Costs of corrugated paper have gone up by over 30% in three months

High and volatile crude prices have hit the corrugated packaging industry very hard.

Corrugated paper is used for packaging in various industries such as food, processed foods, fresh vegetables and fruits, white goods, appliances, engineering etc. The industry is a small scale sector and is suffering huge losses, because of the volatile prices of Kraft paper, which is the major raw material.

Pradip Bosmaya, president, Western India Corrugated Box Manufacturers Association (WICBMA) said, “Eight-five percent of all products are packed in corrugated boxes. Over the last three months, prices of Kraft paper have gone over 30% hitting the industry very badly.”

He said the major culprits are the paper mills in the Vapi area of Gujarat. Most of the paper supplied to Mumbai and Gujarat are sourced from these mills and they are the ones increasing the prices frequently and the rest follow the trend. 

Shirish Desai, president, Vapi Industries Association said, the paper mills are also at the receiving end as their raw material costs are shooting up.

He said, “Due to the volatile crude prices, the input costs or other raw materials including chemicals, etc are fluctuating every day.” Desai doesn’t foresee any solution to the problem in the near term and said the corrugated paper manufacturers wants the paper mills to keep the prices fixed for few months, but they are helpless and pass on the rise.

Pankaj Shah, chairman of the R&D centre of the WICBMA said, a few mills might have to shut down very soon due to successive heavy losses and alleged the paper mills in Vapi are shutting down their production from time to time to increase the prices artificially.

Bosmaya alleged that paper mills have unilaterally increased the prices of Kraft paper amounting to Rs 4,000 per tonne to Rs 4,500 in the last six months. Besides, prices of starch powder, has gone up by about Rs 2,500 to Rs 3,000. Stitching wire prices have gone up by about Rs 50 to Rs 75. Transportation and labour costs have been going up continually, he said.

The corrugated packaging industry is contract bound with their customers and cannot increase the prices as soon as it happens. “Our customers - Hindustan Lever, Amul, to name a few have contracts signed for a fixed number of months and the sudden rise has to be borne by us severely impacting our bottom-line,” Shah said.

He said that the paper mills must fix the price for a fixed number of months, so that we could breathe easy. “The paper mills must understand our situation and should keep the prices fixed for a certain period.”