June 7, 2023

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Resurgent Upward Price Trend In Kraft Paper Prices Brings Indian Corrugated Box Industry On Verge Of Closure

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1 year ago dsprime

New Delhi (India), March 8: The Corrugated Box Industry in the country with 400+ Automatic Corrugators & more than 10,000 Semi-automatic Units, mostly in MSME sector, is facing immense stress on account of the unprecedented cost escalations and resultant supply dislocation over last 2 years. The situation has aggravated as the prices of all grades of kraft have gone up by almost 25% in recent months, thus taking total increase to almost Rs. 20 per kg over last 2 years.

Some of the recent developments behind the current crisis: –

Imported Waste Cuttings: Mr. Sanjay Rajgarhia, President – ICCMA informed that  One of the major raw materials for Kraft paper mills has more than tripled in last 2 years – from around US $ 100 pmt to US $330 pmt now. Containers’ Freight has multiplied almost 4x and Logistics dislocations on top are creating stock-out situations. Domestic waste paper prices are also shooting up in line with imported waste cuttings adding fuel to the fire.

Levy of Customs Duty on Imported Waste Cuttings: To make matters worse, in the recent Budget of 2022, Govt. of India levied 2.5% customs duty on imports of all types of waste cuttings.

Energy Prices: Oil prices have crossed $100 and Coal prices is trending upwards sharply once again. Freight and Transportation costs are taking the full brunt of energy cost hikes as a result of Energy crisis.

Other Inputs: Starch cost has skyrocketed and the price of the same has increased by almost Rs. 8 per kg in last 4/ 5 months. Similarly, other inputs like ink, wire, etc. are going up in sync with the strong upcycle in all commodities. Conversion cost of box units have raised by almost 50% after including increases in Starch & Manpower cost, stated Mr. Kirit Modi, President Emeritus – ICCMA.

GST Increase on Corrugated Boxes from 12% to 18% w.e.f. 1st Oct 2021 Combined with Kraft paper and other input cost hikes, this was the last thing which has broken the back of the Industry. Box Units need to raise almost 50% additional Working Capital funds to even sustain current level of operations.

International Kraft Paper and Pulp Prices are at all-time high- Besides taking massive price increases, all International Paper and Pulp Mills are fully booked and quoting longer lead times.

Corrugated Box is an eco-friendly Industry that consumes about 7.5 million MT per year of Recycled Kraft Paper and produces 100% Recyclable Corrugated boxes to constitute a market of Rs. 40,000 Crores.

The Industry employs a workforce over 7 Lakhs and plays a key role in the Indian Economy by enabling the smooth functioning of supply chains for Essential Goods, which is particularly critical in these volatile times.

APPEAL from Indian Corrugated Box Industry

ICCMA (Indian Corrugated Case Manufacturers Association) on behalf of entire Corrugated Box Industry is appealing to its’ esteemed clients to save Corrugated Box Industry by granting at least 20% on the total cost of boxes, according to Mr. Harish Madan, Vice President to cover the hikes in Kraft paper prices and conversion inputs to remain viable.

The Corrugated Box Industry’s healthy growth is of vital importance, not only to keep all manufactured goods supplied with sustainable packaging but, also essential for furthering our honourable Prime Minister’s cherished   dream of MAKE IN INDIA.

www.iccma.com

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