Paper prices push corrugated packaging costs up by 10–12%, while global logistics may take several weeks to stabilize even after the war ends: ICCMA President

Paper prices push corrugated packaging costs up by 10–12%, while global logistics may take several weeks to stabilize even after the war ends: ICCMA President

- Kraft paper prices have increased by about Rs. 4–5 per kg in recent weeks
- When Kraft Paper prices, conversion costs and GST Impact is combined, the total cost impact on corrugated packaging is around 20%, which is impossible for any tertiary industry to absorb.

West Asia crisis drives up pulp, chemicals, and freight costs, disrupting supply chains and pushing Indian paper and corrugated packaging prices higher amid demand uncertainty. In view of the crisis, The Pulp and Paper Times talks to Indian Corrugated Case Manufacturers Association (ICCMA)’s President Mr. Rishabh Agarwal, here are his views:

The Pulp and Paper Times

Q1. What is the direct impact that the corrugation industry is experiencing due to the West Asia crisis?

The impact is quite significant.

The crisis has increased every direct cost component. Disrupted supply chains, higher freight rates, war-related surcharges, and adverse currency movements have all raised the cost of each and every raw material.

But apart from the price it is the availability which is a bigger impact and we are grappling with that, so supply chain disruptions are a given. Supply chain planning is as good as not possible.

Q2. Kraft paper is a key raw material for box manufacturing. How have box costs been affected in recent times?

Disrupted supply chains, higher freight rates, war-related surcharges, and adverse currency movements have all raised the cost of waste fibre for kraft paper producers.
Since kraft paper manufacturing is highly energy-intensive, this has resulted in higher input costs and uncertainty in raw material availability for corrugated box industry.
Kraft paper prices have increased by about Rs. 4–5 per kg in recent weeks, which alone translates to a 10–12% rise in finished corrugated packaging costs, depending on specifications and volumes.

The largest volume of waste paper required by Kraft paper mills in India come from America and Europe. As it is an extremely low value commodity the freight cost is a big impact. So if the situation continues as it is there is bound to be a major disruption in supply continuity of this critical component in our supply chain and availability issue can become bigger than price.

So even if the War ends the worldwide logistics will not get back to normal for several weeks and therefore this pain may not end immediately.

Q3. Kraft paper mills have increased prices by Rs. 3 to 5 per kg. Is the current market demand able to absorb these price increases?

Beyond kraft paper, other inputs have also seen sharp increases—ink prices are up by over 20%, PVA adhesive by more than 50%, and costs of plastic packaging materials, stitching wire, and fuel have all risen by over 10 %. Together, this amounts to 4–5% increase in corrugated packaging conversion costs.

The industry has already been dealing with cost pressures due to the inverted duty structure over the past six months, the full impact of which is only now becoming evident. Input tax credits on capital goods and a significant portion of service taxes have effectively become costs, along with increased compliance requirements and working capital blockage of at least three months. This alone has added about 4–6% to costs.

When Kraft Paper prices, conversion costs and GST Impact is combined, the total cost impact on corrugated packaging is around 20%, which is impossible for any tertiary industry to absorb.

Q4. Have corrugated box manufacturers passed on these increased costs to their customers? Are the end customers willing to pay this hike?

Many large corporates have been forthcoming to give the increase as this is a force-mejeure scenario. Forward-looking supply chain managers recognize the situation and are willing to support sustainable pricing to ensure continuity of supply.

Q5. Are the recent increases in paper prices primarily driven by market forces, or do you believe there are other contributing factors?

A: Not entirely. Factors like GST-related cost structures, currency fluctuations, and geopolitical conflicts are not market-driven. While supply-demand dynamics play a role, the current price increases are largely influenced by external factors, including global disruptions and ongoing geopolitical uncertainties.

Q6. Exports in several sectors have also been hampered due to the ongoing conflict, which has a direct impact on packaging materials. Do you feel that demand for corrugated boxes has declined in the export segment?

Absolutely. Corrugated packaging suppliers catering to export sectors have been affected and under pressure for several months, initially due to disruptions such as US tariff issues and now further impacted by the Middle East conflict.

There are situations where suppliers are left with excess raw materials or finished goods due to sudden order cancellations, while at other times they face urgent, unplanned demand spikes. This unpredictability makes planning extremely difficult.

Sectors such as fresh fruit exports to the Middle East have been heavily impacted. Other affected industries include plastics, manmade fibre textiles, and tiles—segments that typically have substantial corrugated packaging requirements.

Q7. Any additional observations?

A: The biggest challenge currently is volatility and uncertainty. Planning has become extremely difficult for both manufacturers and customers, and margins are under pressure across the value chain.

Lastly, while the government has been making efforts to keep fuel prices stable, a prolonged crisis could eventually impact fuel availability and pricing. If that happens, the situation could become even more complex and challenging for the entire industry.
 

Published at : Apr 08, 2026 08:47 AM (IST)

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