Paper mills in Morbi face rising coal prices and demand crisis amid Iran–Israel war

Paper mills in Morbi face rising coal prices and demand crisis amid Iran–Israel war

Iran–Israel War Begins Impacting Paper Mills; Rising Coal Prices and Halt in Waste Paper Imports Raise Shutdown Concerns

The Pulp and Paper Times

The ongoing conflict between Iran and Israel is beginning to impact India’s industrial supply chains, with the effects now reaching the paper sector. Industry stakeholders warn that disruptions in global shipping routes and rising fuel costs could create operational challenges for paper mills in the coming weeks.

Paper mills in Morbi, a major industrial hub in Gujarat, are already witnessing the early impact of the crisis. Imports of waste paper and fuel supplies are facing uncertainty due to disruptions in international logistics and shipping routes linked to the tensions in West Asia.

According to a news bite to ANI, Mr Baldevbhai Patel, associated with a Paper Mill in Morbi, said, the price of imported Indonesian coal—commonly used as fuel in paper mills—has already risen sharply due to the geopolitical situation.

“Earlier, Indonesian imported coal was available at around ₹5,500 per ton. Now the price has increased to nearly ₹6,500–₹8,000 per ton amid the ongoing war situation. If the conflict continues, sourcing imported coal could become even more difficult,” he said.

Mr Baldevbhai further pointed out that disruptions in maritime routes are adding to the uncertainty. With key shipping corridors such as the Strait of Hormuz already affected, there is a possibility that coal imports may remain disrupted for the next one to one-and-a-half months. This could lead to further increases in fuel costs for paper manufacturers.

Another major concern for paper mills in Morbi is their strong dependence on the local ceramic industry. A large share of packaging paper produced by these mills is supplied to ceramic manufacturers.

“Our industry is closely linked with the ceramic sector. If the ceramic industry faces gas supply issues and slows down or shuts operations, the demand for packaging paper will also fall. Nearly 60–70 percent of our finished paper is supplied to ceramic manufacturers. If their operations stop, we will also have to halt production because there will be no consumption for the paper produced,” Mr Baldevbhai explained.

“With the global nature of the paper industry, we depend heavily on imports and exports. Due to the war, several shipping routes are getting blocked, and a new surcharge of about USD 1,500–2,000 per container is being imposed. Since waste paper is a relatively low-value commodity, such additional freight costs significantly increase overall production costs,” Mr. Shailesh Bhai Patel, President of Morbi Paper Mills Association explained.

Industry representatives warn that if the war continues and supply disruptions persist for another 10–12 days, paper mills in the region may face a forced shutdown due to rising fuel costs, supply constraints, and declining demand from the ceramic industry.

The situation highlights how global geopolitical tensions are beginning to affect India’s recycling-based paper sector, which relies heavily on imported waste paper and international shipping routes for raw material supply.
 

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