According to Harsh Pati Singhania, Vice Chairman and MD, JK Paper and President, AIMA, while the demand for paper was impacted during the lockdown with most schools, colleges and other educational institutes closed; there was traction in demand for packaging boards.
subscribers exclusive

“Paper industry was one of the most affected (during the pandemic) as educational institutes including schools, colleges and other institutions were shut down. Education is one of the big drivers for the paper industry in India. But now as we move along educational institutes, particularly in some region, have been allowed to open and may be by next session others should also open so the worst should be over and quarter-on-quarter or month-on-month we are seeing an uptick,” Singhania told BusinessLine.

The increased reliance of people on packaged goods and products during the lockdown gave a fillip to the packaging board business. This apart, the global trend supporting biodegradable and sustainable packaging has also augured well for the industry.

J K Paper has been able to operate its plants at more than 100 per cent capacity utilisation and has also been selling large volumes both in export and domestic markets across categories.

“On a quarter-on-quarter basis we have been improving and with demand revival and price improvement we would expect our performance to be better,” he said.

The company’s ongoing Rs 2,000 crore expansion project for increasing the packaging board capacity at the plant in Gujarat is likely to come onstream by the middle of this calendar year. It had also acquired debt-ridden Sirpur Paper Mills through the IBC process and that company is also now on the revival mode.

These major growth initiatives which are underway will lead to growth as long as J K Paper is concerned, he said.

Price correction
Due to the shutdown, the prices of finished goods declined in India and in some categories it reduced substantially. Though there has been an upward revision in prices in the last few months, however, it is not back to pre pandemic levels. The industry is however doing better and should improve moving forward.

Prices had gone down by nearly 15 per cent during the lockdown and from there it has seen an uptick by around four-to-five per cent in the last few months. Though they have still not reached the pre-pandemic levels, however, it is expected that prices would improve moving forward.

“Global pulp prices have gone up a lot in the recent months and that will have a bearing on paper prices. So there is a need and requirement to take price correction in the next one or two quarters given the pulp prices where they are now,” he said.

From March 1, prices of coated and uncoated papers have been increased by $20 (₹1,456) a tonne. The user industry has been told that prices would be raised further by $20 each at least four more times this month.
subscribers exclusiveSUBSCRIBER EXCLUSIVE
alt_text
Mobiles-Tablets
OnePlus 9R: India-only budget variant
alt_text
Visually
Global M&A activity rebounds in Q1 2021
alt_text
Technical-Analysis
Movers & Shakers: Stocks that will see action this week
alt_text
Commodity-Analysis
Why gold is set to continue its rally

The industry, mainly the corrugated manufacturers, is worried as the economy is just recovering from the pandemic impact.

Corrugated or brown boxes are used in packing anything from electronics, white goods, electrical products to e-commerce items. Manufacturers of the boxes are worried as the price of their main raw material, kraft paper, has already gone up by at least 70 per cent since January 2020.

Impact on consumers
This will likely result in consumers paying a tad more for buying anything from a branded garment to fast-moving consumer goods (FMCG) to white goods to products bought through e-commerce.

“The corrugated box industry is reeling under the twin blows of sharp cost increases in a short span of a few months and raw material supply disruptions. We are not even able to pass on 50 per cent of the total hike to our customers,” said Sandeep Wadhwa, President, Indian Corrugated Case Manufacturing Association (ICCMA).

According to a veteran expert, the problem for corrugated box makers is that they are now having to pay higher labour charges, while the surge in steel prices has resulted in costlier wires and pins used in the boxes.

Wadhwa said manpower costs, starch, freight and other overheads have increased 60-70 per cent over the last couple of years.

“One should understand the problem of corrugated box manufacturers that they supply the brown boxes after having contracted orders at a fixed price. Such steep hikes will affect their bottom line. Most of these manufacturers are small and medium enterprises and they do not have deep pockets,” the expert said.

The corrugated box industry in the country comprises 350-odd automatic manufacturers and over 10,000 semi-automatic units, primarily micro, small and medium enterprises.

Material shortage
“One factor is the price rise. On the other hand, paper mills say they do not have the material,” said Wadhwa.

In a letter to its customers, a leading paper manufacturer said that the firm was forced to raise prices after pulp prices increased 70-100 per cent in the last 3-4 months, coupled with 200-500 per cent increase in ocean freight charges globally.

