Buoyed by the school season demand for printing and writing paper, mills are set to hike prices. But in the backdrop of an overall slowdown in demand, the industry is not optimistic on the outlook for the rest of the year.
Leading manufacturers attribute the reasons for the hike to increasing costs of coal and fuel. The school season demand for notebooks and textbooks for the new academic year in June is an opportunity to offset the cost increases.
Price hikes
JK Paper has announced a price increase of Rs 1,500 a tonne for coated paper, and Rs 1,000 for high-end copier and specialty paper, effective from January 1. In December 2011, the company had increased coated paper prices by Rs 1,000 a tonne following good demand and order book position.
Copier paper and printing/writing paper prices will go up further by the end of this month or early next month, thanks to the notebook season and the proposed State Assembly elections. There is an opportunity for paper manufacturers to recoup the increasing costs, JK Paper has said.
Leading manufacturers acknowledge there could be a price increase in the coming weeks.
The price of coated paper rules at Rs 50,000-52,000 a tonne, and printing and writing paper at Rs 42,000-45,000 a tonne, which is 20 per cent lower than the prices a year back.
The overall slowdown has resulted in demand dropping in both the domestic and international markets.
This has resulted in a steep drop in the prices of raw material pulp and paper as well. The outlook for the rest of the year is not optimistic say manufacturers.
Rupee slide
The depreciation of the rupee against the dollar has presented a mixed bag of opportunities for the paper industry.
For the importers of raw material pulp, the drop in international prices has helped to offset the steep hike in costs. This has helped some of the large importers such as BILT, JK Paper, ITC, Century, Pudumjee Pulp and Paper.
According to pulp importers, hardwood pulp is around $580 a tonne after dropping to a low of about $500 till a few weeks back. A year ago, the prices were around $750-800. Softwood pulp is around $650 a tonne against $900 a year back. Prices have gained some ground in recent weeks on supply being curtailed by overseas manufacturers.
For paper exporters, the fall in product prices has offset the benefit that exports should have given them. For instance, last year printing and writing paper exports fetched about $870 a tonne when the value of the rupee was Rs 44 a dollar but now the export prices are around $770, but the rupee is around Rs 52 to a dollar.
Some of the biggest exporters are Andhra Pradesh Pulp and Paper, BILT, Century Pulp and Paper, Tamil Nadu Newsprint and Papers and the West Coast Paper Mills.