Corrugated box makers hit by input price and supply issues

An estimated 12,000 corrugated box manufacturers face the threat of closure due to a sharp increase in raw material prices and their inability to pass this on to consumers. 

Kraft paper, 70 per cent of the input, has risen by 12 per cent or Rs 3 a kg over a fortnight. Its manufacturers have announced a further price hike by eight per cent or Rs 2 a kg in March.

“The corrugated box industry is staring at huge losses on this count. And, has failed to pass on this raw material price hike to consumers i.e. large corporates who book in advance on a long-term contract. To make matters worse, kraft mills are closing their plants every month on pre-determined dates, creating massive supply disruptions. There seems no stability in sight in the near future, in terms of price or timely supplies,” said Kirit Modi, president, Indian Corrugated Case Manufacturers Association.

Kraft paper mills in the western zone (Maharashtra and Gujarat) observed their first closure between January 27 and 31, and then between February 11 and 15. Further, they have announced closure between March 11 and 15. Mills in other zones are also closing in sync with their counterparts here. South zone mills closed their plants from February 11 and 15 and the north zone has announced closure on March 1-5.

Corrugated box makers face stiff competition from plastics packaging and say this is another reason for inability to pass on the raw material price hike to consumers.

“There are around 300 automatic units and a little more than 12,000 semi-automatic units facing imminent closure on account of these disruptions,” said Modi. This industry says its employs 600,000 people, producing 52,00,000 tonnes annually of boxes worth Rs 18,000 crore. And, it says its products are fully eco-friendly.