“Accordingly, we have been increasing prices in a stepwise approach instead of steep steps like Asian players in multiples of $100 (₹7,280),” the company said in its letter, a copy of which BusinessLine has seen.

According to the expert, pulp prices are currently ruling at $640-650 (₹46,600-47,300) a tonne. The rates have gone up from $440 (₹32,000) in August last year.

Analysts predict prices could rise further, topping $750 (₹54,600).

A paper industry watcher termed the situation as a “repeat of 1974”, while others said the user industry is passing through its “blackest” period in paper trade with “no one to listen, neither the Government nor the industry”.

“As corrugated box manufacturers have not been able to pass on their burden to end-users and brand managers, they have incurred losses in the past year,” said ICCMA Vice-President Harish Madan.

The kraft paper story
Paper prices, particularly kraft paper, have increased on two accounts. One is supply-side problems and the other is the availability of containers and ships.

“Kraft paper mills say prices of imported and domestic waste paper are rising due to supply woes as a result of Covid-led lockdowns and international logistics disruptions,” Wadhwa said.

China is another reason for the rise in paper prices as it has been importing a huge volume of kraft paper to meet its domestic demand. It all began with China banning import of all wastes, mainly paper, from January 1 this year.

The Chinese angle
China had been importing waste paper from across the world before the ban. This included all waste paper generated in the US, Europe and other developed nations. The waste paper was recycled to manufacture paper.

In view of the ban on wastes, Chinese paper mills were unable to get the main raw material and they began to import kraft paper from India. Kraft paper is recycled paper and Chinese mills use it as pulp or a fibre source to manufacture paper.

This has resulted in a manifold rise in kraft paper exports to China, leading to a shortage of the material for corrugated box manufacturers in India.

“There has been an abnormal increase in demand for kraft paper from China,” said Madan.

According to the ICCMA, exports of recycled pulp rolls by kraft mills is expected to touch about 2 million tonnes this year.

“This is roughly 20 per cent of the total domestic kraft paper production in India. This development, on the base of zero export prior to 2018, is a game-changer in supply-side dynamics going forward,” Wadha said.

Boost to exports
The Chinese ban on wastes has given a big boost to kraft paper exports, he added.

This has resulted in kraft paper prices rising by an average Rs 15 a kg. Prices of kraft paper depend on the BF, or bursting factor, which means the strength at which a bunch of papers bursts when hit with a hammer.

For users such as corrugated box makers, the latest hike comes at a time when there is a definite improvement in the demand for their products, following the gradual opening up of lockdowns.

“There is some amount of pent-up demand and some towards the growth in the economy,” ICCMA Vice-President Madan said.

Waste paper supply issues
There are also problems with regard to availability and prices for waste paper.

With educational institutes closed due to Covid-19, the use of notebooks and exercise books declined. This led to the demand for paper used for writing and printing dropping with the rough patch the publishing industry currently going through adding to the trend.

All these hit waste paper supplies. Besides, China has set up units in the US and South-East Asia to convert waste paper into pulp and send them home.

This has resulted in the domestic industry facing problems in sourcing waste paper and recycling it. The Indian industry can look at using eucalyptus for fibre but India does not have enough small forests or farms to supply it.

According to ICCMA, the second wave of coronavirus in Europe and the US has also impacted the collection of waste paper resulting in prices of imported waste cuttings rising.

Waste paper price hike
Prices of waste paper imports that cost $150 (₹11,000) a tonne before the Covid-19 pandemic have now increased to about $310 (₹22,575) a tonne.

“There has been a rise of 100 per cent in prices of domestic waste cuttings. Prices of imported waste paper are double compared with January last year,” Wadhwa said.

Justifying the hike in paper price, a paper manufacturing source said that the industry is not able to get raw material due to freight shortage.

Paper industry’s burden
“China, which has maximum containers, even imported rice from India to get back the containers. This has resulted in charges trebling,” the source said on condition of anonymity.

“Paper industry imports coal. The prices of the commodity have increased from $35 to $75 a tonne. The industry cut prices during the pandemic as demand dropped sharply. Some B grade mills even closed, and we got no help,” the source said.

Some paper mills had incurred losses and some faced bankruptcy. “The current hike is only to recover from losses,” the source said.

The veteran expert said that the user industry would have to unite and at least ask the Government to stop exports.

