Paper prices hit by rising freight rates and raw material costs, import of wood at much higher prices

Paper prices hit by rising freight rates and raw material costs, import of wood at much higher prices

Key Points
- Red Sea Crisis has led to a substantial escalation in the prices of imported raw materials within a short period
- Drewry’s World Container Index has doubled to $5,318 per 40ft container in the last 60 days.
- The shortage of wood has compelled a few integrated paper mills to import wood at much higher prices to maintain production levels
The Pulp and Paper Times | 1 July 2024:

Indian Paper Industry is reeling under the impact of rising ocean freight rates, triggered by the Red Sea crisis and congestion at several key ports in the global supply chain, causing container prices to skyrocket over the past month.

“Drewry’s World Container Index has doubled to $5,318 per 40ft container in the last 60 days, three and a half times the rate of the year before. The speed and magnitude of this recent spike have taken the market by surprise. We anticipate that the current situation will persist in the short term, with no immediate relief. It has a consequential impact on all globally traded commodities, including pulp and paper,” Bilt Graphic Paper Products informed in its circular dated July 1 to all channel partners and dealers.

Uncertainties and disruptions across global supply chains, partly attributed to a combination of supply and demand imbalances and exacerbated by geopolitical issues such as the Red Sea crisis, have disrupted the usual flow of goods. These issues have led to a substantial escalation in the prices of imported raw materials within a short period. Consequently, ocean carriers have imposed general rate increases, peak season surcharges, and an array of other charges.

Trident will be increasing the prices of our writing and printing products PM-1 & PM2 (NSS & SS) by Rs. 2,000 per metric ton (PMT) effective from July 2, 2024. Trident informed in its circular that the decision to revise our prices has been driven by several factors, including significant increases in raw material costs, international pulp price surges, and elevated production costs. This price adjustment is necessary to maintain the quality and supply of our products.

“The important raw materials are in short supply and this has adversely impacted the commercial viability of major paperboards manufactured by us. Thus, in order to sustain and ensure an uninterrupted supply chain, we are compelled to seek a minimum price revision to mitigate the cost impact,” ITC-PSPD informed in its circular dated June 28 to all channel partners and dealers.

“There will be a price increase soon in FBB & Cup Stock grades—between Rs. 1,500-2,000/PMT as the landed pulp prices to us have gone up multifold,” TNPL said in its letter to channel partners dated June 28.

Bindal Papers Limited said that the current challenges in the industry, like the unprecedented increase in raw material cost, have been absorbed over the last few months. However, it is now time to pass on some of the price increase to the market for sustainability. We are intimating you of a price increase of Rs. 3,000/MT for all our writing and printing grades as per the below matrix.

BGPPL stated that the availability of wood has become a significant challenge, leading to a sharp increase in costs. The shortage of wood has compelled a few integrated paper mills to import wood at much higher prices to maintain production levels. It might take about two years to normalize the wood supply situation.

Vishal Paper stated that responding to the unprecedented surge in input cost, especially due to the increased ocean freight in Asia-China/Singapore, etc. affecting imported waste paper and other raw materials, we are forced to implement a necessary adjustment in our pricing strategy. Effective immediately, a price increase of Rs. 3000 per metric ton for all orders with effect from 29.06.24. The total price increase is Rs.5000/-PMT. This is crucial to maintain uninterrupted production and ensure product availability.   
 

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