Corrugated box makers say survival is tough

The Uttar Pradesh Corrugated Box Manufacturers Association held a three-day strike from 8-10 March 2021. Addressing a press conference in Varanasi, Rajesh Bhatia the president of the association said, "In 3-4 months, the price of kraft paper which is the main raw material for corrugated boxes in the packaging industry has increased by almost 60%."

13 Mar 2021 | By Sriraam Selvam

Kraft paper prices are increasing on a day-to-day basis

On behalf of the Association, Bhatia requested the Varanasi MP and Prime Minister of India, Narendra Modi, to look into this matter - and take action vis-a-vis the unprecedented rise in the value of kraft paper.

According to Rishabh Agarwal of Mumbai-based Riyo Parapack, the end customers find corrugated box suppliers as one of the very few supply sources where they can get away with their say on prices by unwarranted pressure. He said, “Unfortunately, they are probably not realising the long-term repercussions of availability and quality which is bound to impact their main product in a major way.”

Mitul Shah of Supack Industries in Rajkot said, "As a corrugated box manufacturer, it has been very difficult to make the brand managers and the corrugated users understand the huge difficulties we are facing due to paper price hike and also the kraft paper availability issues."

Ramgopal Agarwala of Pioneer Packaging concurred. He said, "Kraft paper prices are increasing on a day-to-day basis. Whereas the prices of boxes are not increasing." Agarwala felt, "This is leading to a huge loss for box makers. If this continues, there will be a permanent closure of many units."

The reason is clear. Many corrugated box manufacturers have invested in infrastructure and technology to meet the quality and quantity demand of the corrugated boxes required by the user industry. "This has increased our cost of manufacturing as well as other compliances," said Mitul Shah.

“If the situation continues like this in the coming months, I fear it will break the back of the corrugated packaging industry to a level where an entire generation of entrepreneurs will lose interest in investing in a corrugation plant. India has a long way to go if it has to come to world standards of quality corrugated boxes and this situation is not helping at all,” said Rishabh Agarwal.

Sandeep Jain of Manali Cartons said, "The kraft paper mills have formed a cartel. All mills have a uniform stance on the price increase which is suspicious. He said, "There is a shortage because these domestic mills are exporting paper to China and South Korea…"

He added, "This rise in exports has resulted in a shortage of recyclable paper scrap which otherwise would have been generated locally if the produce was sold locally."

Industry leaders feel, if this continues, the packaging supply chain could come to a standstill in India.

Dot Printer's Tushar Dhote in Mumbai said, "Paper mills are citing various reasons such as fewer imports due to restrictions on China. Also, the European mills are producing less; availability of containers as well as logistics and power costs are impacting the final pricing."

"They are hedging the losses incurred during the initial period of the lockdown in 2020," Dhote said.

Jayraj Salgaokar of Kalnirnay in Mumbai said, "The top cargo shippers in the world have stopped carrying waste paper used for pulping. This makes the cargo prices higher and the availability dearer." Also, the global shortage of shipping containers has led to a sharp rise in transport costs.

Salgaokar added, "China, as a policy matter, has completely stopped deforestation. This has resulted in the rise in imports of pulp and paper." He felt the government should consider reducing exports of pulp and paper. 

Agarwal said that the root cause for all the woes - the pandemic, waste fibre and freight rates, is China.

Mitul Shah echoed the industry sentiment when he said, "Unless we are given our fair share of price increase it will be very difficult for us to survive this catastrophe."