Paper stocks bump in anticipation of govt’s anti-dumping duty levy
“Prices of all varieties — newsprint, writing and printing paper, packaging and speciality paper — have gone up by five to seven per cent this calendar year, primarily because of the China factor and a sudden upsurge in consumer demand,” said Saurabh Bangur, vice-chairman, West Coast Paper.
Last year, China had banned import of mixed paper waste and this had significant impact on the global market. China has substantially raised its import of pulp, leading to a spike in pulp prices. Pulp is a substitute for waste paper and its major exporters —Indonesia, Malaysia, Chile – have diverted theirs to China at a higher price.
- See the below video to understand the china ban on mixed waste paper
“The Indian paper industry is in a sweet spot, as increasing global paper prices have provided an umbrella for raising of domestic prices, even as backward integration for wood / pulp locally through farm forestry has been highly successful. With international pulp prices strong, and a more disciplined global industry, we expect the upswing to be sustainable in the medium term,” says Bhakti Thacker, an analyst with Investec Securities.
WCPM is one of the top paper companies in the country by size – it operates a 320,000 integrated paper mill, with sufficient pulping capacity, and a 75 MW power plant. An optimal size of the plant, it is amongst the more profitable paper companies in India today – FY18 EBITDA margin of 21.2%, and RoIC of 14.7%. WCPM also enjoys adequate supply of water, a key ingredient in paper making, ensuring a disruption free production schedule.
