INR depreciation & consecutive pulp price increases push paper industry to announce price hikes

INR depreciation & consecutive pulp price increases push paper industry to announce price hikes
- Hardwood Pulp now quoted at $620++ and Softwood Pulp at $ 890++
- The depreciation of INR has impacted the wood and woodchips import program, creating challenges for integrated players as they navigate supply constraints in raw materials
The Pulp and Paper Times | 27th Feb. 2025

The Indian Rupee's depreciation has significantly increased the cost of imported raw materials, disrupting supply chains in the pulp and paper industry. Leading manufacturers, including BGPPL, Emami Paper Mills, and Khanna Paper Mill, have announced price hikes to offset rising input costs, with pulp prices surging and wood shortages intensifying. Industry leaders warn of shrinking profit margins and potential market disruptions due to global trade shifts.

Bilt Graphic Paper Products Limited (BGPPL) informed all channel partners and dealers in its circular dated February 26, 2025, that Pulp prices continue to rise, with Hardwood Pulp now quoted at $620++ and Softwood Pulp at $ 890++. This is the third consecutive increase in the last 60 days. Additionally, the availability of Market Pulp remains a challenge. This is a clear trend-setting indication for the general Pulp & Paper price movement to follow.

“In recent days, the Indian Rupee (INR) has experienced significant depreciation, leading to a substantial increase in the cost of all imported raw materials. This has particularly affected Unit Bhigwan, where approximately 65% (by value) of raw materials are imported. Furthermore, the depreciation of INR has impacted the wood and woodchips import program, creating challenges for integrated players as they navigate supply constraints in raw materials,” BGPPL stated in the circular.

In a media statement, Mr Harsh Pati Singhania who helms JK Paper, recently said that "We have seen across the industry a drop of 60-70% in profit margins of paper manufacturers. A surge in imports and high cost of local wood are the two major reasons for this," If the US were to impose tariffs on paper imports into its country, Singhania cautioned that could result in the Indian market being flooded, especially due to overcapacity in certain Asian countries.

"Cost drivers i.e. Wood Prices, Pulp Prices, Depreciating INR, other inflation-driven fixed cost items, etc have exerted substantial upward pressure on raw materials cost. To partially offset the impact of rising input costs, we shall apply P2 (+1500 Rs/MT) on all Uncoated grades except Copy Paper w.e.f. 01.03.2025. We shall also withdraw schemes/discounts given in Feb 25 for Coated Papers w.e.f. 01.03.2025," BGPPL stated.

“With reference to our intimation letter dated 30th January 2025 regarding Virgin Grade Packaging Boards. We have contemplated a lot on the cost matrix based on the Forex fluctuations impact on all raw materials, we are compelled to propose a price increase of INR 1750/- MT in all Virgin Grade Packaging Boards from 25th February 2025,” Emami Paper Mills stated in its circular dated Feb. 19, 2025.

Khanna Paper Mill said in its circular dated feburary 20 2025, stated that we are increasing the price of all our W&P grades by Rs 2500 PMT, effective Monday,. 24th Feb'25. All orders w.e.f. 24th Feb'25 will be accepted at increased price only. The increase in the price is due to rising input costs, driven by the $/ exchange rate and Increase in Pulp prices, which have risen by 10% in last one month. And so, this price adjustment is done to align with the rising costs.

"A lot of capacity, about 8.5-10 million tonnes, has been created in Asia in the virgin packaging board segment in countries such as China and Indonesia," said Singhania. Indian manufacturers locally meet their requirements for wood, which is the main raw material in paper manufacturing. However, local plantations are unable to meet the paper industry's demand because of demand from other industries such as plywood. "Wood costs have gone up 2x as a result of the demand from other industries that require the raw material and are sourcing it from plantations done by the paper industry. The answer is to undertake social/ farm forestry by these industries and also al- low plantation on degraded forest land," Mr Singhania said.
 

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