PR Ray (PRR): As a publisher, we have been warned to plan our paper requirements months ahead, with reports of gazumping on previously agreed mill prices and a global squeeze on the availability of some paper types. Our print production head has been told to order paper stock for 14-16 weeks ahead. How grim is the situation in India?
JPN: You are using coated paper for printing of your magazine and since there is a serious disruption in the availability of containers that has created a supply chain gap, there is a mismatch between the coated paper availability and consumption. As a result, the availability of coated paper is an issue in the market.

PRR: Is there any hope?
JPN: The situation will only be improved once the disruption of container availability is resolved.

PRR: Some manufacturers are quoting price ruling at the date of dispatch. One paper industry expert said the situation was “as bad as it was in 1995-96”. What are your views?
JPN: Yes! Global disruptions in various segments such as container availability, fuel cost, and availability of coal have created a complete disturbance in the supply chain of input material of the paper. As a result, prices of these input materials are increasing overnight. This is forcing paper manufacturers to decide the price while dispatching their materials. The input price changes are so sudden that the paper manufacturers are unable to plan the cost of production well in advance.

PRR: Paper prices that were agreed earlier in the year have also been revised upwards in some cases. What is the reason for this spike in demand? Is it due to millions of tonnes of commercial and publication papermaking capacity being converted to packaging grades and some big brands moving away from plastic?
JPN: The change in paper prices in the market is due to the high prices for pulp, chemicals and logistics, containers availability and other factors like, fuel cost and import freight. This has forced paper manufacturers to push up the prices instantly in the market. Since there is a scope in the packaging segment due to plastic substitution, few paper manufacturing capacities have gotten converted into the packaging segment. This has also created a supply chain mismatch, and this is also the reason for increasing prices of certain variants in the market.

PRR: To what extent pulp prices have contributed to this latest crisis? What should the print and packaging industry know about what is transpiring behind the scenes?
JPN: I would not say this is a crisis. Yes, prices have gone up in the paper industries as well as in other industries due to input price hikes. In the paper industry, especially in the packaging segment, the pulp has played a major role in increasing prices. This situation will remain as such until container availability, fuel cost (and availability), chemical prices and logistics costs are not streamlined. Few of the aforementioned factors are going to take some time to get streamlined. Until that time, the turbulence in the paper industries, as well as other industries, will remain.

PRR: PrintWeek’s colleagues in UK and Germany have shared with us that SCA has stopped making publication paper altogether in Q1, while Stora Enso is closing its Kvarnsveden and Veitsiluoto mills during this quarter – taking out more than a million tonnes of paper production in the process. What kind of impact is this having in paper supply?
JPN: Paper was growing at 5.5% in the pre-Cvoid era in India. We believe post-Covid, it’s likely to grow at 4.5% and that supply can be easily met by Indian paper manufacturers. Whereas in other countries paper growth is flat or it’s in a decreasing trend. So, closing the paper manufacturing by a few mills will balance the demand and supply curve in those countries, too.

PRR: Global supply chain disruptions have been a challenge for the paper and board industry currently, with everything from newsprint to coated wood-free and all in between being in a tight supply situation. How does the association plan to address this situation? Is there any proposal to the Government of India (GOI)?
JPN: All the aforementioned factors are on a global basis so the role of GOI is minimal during this crisis. Associations are submitting their representations to GOI as and when they feel that GOI can streamline or resolve the issues.

PRR: Meanwhile, what are the cost pressures that Indian manufacturers are experiencing due to pulp, fuel, recycled fibre, and chemical cost inflation to levels. How are you coping?
JPN: Yes, all these factors are putting paper manufacturers under immense pressure, and they don’t have any other option rather than passing it to the customer. As a result, the market is seeing sudden price hikes in all paper variants.

PRR: How should the paper industry (and print and packaging industry) make all customers aware about rising costs, extended lead times and lack of availability? What kind of messaging should it be?
JPN: Print and packaging industry has a vital role during these crises to convey the manufacturer’s distress to the market as well as to the customers with logical reasoning. The manufacturer has to produce efficiently so that they can reduce the cost pressure as much as they can, during these tough times.

PRR: Internationally, there have been price increase notifications from BillerudKorsnäs, Iggesund, Eska, Mayr-MelnhofKotka, Lessebo Paper and Smurfit Kappa. What is happening in India? Because we hear of food, pharma and home delivery markets are ensuring massive growth in the demand for boxes ...
JPN: Internationally, these mills have planned allocation of their volumes and they don’t see an abrupt change in pulp prices as well as other input prices. For them, it is easy to plan price hikes in a systematic way and then communicate it to their customers well in advance. India is a fibre deficient country and any change in imported pulp prices will change the entire dynamics for the pulp and paper industry in India.

PRR: What is the future? Rather ironic that just as economies are starting to “get back to normal” when will the “normal” seasonal demand be met?
JPN: Till the time all aforementioned factors are not getting streamlined, there will be a mismatch in paper and paper variants supply chain and the market will see the turbulence in availability as well as in prices. Normalcy may take another six to eight months if the third wave of Covid-19 outbreak is not there in the country. If by any chance the third wave appears, then the anticipation of normalcy will not be possible at this moment.

PRR: With your varied experience of working in the paper industry and non-paper industry, would you like to do crystal ball gazing for the Indian paper industry and give an indication as to the future path it should take?
JPN: Yes, the paper industry is passing through a transformational phase where it’s moving from the writing, printing and newsprint era to packaging and wellness products (biodegradable). Health awareness and environmental pressure (biodegradable uses) will transform this industry in the coming future, which will be a good sign for this industry. In future, the paper industry will rub shoulders with FMCG, pharma, food and eCommerce.

Jain: The industry should innovate in wellness/hygiene, biodegradable, and plastic substitution products

PRR: Coming to the aspect of market segment for the end product, what do you think Indian paper mills should aim at – the volume market or the speciality market – given the constraints that the paper industry in India suffers from?
JPN: India is a big consumption centre, and both segments will play a vital role in this market. Volume will fulfil the demand and specialty will drive innovation as well as premium in the market. Both these segments will move parallel in the Indian market.

PRR: Be it in the volume market or the speciality, which specific segment (writing printing, packaging paper, packaging board) would you prefer the Indian paper industry to focus upon and if so why.
JPN: All these segments have different growth rates, and the paper industry has to prepare itself as per the growth rate of the segment. Since manufacturing in this industry is interchangeable, manufacturers will change their cost from writing printing to packaging with market requirements.

PRR: For the future growth of the Indian paper industry, from where do you think the investments will come from – the private sector, the government, private-public joint participation?
JPN: For the future growth of the paper industry, the investment will come from the private sector, or it may come from private-public joint participation in future once people see this industry as a green and health-conscious industry.

PRR: Would you like to refer to any anecdote during your paper industry career, so far, which has left a mark on you.
JPN: Yes, the go-to-market approach and reducing the packaging board delivery time from 21 days in 2012 to 72 hours in 2021.

PRR: Do you have any message for the paper industry in India and the end-users?
JPN: This industry should innovate in wellness/hygiene, biodegradable, and plastic substitution products in the coming future, along with a lot of plantations wherever it is possible.n

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Narain Jai Prakash is the chief executive officer of Century Pulp and Paper, a division of Century Textiles and Industries. Prakash has worked with various FMCGs such as Reckitt Benckiser India, Sab Miller India, and PepsiCo India in various roles. He has been awarded Business Leader of the Year in 2019-20 by ET NOW.