Morbi paper mills see full-capacity operations as ceramic industry revives; Kraft paper exports to China spike, Prices strengthen; Janmashtami shutdown ahead

Morbi paper mills see full-capacity operations as ceramic industry revives; Kraft paper exports to China spike, Prices strengthen; Janmashtami shutdown ahead

Morbi, Gujarat: The revival of the ceramic industry in Morbi over the past one-and-a-half months has brought a significant improvement in operating conditions for paper mills in the region, with mills that were earlier operating at below 50% capacity now running at nearly full capacity. According to Mr. Dinesh Haripara, Vice President, Morbi Paper Mills Association, the improvement in ceramic activity has strengthened demand and supported better order availability across the local paper industry.

Mr. Haripara said that the current market situation is “fine” and that paper mills are operating well with orders available. He also explained that the impact of the ceramic industry’s revival needs to be understood in the context of the different grades and market segments served by Morbi’s paper mills.

China Export Demand Was Temporary

Discussing exports of kraft paper to China, Mr. Haripara said that some exports took place during May, June and July, but exports during the current month have been negligible.

He explained that China’s temporary demand for imported kraft paper was largely linked to higher domestic waste paper prices and changes in waste paper availability. According to him, waste paper collection and generation in China were lower during that period, pushing up waste paper prices. As a result, the cost of producing finished paper as well as virgin-fibre-based paper increased.

“Waste paper prices increased, and consequently the costing of finished paper also increased. The impact also came on recycled paper because virgin fibre costs were high,” he explained.

Mr. Haripara said that the increase was part of a broader global trend in fibre and waste paper pricing. At that time, Indian mills were comparatively better positioned because fibre availability was relatively normal and imported waste paper was also arriving in the country.

This created an opportunity for Indian kraft paper manufacturers to export to China during May-July. However, he said the situation has since changed, with prices in China becoming more stable and exports from India becoming difficult.

He added that importing paper had become more economical for Chinese buyers than sourcing locally after adjusting for the higher domestic waste paper prices. “Local buying was more expensive, so after making the correction, they imported and matched their costing,” he said.

Morbi Mills Serve Different Kraft Paper Markets

Mr. Haripara highlighted that Morbi has around 52 paper mills, but the mills operate across different kraft paper grades and market segments.

According to him, there are broadly three categories of kraft paper mills in Morbi—A, B and C grades. A-grade mills with higher-quality production capabilities are able to sell beyond the immediate Morbi market and reach destinations such as North India, Jammu, Himachal Pradesh, Baddi, Madhya Pradesh and Rajasthan, largely because of their ability to produce higher BF paper.

He noted that only around two mills in Morbi produce 35 BF paper, while around three to four mills operate in the range of 24, 28 and 22 BF grades. These mills can sell into markets extending towards Ahmedabad, Vadodara and Gandhidham.

On the other hand, a much larger number of mills are primarily focused on the ceramic industry within Morbi and do not compete directly with the higher-BF mills in distant markets. He said that around 10-12 mills, and possibly 15-20 mills depending on classification, are largely focused on supplying paper to the ceramic industry.

“Those mills have the ceramic industry as their base. They do not sell outside Morbi in the same way as the mills producing 16 BF and 12 BF paper,” he explained.

Waste Paper Costs Push Kraft Paper Prices Higher

The increase in waste paper prices has emerged as another major factor supporting kraft paper prices. Mr. Haripara said that local waste paper prices have moved above ₹22, while imported waste paper prices have also increased significantly.

He pointed to a shortage in local waste paper collection and lower generation as key factors behind the increase. At the same time, imported waste paper prices have risen by around $35-$40, putting additional pressure on mills that depend on imported fibre.

For mills producing higher-strength paper, particularly around 35 BF, the use of good-quality fibre from sources such as the US is essential. Therefore, higher imported fibre costs directly increase production costs.

“Those mills depend on good fibre coming from the US because we have to make 35 BF paper. If the cost increases by $40, the price has to increase,” Mr. Haripara said.

He stressed that finished paper prices have to move upward when raw material costs rise; otherwise, mills would face losses through higher conversion costs.

Market Outlook Remains Positive Ahead of Diwali

Despite the rise in raw material and finished paper prices, Mr. Haripara sees a positive demand outlook for the coming months.

He said that all mills are currently operating and have orders in hand. With the Diwali buying season approaching, he expects demand to receive another boost from gifting, shopping, corporate purchases and domestic consumption.

He also expects online shopping and e-commerce activity to increase, which could further support demand for packaging paper and corrugated boxes.

According to Mr. Haripara, even after some increase in paper prices, demand is expected to remain strong enough to absorb the higher pricing. He believes that the market will see a positive demand-price balance as the festive season approaches.

“Gifting, corporate gifting and local domestic shopping will all receive a boost. Demand will remain there, and even after some price increase, I expect the demand to match the market,” he said.

Janmashtami Shutdown to Be Coordinated With Maintenance

Another important development for the Morbi paper and corrugation industry is the traditional shutdown period around Janmashtami in the Saurashtra region.

Mr. Haripara said that paper mills and corrugation units in the region generally remain closed for around four to five days during this period. The shutdown is more prominent in Saurashtra, particularly Morbi, compared with areas such as Ahmedabad, Vadodara and Surat.

He said that the shutdown is not expected to create a significant demand-supply gap this year because mills and corrugators are planning production and deliveries in advance.

According to him, corrugators will plan their box requirements and deliveries beforehand, while paper mills will coordinate back-to-back deliveries according to market requirements. This will allow the industry to manage the temporary production stoppage without creating a major disruption in supply.

The shutdown period is also being aligned with preventive maintenance activities. Mills can use the same period to carry out scheduled maintenance while production is temporarily stopped for the festival.

Mr. Haripara said that the planning generally covers the period from around August 2 to August 7, depending on the individual unit’s schedule.

Better Market Balance Expected

Overall, Mr. Haripara said the Morbi paper market is currently in a much better position compared with the period when mills were operating below 50% capacity. The restart and strengthening of the ceramic industry have improved local demand, while higher waste paper and imported fibre costs are supporting upward movement in kraft paper prices.

With mills currently receiving orders, ceramic activity recovering, and the Diwali season expected to increase packaging and e-commerce demand, the near-term market outlook remains positive.

At the same time, the industry is focusing on advance production planning and preventive maintenance to ensure that the upcoming Janmashtami shutdown does not create a major imbalance between paper supply and corrugated-box demand.

Mr. Dinesh Haripara is Vice President of the Morbi Paper Mills Association and President of Laghu Udyog Bharati (LUB), Morbi District.
 

Published at : Aug 24, 2026 07:57 AM (IST)

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