Printing and writing papers have become pricier from August 1 with paper mills hiking rates by ₹3,000-5,000 a tonne. “Over the past six years, prices of these papers have doubled from ₹50-55 a kg to over ₹100 now,” said a paper trade analyst, who did not wish to be identified.
Printing and writing paper prices are up for three reasons. One, import costs of white cuttings (wastes from making paper) recycled by mills to produce the papers have increased. Two, prices of pulp in the global market are near record highs. Three, demand—domestic and export—for printing and writing papers has outstripped supply.
“A-grade mills are taking 60 days to meet any order. B-grade mills are now stepping up, though their quality cannot match that of A-grade mills,” said Rajesh Sundarani, Executive Director of Chennai-based SBS Paper Recycling Ltd.
“Demand for printing and writing paper is higher than supply. There is demand from publishers and educational institutions, for exports and through government tender. Exports are substantially high than in the pre-Covid period,” said Deepak Mittal, President, Federation of Paper Traders Association of India.
“Paper mills are catering more to export demand since the realisation from the shipments is higher than domestic prices,” said a Kolkata-based paper trader.
No level-playing field
The trade analyst said currently, there was no level-playing field for paper traders vis-a-vis the mills. “You need to get official approval to import white cuttings and pay for it. Again, you cannot import paper such as A4 since it has to conform to the Bureau of Indian Standards. Then, there are safeguard duties on imports. All these have made imports costly,” the analysts said.
As a result of these measures, the import of newsprint has declined sharply. Responding to a question, Information and Broadcasting Minister Anurag Thakur told the Lok Sabha two weeks ago that newsprint imports had declined to 5.97 lakh kg last fiscal from 6.48 lakh kg in 2020-21 and 12.96 lakh kg in 2019-20 and 2018-19.
“A sort of indirect cartelisation has cropped up in the paper sector. They have never had it so good,” he said. Trade experts pointed to the results of some of the paper mills as proof of the good times they are enjoying.
Best quarterly results
JK Papers Ltd in a press release said it had its best quarterly result ever for the June quarter with its profit after tax (PAT) rising by 152 per cent year-on-year. Similarly, West Coast Paper’s PAT was up eight times and that of Emami Paper Mills has increased 68 per cent. Results from other key paper firms such as BILT and TNPL are awaited.
Mittal said pulp prices have increased to near record highs recently. Bleached softwood kraft pulp prices on Shanghai Stock Exchange are currently quoted at 7,192 Chinese yuan ($1,065.34 a tonne), up 20 per cent this year.
“Raw material is a constraint for mills. Even recycled writing and printing paper prices are high,” he said.
Sundarani said the current situation of printing and writing paper is in contrast to what happened during the Covid pandemic when it struggled. “Paper mills are flush with orders. Since February, this sector has rebounded,” he said.
Other sector swinging
On the other hand, prices of other grades of paper such as Kraft, used in packaging or corrugated boxes, are swinging up and down. Demand for kraft paper and corrugated boxes has turned sluggish.
“These units are now functioning only 4-5 days a week. The situation is in contrast to printing and writing paper. The situation on the import front has eased and prices of waste paper cuttings have eased. We are now able to get supplies from the US and Europe, though the problem with Australia continues,” Sundarani said.
August 09, 2022