Paper industry likely to witness price correction in days ahead
The Indian paper industry, which was one of the worst hit in the wake of the Covid-19 pandemic, has been witnessing signs of revival on a month-on-month basis. Apart from a recovery in demand the industry is also likely to see some price correction happening moving forward.
According to Harsh Pati Singhania, Vice Chairman and MD, JK Paper and President, AIMA, while the demand for paper was impacted during the lockdown with most schools, colleges and other educational institutes closed; there was traction in demand for packaging boards.
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“Paper industry was one of the most affected (during the pandemic) as educational institutes including schools, colleges and other institutions were shut down. Education is one of the big drivers for the paper industry in India. But now as we move along educational institutes, particularly in some region, have been allowed to open and may be by next session others should also open so the worst should be over and quarter-on-quarter or month-on-month we are seeing an uptick,” Singhania told BusinessLine
The increased reliance of people on packaged goods and products during the lockdown gave a fillip to the packaging board business. This apart, the global trend supporting biodegradable and sustainable packaging has also augured well for the industry. J K Paper has been able to operate its plants at more than 100 per cent capacity utilisation and has also been selling large volumes both in export and domestic markets across categories.
“On a quarter-on-quarter basis we have been improving and with demand revival and price improvement we would expect our performance to be better,” he said.
The company's ongoing Rs 2000 crore expansion project for increasing the packaging board capacity at the plant in Gujarat is likely to come onstream by the middle of this calendar year. It had also acquired debt-ridden Sirpur Paper Mills through the IBC process and that company is also now on the revival mode.
These major growth initiatives which are underway will lead to growth as long as J K Paper is concerned, he said.
Price correction
Due to the shutdown, the prices of finished goods declined in India and in some categories it reduced substantially. Though there has been an upward revision in prices in the last few months, however, it is not back to pre pandemic levels. The industry is however doing better and should improve moving forward.
Prices had gone down by nearly 15 per cent during the lockdown and from there it has seen an uptick by around four-to-five per cent in the last few months. Though they have still not reached the pre pandemic levels, however, it is expected that prices would improve moving forward.
“Global pulp prices have gone up a lot in the recent months and that will have a bearing on paper prices. So there is a need and requirement to take price correction in the next one or two quarters given the pulp prices where they are now,” he said.
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