Tuesday October 23, 11:07 AM
Paper prices seen up on high input cost, demand |
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By Swati Pandey
MUMBAI (Reuters) - Indian paper makers are set to hike prices again in the quarter to offset rising input costs and also as the gap between surging demand and weak supplies widened, industry players said.
India's largest paper producer Ballarpur Industries Ltd raised uncoated paper prices by 500 rupees a tonne in October and Star Paper, West Coast Paper and JK Paper Mills may also hike prices, they said.
"There's a tremendous amount of pressure on the cost. Pulp prices are going up, there's a pressure on coal prices," Rajiv Shivpuri, vice president, marketing, JK Paper Ltd, told Reuters over phone.
Pulp prices have shot up 30 percent to $680 a tonne in two months, Shivpuri said.
"Softwood pulp prices have increased at a faster rate and could rise further because there have been some pressures on supply from producers," Anil Pahwa, chief general manager at Ballarpur, said.
Brazil, Argentina, Sweden and North America are among the major pulp producers. Besides pulp as a raw material, the paper industry uses coal for its fuel requirements.
DEMAND SURGE
Paper mills' expansion plans could not keep pace with the surging demand, necessitating a revision in prices in the short to mid-term to maintain parity, industry officials said.
Domestic demand for paper is seen growing at 11-12 percent year-on-year, Rohan Gupta, an analyst with research brokerage Emkay Shares said.
The paper industry is expected to grow at 1.1 times of the gross domestic product and paper demand is set to outstrip production at this pace, a study by the Indian Paper Manufactures' Association (IPMA) showed.
"If you see our current consumption of 8.5 million tonnes and the growing demand of more than 9 percent annually, we need to go for capacity expansions now to be able to fulfill our needs ahead," Pradeep Dhobale, president of IPMA said.
"Even after all these capacities come into play we will have a million tonnes shortage by 2011. So, there's still some more scope for adding capacities," he said.
India's paper production currently stands at 8 million tonnes from 6.6 million last year, data from the IPMA showed.
Ballarpur will commission its new unit with a capacity to produce 190,000 tonnes coated paper by October 2008 and its uncoated paper mill is expected to begin production by April 2009 only.
JK Paper plans to start production of a 60,000 tonnes a year packaging boards plant within 3-4 weeks, V Kumaraswamy, vice president of finance of the company, told Reuters over telephone.
Star Paper Mills said it is exercising various possibilities to set up a new mill to expand capacity, but the commissioning would take 2-3 months time.
"We have already increased our capacities but a quantum jump, an expansion, would take some time," Sharad Dube, vice president for marketing of Star Paper Mills, said. "
"A lot of capacities that have been talked about has still not come into the market. They will be a little staggered. We don't expect any major supplies coming this year. That's why prices will remain firm," Ballarpur's Pahwa said.
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