Apart from Covid related challenges, the corrugated box industry is facing the twin blow of four price hikes in kraft paper in a short span of two months and substantial rise in other input cost.
On the other hand, kraft paper mills have justified the hike by blaming the sharp increase of ₹4,500-5,000 per tonne in waste paper prices in the last two months.
The China factor
Paper mills across the world are facing huge shortage of waste paper as Chinese mills went on a buying spree on expectation that their government may ban imports from the US, the largest supplier of waste paper.
Moreover, Indian paper mills could not import adequate volume of waste paper during the Covid lockdown, resulting in their inventory drying up completely.
The global restriction on waste collection due to Covid is expected to keep waste paper prices at elevated levels in the near future.
Other input prices rise
Sandeep Wadhwa, President, Indian Corrugated Case Manufacturers' Association, said in addition to the increase in kraft paper prices, all other input cost such as manpower, starch, freight and other overheads have also witnessed a huge increase of 60-70 per cent in last few years.
Harish Madan, Vice-President of ICCMA, said the survival of the industry would be at stake unless the box users including large FMCGs absorb the rise in cost partially.
Over 10,350 small- and mid-sized corrugated box industry, which employs about six lakh people, has a capacity to produce six million tonne of boxes per annum and logs turnover of about ₹24,000 crore per annum.