US–Iran Tensions: Kraft paper prices may rise by around 5–8% in the near term; waste paper prices have increased

US–Iran Tensions: Kraft paper prices may rise by around 5–8% in the near term; waste paper prices have increased

US–Iran Tensions: Kraft paper prices may rise by around 5–8% in the near term; waste paper prices have increased

-Shipping lines adjust pricing due to higher operating costs and route uncertainties, importers are compelled to bear additional expenses.

The ongoing West Asia crisis may impact India’s paper industry through higher energy prices, rising ocean freight rates, and disruptions in the import of key raw materials such as recovered paper, pulp, and coal. The Pulp and Paper Times talks to Mr. Pankaj Mishra, Head of Sales & Marketing of  Vamshadhara Paper Mills Ltd (Sennars), specialises in kraft paper (both lower and higher gsm) and newsprint paper for diverse applications like packaging, printing, and publishing. Here are his views: 

The Pulp and Paper Times | 31 March 2026

The ongoing tensions between the United States and Iran are increasingly influencing global trade dynamics, with noticeable effects on industries that are closely linked to energy and logistics. The waste paper and finished paper sectors are among those beginning to feel the pressure.

One of the primary drivers of this impact is the rise in crude oil prices. Instability in the Middle East typically leads to volatility in fuel markets, directly affecting shipping and transportation costs. Since international trade in waste paper relies heavily on ocean freight, even a moderate increase in fuel prices significantly raises the landed cost of raw materials.

Waste paper imports, particularly from the United States and Europe, are highly sensitive to freight movements. As shipping lines adjust pricing due to higher operating costs and route uncertainties, importers are compelled to bear additional expenses. At the same time, delays in transit due to rerouting or cautious shipping operations further complicate supply timelines.

Over the past 15 days, Finished Kraft paper prices have increased by Rs. 2.50 to Rs. 4 per kg. A further rise of around 5–8% is expected in the near term. On the other side, Waste paper prices have gone up by Rs. 1.50 to Rs. 3 per kg and are currently trading in the range of Rs 19–Rs. 21 per kg. While there is demand in the market, excess production capacity (overcapacity) is preventing mills from realizing fair prices.

Due to the ongoing conflict in West Asia, exports have been severely impacted. Additionally, rising coal and electricity costs have forced several mills in Gujarat and North India to either shut down or operate at reduced capacity.

On the supply side, uncertainty often leads suppliers to take a conservative approach—either holding back volumes or revising prices. This creates tighter availability in the short term and puts upward pressure on recovered paper prices.

For kraft paper mills, the situation is becoming increasingly challenging. Input costs across the board are rising—fuel, energy, raw materials, and chemicals—all contributing to a higher cost of production. Under such circumstances, mills are left with limited flexibility. Absorbing these continuous cost increases is not sustainable, and as a result, the industry is being forced to implement price increases in finished paper products to maintain operational viability.

In fact, the impact is already visible in the market, where finished kraft paper prices are showing a consistent upward trend, with increases being observed on a near-daily basis. This reflects the real-time pressure on mills, as they adjust pricing to cope with rapidly rising input costs and uncertain supply conditions.

At present, the impact is partly sentiment-driven, but if tensions persist for another 10 to 15 days, the pressure is likely to intensify. The industry may experience further increases in freight rates, shipment delays, tighter raw material availability, and continued escalation in input costs.

In conclusion, while the situation remains manageable in the short term, prolonged geopolitical instability will inevitably translate into sustained cost pressures. This leaves manufacturers with little choice but to pass on the increased burden, making continuous price corrections in the finished paper market unavoidable.
 

Published at : Mar 31, 2026 02:47 PM (IST)