COVID-19 hits paper industry goes into consolidation mode extremely badly together with unparalleled global health, food supplies, hospitality, and other industries.
Economic disruptions caused by a lockdown
- COVID-19 hits paper industry worth Rs. 80,000 at domestic levels which now is working under incredibly tough conditions exacerbated by substantial quantities of paper being imported into the country at a lower cost, largely as a result of Free Trade Agreements such as India-ASEAN FTA and Indo-Korean CEPA and other trade agreements like Asia Pacific Trade Agreements, including China.
- AS Mehta, Chairman of the Indian Paper Manufacturers Association and Chairman of JK Paper stated, “There has also been a chronic stiffness of demand due to lockdown and closure of educational institutions, commercial establishments, and downstream printers, publishers, converters, stationery services.” Further added, “Even after relaxing the lockdown, with just a modest pick-up in demand, the situation hasn’t changed much and might balance till next year. Owing to the extreme deflation of demand and cheap imports rushing into the market, the paper industry in the country is currently operating at less than 50% capacity utilization.
- “The paper sector in the country, which recorded the progress of about 5-6% in the previous fiscal year ended March 31, 2020, can potentially see a de-growth in this financial year with poor sales volumes in the first quarter and the continuing second quarter, where the state has not dramatically upgraded.
- Imports have soared at a CAGR of 11.34 % of value in the past 9 years from average 3,411 crores in 2010-11 to nearly 8,972 crores in 2019-20. Imports are increasing at a high rate as per estimates in comparison to the surge in domestic production rate with slipshod usage of installed capacity.
- Alerting of more suffering from imports for domestic paper manufacturers, which counted for 15-20 % of domestic demand and rose by 18% until January of FY 2020, the report states that Chinese companies are likely to shift the existing stock to the country despite rupee has fallen.
- The positive vision for the industry sectors is the potential to climb from the current 14 kg to about 17 kg by 2024-25, which is presently at 57 kg, per capita paper consumption. The COVID-19 hits paper industry hopes to recover to its usual flow by next year.
The paper recycling industry is dented to a greater extent with no recuperation signs in the foreseeable future.