The corrugated box manufacturers, in particular, can point out that it is an eco-friendly industry recycling brown boxes as well as waste paper.

The ₹27,000-crore sector can also point out that the welfare of six lakh workforce with it was involved, while the industry was key to the Union Government’s “Make in India” programme.

As of now, the whole industry is looking up to the Union Government to intervene and sort out the current problems.

“Three factors are primarily behind the problems the paper industry is facing. The Covid-19 situation has resulted in waste paper supply shortage. The issue has been aggravated by non-availability of shipping containers. While India is starved of waste paper supply due to these factors, export of recycled pulp (made from waste paper and paper cuttings) to China is adding to the industry’s woes,” said Rajesh Sundrani, Executive Director of Chennai-based SBS Paper Recycling Ltd.
subscribers exclusive

Paper manufacturers hike prices, leave user industry fuming

Sectors hit badly
The problems due to these three ‘C’ factors — Covid-19, container shortage and China — in the paper industry is currently such that the waste paper, paper mills, including kraft paper makers, and corrugated or packing box manufacturing sectors have been affected badly.

In particular, export of recycled pulp to China is now turning out to be a major worry, as it is resulting in the domestic industry, particularly packing box makers, facing shortage.

This has resulted in a demand for ban of export of kraft paper from India so that the domestic industries will not be starved of the key raw material, particularly to make packing boxes that are used in a range of industries, starting from white goods to electronics to fast-moving consumer goods and all e-commerce products.

“The situation is turning from bad to worse. While we are paying a higher price for our raw materials, we are not getting supplies on time. Most of the consumers are not aware of the situation and have not been passed on the entire burden we shoulder,” said Harish Madan, Vice-President, Indian Corrugated Case Manufacturers Association (ICCMA).

“The paper industry is facing a huge crisis, mainly since supply of its primary raw material — waste paper — has been affected due to the Covid-19 pandemic, particularly in the US and Europe. We get maximum raw materials from these destinations,” said Rajesh Modi, Director of Mumbai-based Laxmi Board and Paper Mills.

Paper mills deny shortage of kraft paper

Waste paper’s key role
“Waste paper is recycled and it is the main raw material for the industry. But even domestic waste paper is not available for the industry. Imports of waste paper and cuttings have been affected by the second wave of the coronavirus pandemic in Europe after some signs of recovery late last year,” said Aksheev Agarwal, Business Head of Uttar Pradesh-based Paswara Papers Ltd.

Sundrani said waste paper imports meet nearly 70 per cent of the raw material demand for the country’s industry. “The Western world generates a lot of waste as its per capita paper consumption is higher at 350 kg, while our consumption is 20-30 kg a year,” he said.

In the developed world, people use paper tissues for almost anything but since movements have been restricted worldwide due to Covid-19, the usage has dropped.

Sundrani said waste paper generation had dropped 30 per cent, while Modi put the decline between 30 and 40 per cent. Domestic waste paper generation is also down by about 30 per cent this fiscal due to Covid-19 restrictions.

“There has been a major disruption in waste paper collection since the coronavirus pandemic set in and it has had a major impact on imports,” said Rajesh Bhugra, Chief Executive Officer of Rajasthan-based Supra Craft Packaging Pvt Ltd.

As a result of this shortage, waste paper prices have more than doubled currently, said Paswara Mills’ Agarwal.

“Though we have to sell at a higher price, our margins still remain at ₹200-300 a tonne,” said Sundarani.

The shortage could also have been caused by some of the European countries beginning to recycle waste paper, said Vinod Patel, Managing Partner of Chennai-based Suryaans Paper Mills.

Logistics hurdles
The issue of waste paper availability has been compounded by non-availability of shipping liners to bring them to Indian shores from destinations abroad.

“Container and shipping liner shortage has played a big role in the paper industry’s crisis. Waste paper is a low-priced item and 18-19 liners operate in this sector. Currently, only four to five liners are operating making the problems acute,” said Patel.

These liners carrying waste papers are held in far destinations such as Australia and New Zealand, he said.

Laxmi Mills’ Modi said that total shipping costs have increased from around $1,500 to $,5,000 and above. “On top of this, if we ask for 20 containers, we get barely 5-6. This has led to huge shortage,” he said.

According to Sorav Jhawar, Director of Kolkata-based East India Packaging Pvt Ltd, waste paper imports are already down by 20 per cent during the first 10 months of the fiscal compared with 2019-20.

