Paper price rise timed to hurt printers

Major paper mills in India are putting up the price of its coated sheets and uncoated grades of paper. In addition, the price of creamwove, art paper and maplitho is set to rise.

 

Interesting times for the Indian print firms. It means less choice, and less choice means paper mills can dictate more and ultimately control the market price on the terms of the paper mills. This is adversely affecting the printers, since the supply and demand balance is changing.

 

The rises are effective from 2012-13 to 2013-14, and follow announcement earlier this month about the intention to raise the prices of paper and paperboard, once again.

 

The paper mills have a three-pronged price increase strategy:

 

1) They say ongoing cost increases allied with present price levels have led to unsustainable profitability for this business also, therefore corrective price actions are inevitable.

 

2) The price movement is essential in order to offset rising manufacturing costs, particularly regarding high prices of raw materials.

 

3) The price hikes are normally pushed through during peak print seasons (school textbook season or calendars / diaries or Diwali season).

 

The All India Federation of Master Printer said: "Indian paper mills vary its prices or delivery times dependent on the identity of the end-buyer or refused to quote entirely if the merchant does not supply the name of the buyer or if a different merchant previously supplied the buyer."

 

In a statement, AIFMP said: "A paper mill's position has NOT been fully compliant with the applicable laws and the paper industry was not acting in line "with the industry's long established practices of doing business".

 

The All India Federation of Master Printer concludes: If higher paper prices means less ink on paper. Less ink on paper means fewer printers. Fewer printers means lower demand for paper.

 

Lower demand will lead to lower supply. Printing as a means of communication is unlikely to go away but clearly a right-sizing of the entire supply chain is underway. Like everything else this means loss of business and the deliberate death of a USD 30 bn industry.

 

Anand Limaye of the AIFMP said: Increase in paper price means increase in school books' sale price. I feel, this would adversely affect the studies of poor community children. The government should look into this matter." Limaye felt that in addition, to restricted price for paper, the paper must have: good quality; better availability and less price.