A general blog which attempts at creating a community of printers across Asia. Other blogs will get into some of the 'how to' and technical issues.
Friday, 13 January, 2012
Indian paper industry growth and the price situation
Turmoil in paper prices
The paper industry is one of the rapidly growing industries in India. There are approximately 1000 paper mills in India in both organized and unorganized sectors. Of these 1000 paper mills, around 800 are in the organized sector and nearly 200 are in unorganized sector. According to our recent research, these mills on average are currently utilizing approximately 75% of their capacity. Capacity utilization in the paper industry has a positive correlation with the quality and timely availability of inputs.
There is a common or widely held perception that the Indian paper industry generally grows at the same rate as the GDP growth rate. If one goes by this perception, then the paper industry should be experiencing a slowdown in the current financial year, that is 2011-12. However, if one looks at the growth pattern of leading paper companies in India more closely, then this popular notion seems to be mistaken.
The turnover of the top 20 paper manufacturers that have a 20% share in the total production is growing at a healthy rate of 13 to 14%. In addition, 8 to 10 of the top manufacturers including JK Paper, BILT and Khanna Paper Mills are planning to enhance capacity by more than 2 million tonnes in the next 2 to 3 years. The leading Indian mills are making constant efforts for backward integration so that they can achieve easier and more timely access to good quality raw material, including pulp, fibre, coal, chemicals, wood and electricity at reasonable prices.
Paper prices Although, according to IppStar’s research, the paper industry is growing faster than the GDP, it is not totally unaffected by either the economic slowdown or other macroeconomic factors, such as inflation and rupee depreciation. The rising prices of key inputs have again prompted the Indian paper manufacturers to increase the prices of coated, high-end copier and specialty papers by Rs. 1000 to 1500 per tonne from 1 January 2012. Coated paper is now available at Rs. 52,000 a tonne, whereas high-end copier and specialty papers are available at Rs. 62000 and Rs. 56000 a tonne respectively. BILT’s group director, Finance, B Hariharan, in an interview given to the CNBC news channel in April 2011 said that the prices of all types of paper are likely to increase in the near future. The current increase in paper prices may be a result of cost-push inflation, but it also indicates that paper demand is increasing and there is considerable increase in the export of copier and printing paper due to the rupee depreciation of the past 10 weeks.
On the price side there seems to be some turmoil if not chaos. On the one hand, Indian paper manufacturers have increased the prices of coated, specialty and copier papers. On the other, China, the largest exporter of coated paper to India, has slashed the prices by 20%. Currently, Chinese coated paper is available at Rs. 50,000 a tonne, whereas coated paper imported from other countries is available at Rs. 51,000 per ton. Thus, domestic coated paper is priced Rs. 2,000 higher than Chinese coated paper. It seems that Chinese mills may be targetting the Indian market because the USA and some western countries have imposed anti-dumping duties on paper imported from China.