All industry stakeholders say that though prices of raw materials have increased 60-70 per cent in a matter of six month, there has been a lack of regular supply.

“There is a huge challenge in raw material availability for corrugated box manufacturers,” said ICCMA’s Madan.

“The supply chain will be disrupted in a major way due to shortage of corrugated box supply,” said Sandeep Wadhwa, ICCMA President.

China’s double whammy
Two developments with regards to China have further complicated the issue in the Indian paper industry, particularly the corrugated case manufacturing sector.

One, China banned imports of old corrugated cases of boxes and waste paper from January 1. “It began cutting down waste paper imports since 2019 and from November last year all such imports stopped,” said SBS Paper Recycling’s Sundrani.

“Instead, the Chinese industry has begun importing recycled pulp. There is no restriction on import of recycled pulp,” he said.

That led to the consequent second problem of Beijing importing kraft paper from India that can be converted into pulp and used by the Chinese paper industry. But that, in turn, is leading to acute shortage of the material for the packing boxes makers.

“Some mills in India that can source raw materials from the Gulf are exporting mainly kraft paper to China,” said Laxmi Mills Modi.

“The export of recycled pulp to China paper industry is leading to shortage of supplies to corrugated box makers,” said Rishab Agarwal, Managing Director of Mumbai-based Riyo Parapack Pvt Ltd.

Zero to two mt
ICCMA’s Wadhwa said that at least 1.4-1.5 lakh tonnes of kraft paper are being exported to China every month. “Overall, such paper exports which were zero in 2018 could top two million tonnes (mt) this financial year,” he said.

“Apart from the nearly two mt shortage that Indian industry is facing due to lower imports, the exports of another two mt will lead to an overall shortage of at least four mt in raw materials,” Madan said.

“The problem with the exports to China is that once the waste paper has been converted into kraft paper and shipped out, it will not come back to India. Thus, we will keep on losing raw materials,” said Prashant Tikmani, Director of Chennai-based TGI Packaging Pvt Ltd.

East India Packaging’s Jhawar said that if the situation continues, it could end up totally killing the paper recycling industry.

Wadhwa said the situation could result in Indian consumers either having to pay a higher price for products or various sectors running out of packing boxes.

Madan expressed the fear that consumers affected by the shortage could look for alternatives that could lead to polluting ones such as plastics.

While China has banned imports of old corrugated cartons and waste paper to avoid pollution, it is importing recycled pulp and kraft paper from India, which is burdened with pollution when waste paper is converted to recycled pulp or kraft paper.

“Why should India pay for a decision that China has taken? Why should our country be polluted to serve another nation?” wondered Tikmani.

All the stakeholders see the situation continuing for another couple of months without any relief but wonder if the industry would have the strength to withstand the tough ride, particularly with the sharp rise in working capital costs.

“Make in India cannot be a reality with indigenous corrugated packaging industry being forced to the brink of closure,” said Super Craft’s Bhugra.

With vaccination gathering pace across the globe and the economy picking up with curbs on movement being lifted, the situation may return to normal probably in the last quarter of this year, stakeholders in the industry feel.

According to the association, the paper industry is facing an unprecedented crisis as the prices of waste paper, the key raw material for water paper, has doubled over the last six months.

“In order to protect the industry and the employment of millions of people, majority of them located in rural areas, we solicit your intervention to kindly intercede in the present issue of waste paper price hike by the waste paper suppliers…The malpractice by creating artificial scarcity of waste paper availability in the country must be put on hold to ease the undue pressure on the paper manufacturers,” IARPMA said in the letter.
IARPMA said from a pre-COVID price range of Rs 10-13 per kg, the waste paper prices have increased to Rs 22-24 per kg impacting the industry adversely.

The industry body has attributed the unexpected increase in waste paper prices to unfair practices of hoarding and cartelisation by waste paper suppliers.

“Certain waste paper suppliers are controlling the price and availability of waste paper and as a result there is no option for the Paper mills, but to cut their paper production as per the raw material availability and stock inventory”, said Pramod Agarwal, President IARPMA.

IARPMA said waste paper based paper mills account for nearly 17 million tonnes of the total 25 million tonnes of paper produced annually in the country.

Agarwal said while the market price for collection of waste paper from households continues to range between Rs 10-13 per kg, the waste paper suppliers have escalated the prices for supplies to paper mills through illegal hoarding.

