Paper mills are now operating with virtually no margins. The upcoming publishing season may soon create upward pressure on prices

Paper mills are now operating with virtually no margins. The upcoming publishing season may soon create upward pressure on prices

- Uncoated Prices are corrected by ~ 20% and Ctd by ~ 15% from the peak this year.
- unprecedented surge in wood prices (Prices increased by more than 50% since April’24), creating a challenging scenario for the industry.
- price corrections in market pulp and waste paper are promising and can support local producers.
The Pulp and Paper Times

India’s Paper Industry has topped the charts in Asia for being the most volatile market since Q1 to Q3 of 2024. The domestic prices did not remain stable nor sustainable for a longer time and specifically this chaos was prevalent in the recycled waste-based mills, who are in a hurry to reduce or increase the prices, influenced by the lack of study raw material and more pressure out of the desperation to get rid of surplus production in the segment.

Bringing the attention to the current trends in the Paper Market. Bilt Graphic Paper Products informed in its circular dated November 6, 2024 to all channel partners and dealers, Since the beginning of the current year, Paper prices have steadily declined month after month, reaching levels where mills are now operating with virtually no margins. Uncoated Prices are corrected by ~ 20% and Ctd by ~ 15% from the peak this year. This has been further exacerbated by an unprecedented surge in wood prices (Prices increased by more than 50% since April’24), creating a challenging scenario for the industry. Additionally, Wood is now competing with Wood pellets due to the Green Energy movement, leading to an anticipated shortfall in Wood supply at a global level for the Paper Industry. 

Talking to The Pulp and Paper Times, Mr Dipesh Laddha, Director of Kalpataru Papers LLP, said that The global shift in demand for woodfree (uncoated graphic) paper, driven largely by digitalization and changing consumption habits in Western countries and the Far East, is echoing in the Indian Paper Industry as well. With leading manufacturers in the developed countries transitioning to more sustainable alternatives like paper bags, the Writing & Printing paper segment is undergoing a very significant transformation in the desperate need to have more revolution to this product profile. 

“With the upcoming notebook, publishing season & tender orders, we expect a boost in demand, which may soon create upward pressure on prices. At present, prices appear to be at their lowest, but given these factors, they may start to move up in the coming days. We recommend factoring in this outlook when planning your purchases and inventories,” BGPPL said.

Indian Paper Industry got some protection due to high shipping costs, which resulted into limited imports and sustained local production. The new education law pumped up the consumption in the last year but however, as shipping costs stabilized and other Asian countries ramp up production, imports are expected to enter India at increasingly competitive prices. This shift could challenge Indian mills that rely on woodfree paper production, particularly in sustaining profitability within this segment. Mills producing recycled grades of woodfree paper will particularly remain more vulnerable.

“Writing and Printing demand is growing in India, other Asian markets like China are experiencing low demand and oversupply. This has led to higher import volumes at competitive prices, which pose challenges for the domestic WPP market. However, price corrections in market pulp and waste paper are promising and can support local producers,” Mr. Rajat Sarkar, Research Manager ( Asia Pacific) at ResourceWise said to The Pulp and Paper Times.

High Imports of Paper and Paper Products 

The Indian paper industry is grappling with a significant challenge from imported paper. According to the latest data from the Directorate General of Commercial Intelligence & Statistics (DGCI&S), the volume of paper and paperboard imports in India surged from 1.145 million MT in 2021-22 to 1.436 million MT in 2022-23, reaching 1.929 million MT in 2023-24. This represents an increase of over 68% in just two years. 

Notably, imports from China have skyrocketed by 181% over the past two years, while those from ASEAN countries have surged by an astounding 247%. The duty-free import of paper into India has made domestic paper production uncompetitive, posing a serious threat to the sustainability of the Indian paper industry. 

Mr. Aseem Bordia, Partner of Laxmilal and Company said that UPM Finland a major paper manufacturer in Europe lowers Its outlook due to lower deliveries in most businesses and decreased pulp prices. During the second half of the year, market demand for UPM's products has been weaker than expected, leading to lower delivery volumes in most businesses. The weakened pulp market and the high wood cost in Finland had a negative impact on the UPM Fibres business.
 

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