations, we would require immediate price support in all Virgin grades to the tune of 2500/- to 3000/- PMT. We will provide details regarding the magnitude and timeline of the price increase by April 20th 2024.

“The prices of the imported Pulp grades are expected to go up further. Already the imported virgin grades Pulp Prices are under recovery path and expected to go up to 15-20% , if the situation continues,” Mr SVR Krishnan, COO- Khanna Paper Mills said in an interview with The Pulp and Paper Times in December 2023.

Shreyans Industries has also informed that due to significant increase in wood pulp and other raw-material prices, we are compelled to increase the ex-mill price of all our products by Rs.1/- per kg. with immediate effect.

Price Increase in FBB/Uncoated/Cupstock/VAP varieties will also be announced in due course of time, JK Paper’s letter said.

“We have experienced, adverse scenario this time has continued for a longer duration, causing long term value erosion for the industry and our associates like you. Our margins continue to remain under pressure and as we face these headwinds becomes necessary that we look at measures to mitigate the adverse impact. We need your support to look at all avenues which could be of help. We would encourage you to discuss with the regional teams and come up with ideas which enable superior performance as we enter the FY 2024-25” ITC’s mail said.

Mr SVR Krishnan further added that the efficiently operated Pulp & Paper mills, making good quality production of papers and packaging boards will try to protect their margin and improve their Business Performance. Some advantage and additional edge will always be there with the Bigger integrated Pulp & Paper Mills, where the internal efficiency, Smart Procurement, Prudent control on the Finance and the Market reputation are at its best.
 

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