The entire absorbent craft paper using industry is hinged to the hugely volatile Kraft paper market scenario. The demand and supply in kraft has been a big mismatch during last 3 month, taking a heavy toll on depending industries like decorative laminate or corrugated box industries. Both the segments are hit hard and on verge of closure due to supply and price mismatch. The B grade kraft is selling at Rs 42 a kilogram which was hovering in range around Rs 25, that is around 75% of jump in prices in just 5 months.
The issue is going on for the last 4 months and worsening leading to which not only laminates but also the 30,000 crore corrugated box industry too is collapsing. The 11000 crore decorative laminate industry is captive to circumstances at present due to which, finished product (HPL) prices have risen by 20 to 30% varying product and company. Many MSMEs are making cash losses and won’t be able to sustain.
The Ply Reporter finds 2 key reasons mainly ‘hike in kraft paper cost is due to the China factors and availability of Containers. Also, due to lockdown, collection of scrap paper is not happening due to which the wasted cartons, etc are not coming back into the supply chain for recycling. Paper Mills cite the above two as the two main reasons for their increase in inputs cost and hence the rise in the price of their final product, the Kraft paper.
The most significant reason according to the industry KRAFT PAPER CONTINUE TO BE A PAIN POINT FOR LAMINATE MAKERS is that paper mills are exporting Kraft paper to China due to better prices instead of keeping it for domestic consumption that is leading to shortage. From zero exports in 2018 to China, India exported 2 million tonnes worth of Kraft paper in 2020, which is a whopping 25 per cent of its domestic consumption requirement.“Due to all these factors, the industry is grappling with the shortage of 4.5 million tonnes, that is 60 per cent of its annual requirement of Kraft Paper.
On the other side the kraft producing companies are also cribbing about increase in working capital needs. A 10 tonnes of Kraft paper worth Rs 2 lakhs, now, is almost at Rs 4 lakhs including freight taking the working capital requirement two times says Ashish Gupta, a kraft manufacturer.
Since Indian Recycled Kraft Paper producers have received huge orders of Pulp sheets from China at good rates, is one of the big reasons of shortage of Kraft Paper in India. Producers indicate that the prices will not come down to previous level of below 30 in near future and it will continue to above 30 range
The industry body ILMA has expressed its severe concern over Kraft but it sees no respite until government intervenes to put some restriction on export of recycled pulp for kraft to China. Mr Vikas Agarwal, ILMA president says that “Unless Governments initiate strong measures like ban of exports of Kraft paper to China’, there seems to be no respite in prices for next few months.”