Supply chain constraints, raw material price hikes, and shortage of waste paper supplies from US and Europe are said to be the major culprits.
The lockdown imposed during the second wave of the pandemic has affected almost every industry in the world economy including the pulp and paper industry. This has brought significant supply chain disruptions causing shortages and challenges in the industry.
The industry has been witnessing a surge in prices of all types of paper, which are attributed to a number of factors including the increase in basic price of the raw materials for the paper industry. Consequently, the price of the finished paper has witnessed a significant surge in recent times.
For the past few months, the Indian paper industry has been struggling with the shortage in the supply of waste paper, one of the major raw materials for paper mills, from the US and Europe. The global shortage of shipping containers, primarily caused by the Covid-19 pandemic, has also aggravated the inflation in shipping and container prices and has increased delay times.
In March, Pramod Agarwal of Indian Agro and Recycled Paper Mills Association (IARPMA) termed the crisis as a “burning issue” and blamed the waste paper suppliers for jacking up raw material prices. His statement stands true even to this date. However, Agarwal complained that waste paper suppliers are controlling the prices and as a result the paper mills have no option, but to cut their paper production according to the raw material availability and stock inventory.
He also threatened to make available the list of the waste paper hoarders to the government. “The malpractice by unscrupulous suppliers who are creating artificial scarcity of waste paper availability in the country must be put on hold to ease the undue pressure on the paper manufacturers,” he had said.
Major paper manufacturers in India and abroad have announced that they have to or will soon increase the prices of their products. These include BILT Graphic Paper Products, Century Pulp and Paper, Belgium-based Sappi Europe, Indonesia-based Asia Pulp & Paper (APP), and Shandong Chenming Paper, among others. BILT Graphic Paper Products is increasing the price of its Indian art paper grades across the country.
Industry officials have also said the global players have taken a price hike of 6-8% in the past one and a half months and the rupee has also depreciated during the same period, which gives Indian companies room to hike prices.
In yet another development, Stora Enso said it is selling its Sachsen newsprint mill in Germany, with the new owners planning to convert the facility to make containerboard.
Sachsen Mill has an annual production capacity of 3,10,000 tonnes of newsprint made using recovered paper. The EUR 35-million deal to sell the mill to the Model Group involves an agreement whereby Stora Enso will continue to sell and distribute newsprint made at the facility for an 18-month period after the sale completes. After that, Model Group will convert the mill to produce containerboard. Stora Enso is selling its Sachsen newsprint mill in Germany, with the new owners planning to convert the facility to make containerboard.
Meanwhile, UPM has agreed to sell its Shotton newsprint mill in North Wales to a subsidiary of Turkish conglomerate Eren Holdings. The deal is expected to be finalised in Q3.