Corrugated box industry hit by rising kraft paper prices

The Rs 18,000 crore corrugated box industry is in dire straits due to rising kraft paper prices and supply disruptions, an industry official said.

The corrugated box industry in the country with 300 automatic units and more than 12,000 semi-automatic units is facing imminent closure on account of rising kraft paper prices and supply disruptions, Indian Corrugated Case Manufacturers Association (ICCMA) president Kirit Modi said in a statement issued here.

"The industry is staring at huge losses on account of frequent price increases in last one month by paper mills. To make the matters worse, the kraft mills are closing their plants every month on pre-determined dates thus creating massive supply disruptions. Both these actions have caused extreme volatility," Modi said.
 

Kraft paper mills in the western zone went for first closure from January 27-31 this year, second one from February 11-15 and they have announced the next from March 11-15, the statement said.

Paper mills in other zones are also closing in sync with West zone. South zone mills also closed their plants from February 11-15 and North zone has announced their closure from March 1 to 5.

Under these circumstances, the industry does not have any other option but to pass this increase to consumers to sustain this impact, he said.

The industry is looking at a minimum of 12 per cent price increase immediately on boxes so that the box industry is able to cover supplies of kraft paper well in time to avoid any disruptions in the supply chain, Modi said.

The industry, which is employing over 6,00,000 workforce is playing a pivotal role in the Indian economy by producing almost 52,00,000 tpa boxes with the total market size of Rs 18,000 crores per annum, it said.

The cumulative impact of the price hikes on the corrugated box industry, which is already in the doldrums, is to the tune of 12 per cent minimum all across India.

In addition to the cost impact, there is a serious issue of availability of kraft paper supplies in time to the industry due to the frequent closures by all kraft paper mills in various regions, it said.