Prices of pulp and wastepaper have increased sharply since the onset of the pandemic | Photo Credit: R_VIMAL KUMAR
Faces crisis on raw materials shortage,costly coal and the Russia-Ukraine standoff
The Indian paper industry is going through a crisis, something not seen in the last four decades.
The industry is currently being crushed by the non-availability of waste cuttings or waste paper, high prices for pulp, fibres and newsprint, container problems, including rising freight rates, increasing coal, chemicals and other inputs rates, and, finally, the Russian invasion of Ukraine.
“Indian paper industry faced a crisis in 1974, but this seems to be worse than that,” says a veteran industry analyst.
“Raw material for the paper industry is just not available in India. Be it import of pulp or paper, the delivery takes 4-6 months resulting in scarcity. This is all set to disrupt the packaging line,” said Kirit Modi, President Emeritus, Indian Corrugated Case Manufacturing Association (ICCMA). “We had never imagined a situation that would be too difficult to manage like this. Prices of pulp and wastepaper have increased sharply since the onset of the Covid pandemic,” said Sanjay Rajgarhia, President, ICCMA.
“The situation is getting worse by the day. This has resulted in paper mills cutting their operations to 2-3 days a week,” said Rajesh Sundrani, Executive Director of Chennai-based SBS Paper Recycling Ltd.
Centre imposes 2.5% duty
“From February 1, the US waste paper rates have been increased to $400 from $300 a tonne. Despite being ready to pay the hike, we are not getting supplies. In addition, the Russia-Ukraine crisis has added fuel to the fire, while the Indian government has imposed 2.5 per cent basic customs duty on waste paper imports,” said Vinod Patel, Managing Partner of Chennai-based Suryaans Paper Mills, listing out the woes.
“The total fibre availability is an issue for the paper industry. Imports have increased to three million tonnes now and the Centre has tried to take advantage by imposing the import duty in the Budget this year,” said a paper industry analyst, not wishing to be identified.
The raw material shortage has resulted in domestic waste paper prices rising to Rs. 28 a kg from Rs. 20.
Shrinking sources
Things turned worse in December due to container shortage and international liners have increased their prices.
“The charge to bring waste papers in a 40 feet container has been raised to $3,600 from $2,800. Earlier, it was below $1,600-1,800. Our sources of imports are also shrinking. We are now confined to the US and West Asia,” said Sundrani.
Patel said Europe had suddenly banned exports of waste paper. “When the Indian government took up the issue, the European Union blamed it on a clerical error. But the ban still continues,” said Sundrani.
ICCMA’s Modi said unbleached pulp prices have increased to over $900 and bleached pulp to around $1,300 a tonne, a sharp hike that paper mills have found tough to handle. The hike has resulted in softwood prices increasing.
Deepak Mittal, President, Federation of Paper Traders Association of India, said paper mills are also faced with the problem of coal supply. With the Centre according priority to power plants for coal, paper mills have not been able to get the raw material supply.
“Coal prices have also been impacted by Indonesia’s decision to curb exports,” said ICCMA’s Modi.
According to Rajgarhia, prices of other raw materials such as corn starch and steel pins have also increased. Paper mills have no control over the prices, said Mittal.
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