Paper companies are planning to raise writing and printing paper prices by Rs 2,000-2,500 a tonne, or 5-6 per cent due to higher input prices, slowdown in imports and a seasonal demand for school books. Currently, prices are in the range of Rs 40,000-44,000 a tonne.
Globally, pulp prices have been rising. Hardwood pulp prices, for instance, have increased from $550 to $850 a tonne since December. This led to a further increase in paper prices, which are now ruling in the range of $1,000-1,100 a tonne. In the Indian context, even though the rupee has appreciated, import of writing and printing paper, mainly copier, have turned costlier and come to a standstill,” said Shreeyash Bangur, director (corporate), Andhra Pradesh Paper Mills. Imported paper is costlier by 7-8 per cent compared to locally manufactured paper.
While international prices have firmed up, the impact of higher input cost is yet to be fully passed on by Indian companies. A number of producers are dependent on imported pulp or waste paper while most depend on imported coal. “A further price increase of Rs 2,000-2,500 a tonne is likely over next few weeks,” Bangur added. A price increase of Rs 1,500-2,000 a tonne was taken in the previous quarter.
Industry officials said that global pulp production has halved due to higher cost of wood and an earthquake in Chile which is a major pulp producer. Consequently, a number of international paper producers shifted to waste paper, whose prices have also increased. In India, demand has been buoyant due to a reviving domestic economy and government focus on education. Various segments of the writing and printing paper such as copier and coated are growing in double digits.
However, a capacity addition of around 3,00,000 tonnes is expected in the current year from West Coast Paper and Tamil Nadu Newsprint and Papers. While the addition of new capacities could put some pressure on prices, industry experts believe that the surplus can well be exported if the current price buoyancy continues in global markets.
“If all capacities come up in time, we expect a price dip. However, the demand will catch up with the increased supplies in a period of three-four quarters. Moreover, if international prices remain firm, some of the surplus quantity can be exported,” said V Kumaraswamy, chief financial officer, JK Paper.