LOS ANGELES, April 07, 2020 (GLOBE NEWSWIRE) — Acumen Research and Consulting, a global provider of market research studies, in a recently published report titled “Disposable Plates Market (By Product Type: Plastic Plates, Aluminium, Paper, Others; By Design: Compartment, Plain; By Sales Channel: B2B, B2C) – Global Industry Analysis, Market Size, Opportunities and Forecast, 2020 – 2027”.

Disposable plates are rapidly gaining growth due to the increasing demand for ready to eat food across the globe. The rapidly changing lifestyle coupled with the increasing working women population is supporting the market value. The global disposable plates market is segmented into product type, design, and sales channel. On the basis of product type, the market is bifurcated into plastic plates, aluminum, paper, and others. In terms of the design, the market is divided into compartment and plain design segments. By the sales channel, the global market is segmented into B2B and B2C.

The plastic plates segment accounted for the maximum share in the global disposable plates market in 2019. The plastic plates segment is further segmented into Foam, Polypropylene (PP), Polyethylene terephthalate (PET), Polyethylene (PE), Polylactic acid or polylactide (PLA), and Polyhydroxyalkanoates (PHAs). The easy and efficient manufacturing process associated with the plastic disposable plates is primarily accelerating market growth. The availability of numerous options with lesser cost, easy access, and various designs is further supporting the market growth.

The paper plates segment is projected to exhibit the fastest growth over the estimated period from 2019 to 2026. The eco-friendly nature of paper products is primarily supporting segmental growth. Additionally, the adverse effect of plastic products on the environment coupled with the ban on plastic in several economies is projected to support the growth of paper products in the global disposable plates market. Moreover, the increasing focus of several entrepreneurs and social organizations on manufacturing of disposable plates made up of paper is further anticipated to contribute to the segmental market value. For instance, in 2019, a Meghalaya Villager has started biodegradable plates business through learning from YouTube. Dilseng Sangma, a young entrepreneur from Williamnagar in the East Garo Hills district is using Areca leaves that are biodegradable for making disposable plates and bowls. The startup is producing around 250-300 plates and bowls a day in 2018.

In 2019, North America held the major share of the global disposable plates market. The region is particularly gaining growth due to the common trend of packaged and ready to eat food in the regional market. The busy life schedule and a high percentage of the working population are adding market value. The major economies of the region including the US and Canada are primarily contributing to the market value.

Some of the leading competitors are Be Green Packaging Llc, Ckf Inc, D&W Fine Pack Llc, Dart Container Corporation, Dopla Spa, Duni AB, Fast Plast A/S, Genpak Llc, Georgia-Pacific LLC, HOSTI GmbH, Hotpack Group, Huhtamaki Oyj, International Paper, Jinhua Lansin Commodity Co., Ltd, NUPIK – FLOUK Ltd, Pactiv Llc, Polar Plastic Ltd, Poppies Europe Ltd, Seow Khim Polythelene Co Pte Ltd., and Vegware Ltd. Disposable plates companies are focusing on new product development to expand their position in the disposable plates industry.

Some of the key observations regarding disposable plates industry include:

In 2020, Women Self Help Groups (SHG) in India has started production of an environment-friendly product which includes Sal leaf plates in order to combat with banned plastic disposables. In Sambalpur (India) almost all types of plastics have been banned years back and recently disposable plastic plates, single-use plastics, cups, and glasses too have been banned.
On account of coronavirus, restaurants are switching towards the disposables to reduce the risk of viruses. For instance, Ghostlight Coffee shop started using disposable plates, cups, and utensils to avoid their staff members from washing the handled items frequently, simultaneously reducing the risk of virus. Also, Lock 27 Brewing’s restaurants removed salt and pepper shakers and ketchup and mustard bottles from their tables and have switched to single-use disposables.
Vankleek Hill Fair 2020 organized at Vankleek Hill (Canada) features a display of products like home crafts, clothing, culinary arts, flowers, photography, beef show, cattle, dairy cattle, antique tractor pull, canned food, and grains among others. The garden vegetable division with the price money of US $4, $3, and $2 has the special note for the exhibitors to must display all items on size appropriate, disposable plates. The same note is for “fruit division with the prize money of US $4, $3, and $2” and for the “Culinary Arts Division”.