Paper industry roundup for July 2023

JK’s BCTMP plant to be operational by 2025-26

JK Paper’s board of directors have approved the establishment of a hardwood bleach chemical thermo-mechanical pulp (BCTMP) plant at its unit CPM in Songadh, Gujarat. JK Paper will make an investment of Rs 650-crore in the project. The BCTMP plant will have a capacity of 125,000 ADMT per annum. The project will be financed through a mix of internal accruals and borrowings.

During the company’s meeting on 24 July 2023, it was mentioned the new plant will allow JK to address the price volatility issue for hardwood BCTMP, as well as reduce the company’s dependence on external sources for supply. The BCTMP plant is expected to be operational by the second quarter of FY 2025-26.

TNPL’s dividend to be larger than last year

The board of Tamil Nadu Newsprint and Papers (TNPL) has announced that it will be paying its dividend of Rs 5 on the 25 October, an increased payment from last year's comparable dividend. This takes the dividend yield to 2.4%, which shareholders will be pleased with.

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Tamil Nadu Newsprint and Papers' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow. Looking forward, earnings per share could rise by 18.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 7.2% by next year, which we think can be pretty sustainable going forward.

Meanwhile, on 24 May,  TNPL posted its highest-ever annual revenue of Rs 5,225-crore in FY23. The Chennai-based paper and paperboards manufacturer posted revenue of Rs 4,069-crore in FY22. Net profit for the full year swelled to Rs 388-crore against Rs 14-crore in FY22. Profit before tax stood at Rs 603 crore (Rs 22-crore) in FY23. 

The company said its printing & writing paper production was 420,793-mt against 388,881-mt in FY22. “The total sale of printing & writing paper in 2022-23 was 420,793-mt with the company recording zero stock of printing and writing paper as of 31 March 2023,” it added.   

Energy supply a factor in UPM closure plan 

The Finland-headquartered group announced the closure plans on 25 July. UPM said it will close its Plattling mill in Germany alongside interim results that were impacted by destocking and lower pulp prices in Q2.

Plattling is located in Bavaria and is part of the UPM Communications Papers business.

It runs two paper machines and closing the mill would result in a permanent reduction of 380,000-tpa of uncoated publication paper, and 215,000-tpa of coated publication paper.

The mill employs around 400 people. If the closure plan goes ahead, it will stop making paper by the end of this year.

UPM cited a 15-year declining trend in demand for graphic papers, with the decline “accentuated significantly over the course of this year”.

It also pointed to energy supply issues, and stated: “The uncertainty about reliability and cost competitiveness of the energy supply in Germany is currently a big challenge.”

UPM has seven mills in Germany and Austria with the others located at Nordland Papier, Hürth, Augsburg, Ettringen and Schongau, where it recently shut a paper machine.

It also closed down PM4 at its Steyrermühl mill in Austria. 

Naini will add 130,000-tpa capacity

Naini Group has ordered a specialty paper machine for a brownfield paper project at its site at Kashipur in Uttarakhand. The group has ordered a specialty paper machine on Valmet. As the name suggests, the new machine shall be used to manufacture specialty paper products, mainly flexible packaging paper. The machine will have a deckle of 4.2-m and a maximum speed of 1200-mpm.

The machine is being purchased as a part of our brownfield paper project in Uttarakhand. The project aims at exploiting opportunities in the flexible packaging segment. The kit will add 130,000-tpa to its current manufacturing capacity. The project is expected to become fully operational by January 2025.

As of 2023, the Naini site is integrated with Plant Information Management Systems (PIMS). The site-wide manual and mechanical operations are streamlined for better processes, fewer breakdowns, and better communications. Also, the bleaching equipment is R6 technology powered and can work with hardwood dominant raw material batches. This reduces Naini's dependency on softwood pulp, which needs to be imported.

Mondi buys Canadian mill 

The USD five-million purchase of Hinton Pulp Mill, from West Fraser Timber (WFT), will see Mondi and WFT enter into a long-term partnership to secure local fibre.

Mondi plans to invest USD 420-m into the plant, primarily for a new 200,000 tonne kraft paper machine, due to come online in late 2027.

The plant’s purchase and development will allow Mondi to supply its 10 paper bag factories in the Americas with high-quality, low-cost kraft paper, shortening supply chains and reducing the carbon footprint of its products.

Subject to regulatory clearance, the deal is expected to close at the end of 2023.

Recently, Mondi has teased a USD 17-m investment at its Polish Solec plant, which will expand its FunctionalBarrier Paper portfolio for food and atmospherically sensitive product applications.

The ultra-high barrier paper, called FuntionalBarrier Paper Ultimate, will be suited for items like dried foods, powdered milk, and toiletries, and protects goods from water vapour and oxygen to preserve their shelf-life.

Designed to replace current aluminium foil or plastic-based barriers, the range will be entirely recyclable in paper waste streams.

Dev Priya streamlines production of 2,00,000-tpa

9 February 1990 was when the journey began in Meerut. Dev Priya Industries (earlier Dev Pulp) started its kraft paper production in December 1992. The initial capacity 30 years ago was 12,000 TPA. Today, Dev Priya has two paper machines and produces 150,000 TPA, with a production potential of up to 2,00,000 TPA. For its raw material requirements, the group imports 60-70% of waste paper.

The current product portfolio comprises fluting paper, testliner paper and recycled kraft linerboard paper which are deployed by FMCGs, TV manufacturers, refrigerator manufacturers, food and beverage industry, medicine companies, etc.

Amit Gupta, who is the technical director at Dev Priya told a news outlet, “Lots of mills are shutting down.”

A case in point is Morbi in Gujarat where 30-40 mills have closed down. The other trend is, imports are increasing since the prices of finished products are suppressed in the international market. Therefore, India is importing good quality paper at lower prices. Amit Gupta said, “These factors have resulted in the downfall in Indian markets. The pulp prices have declined drastically to almost 50%.”

Gupta added, "The market can be in this decline period until March 2024. The challenge has been caused due to low demand, which is a factor we cannot control. The only part we can control is our expenses in terms of efficiency, viz. power, chemicals, fuels, etc." As a result, many mid-sized paper mills have decided to halt investments till the market revives.

Two Sides writes to German retail group about misleading paper comments

The print and paper advocacy group, Two Sides, contacted REWE following its published decision to cease production of its weekly promotional paper flyers from 1 July 2023.

In a press release published in July 2022, REWE stated that: “This will have a huge impact on the environment, climate, and the sustainable use of resources, saving more than 73,000 tonnes of paper, 70,000 tonnes of CO2, 1.1 million tonnes of water, and 380 million kWh of energy per year.”

Two Sides said it believed these statements were sensational and misleading in terms of their environmental claims and the statistics used. Its communication with REWE also pointed out that the company’s press release included no acknowledgement that digital media has a measurable impact on the environment.

Two Sides said it asked REWE to desist from making these statements and provide detailed substantiation of the environmental benefits claimed.