Kraft Paper Mills Increased Prices – another panic-demic

Kraft Paper Mills Increased Prices

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The pandemic caused disruptions have led to Kraft Paper Mills Increased Prices by leaps and bounds.

Cascading impact of price surge

  • Supply Chain Management was adversely impacted by Covid-19 and the long lockdown spell. This disorder resulted in Kraft Paper Mills Increased Prices.
  • The situation deteriorated further with another volley of blows comprising around 45% to 50% surge in price of local waste paper over this period.
  • The cascade to whole this muddle has disheveled the cost sheets of the paper mills with an inevitable increase in the finished paper price by 20% to 25% in order to recoup and maintain the profitability markups. The paper mills are bulldozed to sell their paper at par to fuel the continuing operations to the extent possible.
  • Kraft Paper Mills Increased Prices have observed impact across the board whereby most of the paper mills have increased the prices by Rs. 3 per kg on finished paper.
  • Notably, the waste paper is currently trading at a quoted price of Rs. 14.50 per kg versus Rs. 9 to Rs. 10 per kg that prevailed in the months of May and June. This hike in fact is not commensurate with the price of the finished paper and thus is resulting in congested profit margins. This view was expressed by Mr. Hardik Patel, Director at Om Sree Papertek in Hyderabad.
  • Similar views were echoed even by Mr. Deept Agarwal, Director at Paswara Papers Limited, who somber the price increase and difficulty in aligning the same with the sale prices.

Read this article also: Price increase hits paper market hard – coping challenges

Viability challenges

  • As per the recycling industry latest news over the lockdown period the prices for waste paper have experienced a significant surge by Rs 4,500-5,000 per tonne with respect to both domestic and imported segments. Moreover, as a matter of ensuring cascading viability, the Muzaffarnagar and Meerut based paper mills are expected to increase the price by Rs 2 per kg in forthcoming days.
  • Nonetheless, the situation got exacerbated with the Chinese policy for banning waste paper. Considering the indispensable nature of Chinese orders for paper mills as hitherto and decline in domestic demand, Mr. Manoj Patel, Director at Sukraft Group, has raised concerns over the survival of the paper mills in such situations.
  • The micro, small and medium enterprises (MSMEs) category housing the corrugated box industry, are swerving in the lurch due to prices of kraft paper and other conversion input costs, said Harish Madan, Vice President of Indian Corrugated Case Manufacturers’ Association (ICCMA).

Conclusion

Undoubtedly the pandemic has driven away the viability and feasibility of paper mills’ operations. The Government needs to infuse life into the paper industry on ventilator.

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