The Indian paper industry is expecting an increase in the prices of pulp and paper in the coming months in line with the increase in global prices.
Internationally, prices were low about two years ago but they have improved now, Harsh Pati Singhania, vice-chairman and managing director, JK Paper Ltd., told BloombergQuint at the sidelines of an event in New Delhi today.
Globally, there has been a major increase in pulp prices and, therefore, international producers have increased prices. If that remains the case in pulp prices, there may be an increase in prices in the domestic market as well.Harsh Pati Singhania, Vice Chairman & MD, JK Paper
International prices of pulp and paper have risen, with merchants in the U.K. increasing prices of uncoated paper between 5-7 percent. Pulp prices have risen £70-80 per tonne since the start of this year in the U.K.
International hardwood pulp prices rallied from $200-690 per tonne, mainly due to supply disruption as pulp mills in Indonesia and Brazil experienced lower production due to environmental concerns as well as maintenance shutdowns.
At present, the paper industry is in the slag period and post November, the season would pick up till April, said Saurabh Bangur, president of the Indian Paper Manufacturers Association and vice-chairman of West Coast Paper Mills Ltd., who was also present at the event.
“Moving forward, 2-4 percent of price increase should be there. Demand looks positive. Internationally, prices of pulp and paper have moved. Domestically, prices should be moving up in the months to come,” he said.
Impact Of High Raw Material Cost
The Indian paper industry bears the brunt of high wood and pulp prices, which serve as raw material. Currently, there is a 1-million-tonne gap between supply and demand.
Singhania said there is need for “an industrial plantation policy, which will allow more wood to be grown at a lower cost on a large scale in a more scientific manner. This will help bring down the cost of wood and provide large amount of employment.”
The paper industry is expected to surpass 20 million tonnes by 2020 from the current 15 million tonnes. The company will need an investment of Rs 90,000 crore by 2030 to meet the ever-growing demand, Singhania had told BloombergQuint in an earlier interaction.
The industry has also made a representation to the government to allocate degraded forest land for having their own captive plantation.
"Indian industry's raw material challenge is big because price is higher as compared to global players where cost of production is cheaper, and they have their own captive plantations. Whereas, we have to depend on other agencies for raw material procurement," said Bangur.