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Friday, Sep 02, 2005

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Paper makers set to hike prices

R. Balaji

Chennai , Sept. 1

PAPER manufacturers are to increase prices further in October on increasing demand in the printing and writing segment. Apart from exploiting the increase in demand, manufacturers are also taking into account the increase in cost of inputs, particularly fuel.

The increase could be Rs 750-1,000 a tonne of printing and writing paper. The prices are now ruling at Rs 43,000-44,000 a tonne.

The proposed increase is attributed to the overall growth and buoyancy in the international markets and particularly to the growth in the printing and publishing segment, according to manufacturers.

Paper mills are concerned about further increases in cost of fuel and coal. The price of coal could be affected due to restructuring of supplies. While 70 per cent of the coal could be available at pithead prices, the balance will have to be purchased at open market prices. Therefore, the mills are using the buoyant market to protect their bottom lines against anticipated increase in input costs.

In 2004-05, there was no significant increase in paper cost. They are making up for the increase in the current year, say manufacturers.

Mills increased prices in April/May and in July. The market has absorbed the prices without a glitch. The order situation is comfortable with the mills, and the inventories are not high. The market is bound to absorb the increase in October, which could be the last opportunity to effect the increase. The manufacturers expect a lull following the year-end.

A major growth in demand is from the copier paper segment, which is growing at 18-20 per cent, against 6 per cent in the case of other categories of printing and writing paper.

Also, following the notebook season driven by the academic year beginning in June, there has been demand from the corporate segment for annual reports, balance sheet and notebooks. Printers are also starting on the manufacture of diaries and calendars for the coming year. All these have contributed to the demand.

The printing and publishing segment has in a large way contributed to the demand for paper. Large publishers have shifted their printing operations to India from Hong Kong and Singapore. Africa and the US also give orders for textbook printing; quality of printing and costs are attracting overseas markets to India. Indian paper is feeding the demand for printing for exports.

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