As paper prices go up, paper stocks rally between 8-15%

Among the paper mills, over the last one week, JK Paper saw a 17% rise in stock, followed by Orient Paper (16%), Emami (12%), West Coast Paper Mills (11%), Seshasayee Paper and Board (10%) and Andhra Paper (8%).

As it has been happening for quite some time now, the rise of raw material prices, including chemical prices, and logistics, have forced the paper mills to increase prices to an all-time high. To put this into perspective, raw material prices have increased from 40 to 70% on a month-on-month basis.

Meanwhile, the market is witnessing a surging demand for paper after the reopening of the education institutes. Additional demand is also coming from the FMCG sector.

According to JK Paper sources, shared with news media, the demand for the printing segment has reached almost 90% of the pre-Covid level. And, going forward, the company is expecting a 10-20% price increase. 

Meanwhile, on the international level, paper manufacturers are implementing a further swathe of surcharges. At least one continental mill has been temporarily shut down after spiralling energy costs made its operation uneconomical.

Paper industry sources said that UPM, where strike action in Finland has now reached 70 days, is bringing in a fresh surcharge of 145-pound/tonne from 16 March.

Regarding the unavailability of raw material, the Federation of Paper Traders Association of India (FPTA) had earlier said that supply of old newsprint had dropped 35% as its collection declined due to the Covid pandemic. Also, the problem in collecting waste paper had led to a huge shortage affecting kraft, duplex and other such papers. 
Also, the A-grade mills that depend on pulps have been affected, thus resulting in the price rise. 

(Courtesy: Agencies)