Paper prices up 10% in 3 months

In the backdrop of rising input costs for the paper and pulp industry, prices of paper and allied products have surged between 3 and 10 per cent across categories in the last three months, with more hikes lined up for the upcoming quarter.

"Writing and printing paper prices have soared by Rs 500-1000 a tonne since January, depending on grammes per square meter (GSM) specifications to Rs 46,000-47,000 a tonne," Narsimha Rao, director, marketing, Hindustan Paper Corporation, said.

While input costs had risen by nearly 16 per cent, prices were up by only 3-4 per cent, he added. Both fibrous and energy inputs now were dearer for manufacturing companies.

Energy costs in terms of both coal and oil had increased by a margin of 7-8 per cent in the last two months, said Ashok Kumar, associate vice-president & unit head of Ballarpur Industries limited. Prices of wood pulp, primarily soft wood pulp, had risen from $500 to around $750 a tonne, said industry sources.

With demand likely to surge with the start of the new financial year, prices of writing & printing paper could go up by a further Rs 1000 a tonne from mid-April or May onwards, said Rao.

Duplex board prices were up by 10 per cent in the last quarter to around Rs 25,000 a tonne now owing to rising prices of waste paper, which is the chief feedstock for duplex boards, said Pradeep Dhobale, president Indian Paper Manufacturers Association (IPMA) and chief executive of ITC's paperboard and specialty paper business.

The last quarter had seen an increase of around 7 per cent or nearly Rs 2,000 a tonne in newsprint prices owing to surging prices of waste paper & wood pulp, the chief ingredients, said Anil Kumar, executive director & chief executive officer of Shreyans Industries, and president, Indian Pulp and Paper Technical Association (IPPTA).

Current international newsprint prices are at $800 a tonne $100-150 higher than in Janaury, and the domestic prices will reflect the spike from April, since the country imports nearly 50 per cent of its newsprint requirements.

This could mean a rise of nearly 11-12 per cent in prices or around Rs 3,000-4,000 a tonne of newsprint in the coming quarter, soaring the prices up to nearly Rs 30,000.

While the net newsprint requirement was estimated to be 2 -2.1 million tonnes per annum, demand was expected to go up by 15-20 per cent this year.

While the Union Budget 2008-09 promised an excise duty cut of 4 per cent on paper, paper board and articles manufactured of non-conventional raw materials, bringing it down to 8 per cent, the benefit was unlikely to be passed on to the consumer.

The decision came as a breather for individual units, who have been grappling to absorb the rising input costs, said industry sources.

The duty cut could mean more healthy bottomlines for the companies, said Dhobale.

It was unlikely that prices of writing paper, duplex boards, coated paper would go down in the coming months, Dhobale admitted. It all depended on the dynamics of demand and supply, he added.