Paper Price Could Reach Rs. 72,000– Rs. 75,000/Ton in 4–6 Months, Stable Timber Costs, Falling Wheat Straw Prices and Strong Paper Demand Ahead

Paper Price Could Reach Rs. 72,000– Rs. 75,000/Ton in 4–6 Months, Stable Timber Costs, Falling Wheat Straw Prices and Strong Paper Demand Ahead

- Paper Industry Outlook Turns Positive as Demand Strengthens and Imports Lose Competitiveness

The Pulp and Paper Times

Kuantum Papers sees healthy paper demand in Q1 FY27, while higher fuel, chemical and raw material costs amid the West Asia conflict continue to pressure margins. The company expects demand to remain supportive, imports to remain less competitive, and paper prices to strengthen, with NSR already improving and further price gains expected over the next 4–6 months.

MR. PAVAN KHAITAN – VICE CHAIRMAN AND MANAGING DIRECTOR – KUANTUM PAPERS LIMITED, shared his views on the paper industry during the Q1 FY27 concall, stating that the sector witnessed healthy demand supported by education, publishing, office consumption and broader economic activity in the first quarter of FY27.

He said this strong demand enabled the company to achieve good sales volumes in the market and also improve net sales realization. However, he noted that the West Asia conflict intensified cost pressures, particularly in fuel, chemicals and other raw materials, while also impacting freight and logistics costs. This created a challenging margin environment for paper manufacturers despite improving demand conditions.

Looking ahead, he said the key factors for the industry will be the trajectory of raw material and energy costs, paper realizations, and competitive intensity from imports. While some near-term volatility may continue, he expects demand to remain supportive. He also highlighted growing opportunities in higher-value paper applications as customers increasingly shift towards sustainable alternatives to plastic-based products.

IMPORT OF PAPER

On imports, Mr. Khaitan observed a declining trend, which he described as a positive development for the industry. He attributed this largely to global challenges in shipping costs, container availability and logistics. According to him, the primary reason is shipping constraints, which are leading to reduced imports into India. He added that pricing remains stable and has not declined from previous levels, which is also a positive sign. He further stated that he does not foresee significant competitive pressure from imports in the future.

RAW MATERIAL AND CHEMICAL COSTS

Mr. Khaitan noted an interesting trend in raw material and chemical costs, stating that the escalation was primarily driven by the West Asia conflict. He explained that prices had initially eased when the conflict was perceived to be de-escalating, but rose again once tensions resumed. He said prices are currently higher than Q4 levels but have now stabilized, with no expectation of further increases in the near term.

He also mentioned that wheat straw prices are showing a downward trend and are expected to soften further in the next quarter. He added that about 50% of the cost increase is due to the West Asia crisis, while the rest is driven by local factors depending on the state of operations and raw material procurement costs.

On cost pass-through, he clarified that there is no direct correlation between increased costs and selling prices. However, out of an INR 4,200 per ton increase in costs, INR 3,400 has already been passed on through price increases on a quarter-to-quarter basis.

Regarding wheat straw, he said prices are clearly trending downward and the impact will be more visible in the coming month. He explained that wheat straw is primarily used as cattle fodder in Punjab and nearby states, and only a small portion is used by the pulp and paper industry. With alternative fodder options such as rice straw and corn cobs expected to enter the market by September–October, pressure on wheat straw prices is likely to ease, leading to stabilization.

On timber prices, he said the trend remains positive, with prices largely stable or declining by 5%–6%. He expects this trend to continue, supported by social forestry initiatives and clonal sapling programs that are helping improve timber availability. He also noted that other industry players are undertaking similar efforts.

However, he added that rising handling, labour and transportation costs will offset some of the decline in timber prices, keeping the overall price line relatively stable going forward.

PAPER PRICES

On paper pricing, Mr. Khaitan disagreed with the view that prices are flat. He stated that the company’s net sales realization (NSR) has increased by about INR 3,400 per ton in Q1 compared to the previous year, and on a year-on-year basis, it is higher by around INR 4,000 per ton.

He added that not all products can be compared with Chinese import prices, as the company has a distinct product profile and strong market positioning. He highlighted that Kuantum Papers has built strong marketing strength and depth of market, enabling it to achieve better realizations than industry peers.

Currently, the company is realizing around INR 68,000–INR 69,000 per ton. Looking ahead, he expects prices to rise further to around INR 72,000–INR 75,000 per ton over the next 4–6 months, supported by improving market sentiment and demand growth.

On seasonal trends, he noted that September is typically a weak quarter for the paper industry, with Q2 being one of the leanest periods. However, demand generally improves from October onwards as preparations begin for the new academic year. Despite this seasonality, he confirmed that pricing has remained stable with no downward pressure.

He also stated that imported paper prices are currently in the range of $610–$620 per ton, but volumes are not significant enough to impact the domestic market meaningfully.

INVERTED DUTY STRUCTURE POST GST

On the GST-related inverted duty structure, Mr. Khaitan said the government remains firm in its decision and the industry must move forward. He explained that the impact is limited only to notebook paper production, and the company has already taken a conscious decision to reduce or eliminate its exposure to this segment.

As a result, he said the impact on Kuantum Papers will be negligible. He further added that for the limited notebook paper sold in the last six months, the company has already passed on the GST-related cost to customers. He emphasized that the company has been clear in recovering such costs, making the situation a win-win for both the company and its customers.
 

Published at : Sep 12, 2026 05:49 AM (IST)

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