The government’s plan to import more coated paper has added to the pressure of the domestic industry, forcing its captains to take a series of price cuts in the current financial year and yet not finding business comfortable. Imported coated paper currently sells at prices that are seven-eight per cent less than that of the locally manufactured variety, courtesy a steady fall in their prices over the last few months.
The volume of imported paper has gone up steeply compared to last year. While no ready data is available, an industry official said the monthly average of coated paper import so far this year has been 15,000-16,000 tonnes as against 8,000-9,000 tonnes last year.
Leading the list of the importers is China, followed by Indonesia, according an industry official. Both had till recently been a major exporter of the product to the US and Europe. Things went against them earlier this year when America and the countries of the Western continent imposed high anti-dumping duties on them. The two East Asian nations have since been pushing coated paper into India in a big way.
In India, this has impacted the margins as well as sales of the country’s two front-runners in the business: Bilt and JK Paper. Under pressure, both companies went for price cuts three times so far this financial year. The domestic price of coated paper has, since April, slumped to Rs 51,000 per tonne.
The imported variety, still, has an edge in sales as its price is pegged at Rs 47,000 per tonne. The market size for coated paper in India is estimated at 480,000 tonnes. Of this, 375,000 tonnes is produced locally by Bilt and JK Paper. The rest are small mills. Imports meet the gap.
Of late, though, the rise in imports has left the game tough for domestic producers when it comes to maintaining sales and stabilising prices. They are also offering discounts to select buyers even as they are troubled by a sharp increase in input costs, (due to higher prices of coal, chemicals and wood besides freight charges).
Pressure is also being felt on uncoated paper, though here the trigger is not imports. A prominent dealer for a Mumbai-based paper company said the demand had slowed down due to campaigns on saving of trees, permission to have electronic annual reports and a slowness in overall economic activity. Coated paper prices have come down by around Rs 2,000 to Rs 50,500 per tonne. Also, he said, the dealers’ positions have turned worse due to falling prices as they have to bear a large part of that burden.