With a CAGR of 8%, country witnessing solid growth in pulp and paper

According to the IPMA, paper consumption in India will reach 30 million tonnes by March 2027. This includes investment plans by JK Paper which acquired 85% stake in two corrugated packaging firms. Then there is West Coast which plans to put up 200,000 MTPA board capacity through a brownfield route by FY27 and TNPL which plans to put up 200,000 MTPA board capacity through a brownfield route by FY25.

Also there is APP in Maharashtra where a substantial new investment aims to yield a production output of 1.2 million tonnes by 2026/2027. And then there is SPB which plans to acquire a 75,000 MTPA paper company through NCLT and plans to enhance its paper capacity by 66,000 MTPA by FY26.

PrintWeek has been hearing a lot of talk about “paper packaging as a superior alternative to plastic-based packaging”. As part of the paperisation drive, we have heard of Naini Tissues who have opted to partner with Valmet to manufacture flexible packaging paper, illustrating this proactive approach. India's tissue market has Gayatri Shakti Paper Mill which selected Toscotec to install a new state-of-the-art tissue machine. Also Kuantum plans to put up a 25,000 MTPA tissue paper line and increase P&W paper capacity by 16,000 MTPA in FY24.

The point is, domestic paper manufacturers have undertaken large investments and there is adequate domestic production capacity in the country for almost all grades of paper.

According to the latest data issued by DGCI&S, “Imports of all grades of paper have been accelerating in Q1FY24 with the highest jump of 214% seen in imports of uncoated writing & printing paper, 28% in coated paper and paperboard, 15% in kraft paper and 65% in tissue paper imports. Also, India’s imports of paper and paperboard accelerated by 39% at 409 thousand tonnes in Q1FY24 over 294 thousand tonnes in Q1FY23.”

So, how are paper mills performing in these volatile times?

One trend we are detecting is, most paper companies have improved their balance sheet. And on the other hand, a recent report says, revenue of paper makers will crumple 8-10% this fiscal.

The good news is, the Indian paper industry is moving up the technology and sustainability curves matching with the world’s best. Specific water and energy consumption is being reduced continuously, said Vadiraj Kulkarni, the vice president, IPMA during the inaugural of PaperTech 2023 in September. As a result, India’s paper industry has managed to bring down its specific energy consumption by about 20% in the last five years.

According to a paper pundit who spoke to PrintWeek, Market price trends are dependent on imported waste paper prices (this seems to be stable); rates of imported finish paper such as newsprint paper (this decides the rates of Indian recycled newsprint); and rates of imported white grade papers and wood pulp (this impact Indian white grade finish paper of all grades.

What do the Indian paper traders say about the demand for finished paper in the current scenario. Again, two trends are emerging. One is export orders are a bit subdued. But all eyes are on the festival season (Ganapati to Cricket World Cup to Diwali). Plus the animal spirits are revving up for the state election at the end of 2023 as well as Lok Sabha in 2024.

As Ramesh Kejriwal of Parksons Packaging pointed out at the recently hosted Respack conference, “There is a greater demand for a better quality of FMCG products which is marketed through organised retail, e-commerce, rising healthcare spends, over-the-counter medicines and increasing preference for ready to eat foods. These are the key demand drivers for paperboard and mono carton packaging.”

Meanwhile, the demand level for paper is 15% lower than it should be in this season. As was pointed out by two panellists during the Wan-Ifra summit in Kochi, there is sluggish movement in demand and rates of white grade and newsprint grade paper.

On the eve of the IndiaCorr show one discerns Little movement in the packaging segment like Kraft paper. As a leading brown box converter told us, “As per the track record of 2023, it has been observed that kraft paper mills are doing business on an average conversion cost of Rs 9/ per kg to Rs 12/ per kg.” To explain the difference between the purchase rates of corrugated waste paper and sales of finished kraft paper: 18 B.F 120/140 is the conversion cost and this is expected to continue.

Most dealers of grade material are not interested in maintaining additional stock, as they do not anticipate a long-term price hike in the industry. 

India Paper Market Overview, 2022-2028 

India paper market has grown at more than 8% CAGR - 2022-23 to 2027-28.

Paper industry digitalisation could save the pulp and paper industry USD 20-billion by 2025, raising productivity, reducing waste, and ensuring the mills are safe. Today, integrated paper mills have reduced water usage to 40 cubic metres to produce a tonne of paper from the earlier 200 cubic metres. There is a concerted effort to bring it down further.