Category Intelligence on Recycled Kraft Paper Price Trend India covers the following
Kraft paper is estimated to grow at a CAGR of 9.3 percent from 2018-2020 . The market is highly fragmented in nature. Most of mills are located in Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Madhya Pradesh, Punjab, Haryana. For Indian paper mills, export business are emerging as an opportunity due to high margins and is expected to grow further due to increasing demands.
Kraft Paper Raw Material – Supply & Demand
In India, the recovery rate of recovered paper is less around 25-27 percent, the remaining is being imported making domestic supply less than the demand. India mainly imports from the US followed by Europe and Middle East, so, any fluctuations is imported raw material prices are expected to impact the prices . The Chinese Government's ban on waste paper have resulted a drop in prices at global level.
Raw Material Cost
In India, waste or recovered paper is the major raw material and accounts for 60-70 percent of the total kraft paper production cost. Fluctuations in imported or domestic price is directly affecting the Kraft Paper prices. Price hikes in recovered paper had a severe impact on kraft paper thereby increasing a shoot in the prices is 2017
In India, paper mills are still dependent upon coal for electricity generation which is majorly being imported from Indonesia and South Africa. The imported coal prices had increased in 2017 and has also witnessed a price hike in 2018 until September. Since utility costs comprises of 5-6 percent of the production cost, so increase in utility cost will have a medium impact on price increase as compared to waste paper.
Demand and Supply Dynamics
Demand from domestic and exports consumption is also another factor which might have a high impact on kraft paper price if the market conditions are tight. According to Indian paper mills , exports of kraft paper have increased drastically in 2018 due to high margins and demand from countries such as China, Sri Lanka, Middle East, African Countries. Ban on waste paper in China due to environmental regulation and the US-China trade war are expected to be one of the reasons for high demand from these countries especially China
Strengthening of USD against INR will also have an impact on the domestic price as compared to waste paper price. Until October 2018, the USD-INR exchange rate increased by 11 percent when compared to 2017, however, the current prices of Kraft Paper are lower than the previous year due to decrease in recovered paper prices
With the growing Indian economy and the increasing demand, India imports a large quantity of recovered or waste paper. In 2018, Kraft paper prices have stabilized after a period of high volatility due to sudden hike in raw material prices last year. 2018 is an unprecedented boom for Indian manufacturers due to lower waste or recovered paper prices.