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With imported pulp prices on a high, paper-makers feel the pinch

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High-end board and packaging-paper manufacturers are likely to feel the impact of surging prices of imported pulp, which hit a seven-year high and are expected to remain elevated for some time, according to industry sources.

On the other hand, paper manufacturers with captive pulp production facilities are on a strong wicket.

Hardwood pulp prices range around $770 a tonne and softwood around $860. But with most of the softwood pulp requirement met through imports, the industry will feel the impact across the board, sources said.

A leading pulp importer said the buoyancy reflects the situation in the international markets with prices driven up by demand from China. It has banned use of ‘mixed paper’, essentially paper waste. This has put pressure on pulp supplies, coinciding as it also does with maintenance shut-down at some large pulp manufacturers worldwide.

Prices are bound to remain high in the current quarter, but some relief may be expected subsequently, said sources.

More than in printing and writing paper, where domestic pulp capacity is available, high-end board and packaging-paper manufacturers are likely to feel the pinch as most of the imports are of softwood pulp and BCTMP (bleached chemi-thermo mechanical pulp). This will impact large players such as ITC, TNPL, JK Paper, Century and Emami depending on their level of imports. Pulp prices are up by about $240 a tonne over a six-month period.

Cost pressures

Paper prices have also moved up in the past couple of months due to cost pressures — prices of fuel, including coal and furnace oil, and chemical inputs have spiralled — said the sources. Printing and writing paper are priced at ₹65,000-68,000 a tonne. Paper mills have offset the lows of previous quarters, but whether there is headroom for further increases remains to be seen, said an industry representative. Demand has been buoyant with the peak academic season round the corner.

According to a leading manufacturer, paper-makers are bound to pass on the raw material cost. At about $800 a tonne, internationalprices are buoyant; so export will provide some relief.

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