Chennai, Tamil Nadu, The Kraft Paper Mills in Southern India are badly hit, due to the steep increase in the price of raw material (both imported and local waste paper) in the last 2 months. The price of imported raw material for manufacture of quality Kraft Paper ie DSOCC has gone up from US $ 180 to 270/t and it is feared that the same is likely to touch US $ 300/t shortly. Further, the local raw material cost is spiraling up adding to the woes of the mills.

The price of Kraft Paper has remained stagnant in the last 15 years. Whereas, all input costs have gone up tremendously. The demand for Kraft paper is only increasing by 10% annually as projected by Corrugated Box Manufacturers Assn. However, The Southern Mills produce nearly 9 to 10 Lakhs Tons Kraft Paper annually. and with the new capacity of nearly 1.5 Lakh Tons expected to hit the market, the supply far exceeds demand and total picture looks grim for the mills.

Though the Kraft Paper Mills are trying to drive up the price to the extent of Rs.2000 to Rs.3000 per ton, the mills are worried about the situation of non-availability of raw material in the months to come. The exact cost increase is mainly dependent on sustained supplies of raw material, power tariff increase in Southern States and hence the mills are hesitant to specify the exact price revision in the coming weeks, which is going to be crucial for the Kraft Paper Mills. Further, the mills are facing labour shortage as the workers are not turning up for their work, with the result, the paper mills are depending on contract workers, who have migrated from other States and saddle the mills with high cost of labour.

The Govt. of India should consider the exemption of customs duty and countervailing duty for import of waste paper in view of the increase in the price of imported waste paper and its shortage globally.

The Kraft Paper mills are worried about their future and the shortage of raw material and only the fittest will survive in the industry in the next 2 years, some of the mills have already fallen sick in view of the above problems.