Paper dominates the start of the new year

Asia Pulp & Paper Group (APP) is setting up India’s largest paper mill in a single site with a capacity of a five million tonnes per annum in Ramayapatnam in the Coastal Andhra’s Prakasam district. The Andhra Pradesh Economic Development Board CEO J Krishna Kishore while talking to PrintWeek said, the USD 3.5 billion investment in India’s biggest single site, greenfield project to-date. 

The proposed mill is expected to produce pulp, paper and board. The construction process should begin after 12 months, once the legalities and paperwork are cleared.
APP is not the only paper mill which is in the news. The past few months have been busy-busy with a slew of announcements.

JK Paper acquired Sirpur Paper mill with an installed capacity of about 138KT (about 30 per cent of JK current capacity). In addition, there shall be the completion of a brownfield expansion plan of 200,000 tonnes in Gujarat. JK Paper is a leader in India's copier paper segment with 23 per cent market share, the second-largest in the coated paper segment (12 per cent market share) and a leading player in the packaging board segment, having a market share of 11 per cent.

Emami said it will invest Rs 2,000 crore for a greenfield multi-layer packaging board plant at Bharuch in Gujarat with an investment of Rs 1,000 crore. Spread over an area of 103 acres, the plant would have a capacity of 2.25 lakh tonne per annum (TPA) along with an 18 MW captive power plant which would entail an investment of around Rs 1,000 crore in the first phase. Today, Emami Paper is the largest producer of newsprint and one of the leading producers of multi-layer packaging board in India with a production capacity of 3.35 lakh tonnes per annum.

ITC Paperboards & Specialty Papers Division (PSPD) has been building capacity with the addition of a virgin board paper facility at Bhadrachalam in Telangana and rebuilding specialty papers division at Triveni unit near Kolkata. The new virgin paperboard facility will add to the existing capacity of ITC PSPD, which is a leader in the packaging segment. This is an investment of about Rs 1000-crore for virgin board and specialty paper manufacturing.

Tamil Nadu Newsprint and Papers (TNPL) one of the largest bagasse- a residue of sugar cane, as a primary raw material converter in the world invested in a greenfield factory in Tiruchi district in Tamil Nadu with a capacity of two lakh tonnes a year. TNPL will make a high-end, multi-layer double-coated board for use in the packaging industry and will be built at a cost of Rs 1650-crores. It will manufacture double-coated white backboard, folding box boards, and liquid packaging boards. The plant built on a 303 acres area will cater to the needs of pharmaceuticals and healthcare sector, food and cosmetics, and publication industry.

There is a lot more action.
Today, India is the fastest growing market for paper globally and is expected to grow over six percent per annum. With a domestic turnover of Rs 50,000 crore, it accounts for three percent of the world’s production.

On the global front, a number of mills have shut down, which means there is no oversupply hang and that should augur well for Indian paper companies over the next two years. Plus there has been a paradigm shift in packaging consumption owing to an e-commerce boom. The paper industry is bullish when one considers that e-commerce sales in China is estimated to be USD 1 trillion. The Indian e-commerce market is at USD 20 billion. A lot of demand ...

 Which is why paper mills in India have their profitability on an uptrend. H1 FY19 earnings of paper companies have reaffirmed the growth momentum. One reason is, the Government has imposed an anti-dumping duty (ADD) on certain kinds of uncoated paper from Indonesia, Thailand and Singapore for three years in order to protect the interest of domestic companies. Currently, the duty stands at a difference between the landed value of the product and USD 855/tonnes. Above all, pulp prices continue to rise to unprecedented levels due to demand and availability.

Products affected include all woodfree coated and uncoated grades in reels, sheets and cut sizes, as well as office papers and a number of other board and speciality products.
I’ve counted four paper price shifts in the past few months. Please fasten those seatbelts!