Corrugated paper industry facing dual challenge
Hyderabad: The corrugated paper industry is facing the twin shock of high raw material prices and low demand due to changes in consumption patterns.
In India, there are about 350 automatic corrugators and about 50 of them are in Telangana. In addition, there are more than 10,000 semi-automatic units across the country and the segment generates direct employment for about 4,00,000 people.
Speaking to Telangana Today, Sandeep Wadhwa, president, Indian Corrugated Case Manufacturers’ Association (ICCMA), said the corrugated box industry was in distress over the rising Kraft paper prices, a key raw material to make corrugated boxes, and also supply disruptions due to Covid pandemic. The prices of both domestic and imported waste paper prices have gone up by Rs 4,500-5,000 per metric tonne in last couple of months, he said.
Both China and India import their waste paper primarily from USA and Europe. China has proposed ban of waste paper imports from January 2021 and as a result the Chinese paper mills are taking up the waste paper supplies available in overseas markets pushing up the prices, he said.
Lockdowns across the world have dented the generation and collection of waste. Indian paper mills could not import adequate volumes during lockdown periods resulting in a lower inventory and shortage in some lower grades of paper. Man-power costs, starch, freight and other overheads too have increased. The cost structure of raw material costs has increased by 20 per cent, he said.
“Most of the manufacturing units are in the SME space. While they are not able to get a price increase from their clients, they they are paying a higher price for raw materials to ensure production is not stalled,” he said.
“Corrugated box industry is important for the growth of economy because it helps in movements of goods. However, the demand is not expected lines even during the festive season,” he said adding that FMCG, pharma, beverages, engineering goods, automobiles, food, vegetables and e-commerce have been the key demand drivers.
The industry annually makes about 5-6 million metric tonne per annum and the southern States account for 32 per cent of the demand. The industry is valued at about Rs 24,000 crore. It supports circular economy and most of the waste is recycled. It has seen innovations that lower the raw material usage without compromising on strength. A lot of players have made corrugated beds for use at Covid centers. They also made sanitizer stands, Wadhwa said.
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