Kraft paper prices may stabilize Rs. 3 to Rs. 4 per Kg higher than the levels seen in February; domestic short-fiber availability will come under pressure

Kraft paper prices may stabilize Rs. 3 to Rs. 4 per Kg higher than the levels seen in February; domestic short-fiber availability will come under pressure

-Impact of the US–Iran Conflict on the Indian Kraft Paper Industry

The ongoing West Asia crisis may impact India’s paper industry through higher energy prices, rising ocean freight rates, and disruptions in the import of key raw materials such as recovered paper, pulp, and coal. The Pulp and Paper Times talks to Mr. Hardik Patel, Director- Sales and Marketing, Om Sree Papertek (P) Ltd. here is his opinion:

The Pulp and Paper Times

The escalating geopolitical tensions between the United States and Iran have begun to create ripple effects across global supply chains. While the direct conflict may appear geographically distant from the paper industry, the sector—particularly kraft paper manufacturing—remains deeply integrated with global trade routes and raw material markets. As a result, the ongoing situation is expected to significantly influence both input costs and demand dynamics within the industry.

One of the most immediate impacts will likely be disruptions in the movement of imported waste paper, a critical raw material for paper mills. A large portion of recovered fiber sourced from the United States and Europe travels through shipping routes that pass close to the conflict-sensitive regions in the Middle East. Shipping lines tend to avoid such zones during periods of instability, leading to longer routes, higher freight costs, and additional war-risk insurance premiums. These surcharges will inevitably translate into higher landed costs for waste paper imports.

Another major concern is the supply of short fiber pulp from the Middle East. India imports an estimated 30,000 to 35,000 tonnes of short fiber from this region. With uncertainty in the shipping corridors and regional trade flows, these supplies are likely to be temporarily disrupted until the situation stabilizes. As a consequence, domestic short fiber availability will come under pressure, pushing indigenous pulp prices upward as mills compete for limited supply.

Beyond raw materials, the broader cost structure of paper manufacturing is also expected to be affected. Fuel and chemical prices have already shown signs of escalation as global logistics networks face uncertainty. Industries dependent on international shipping—directly or indirectly—are experiencing cost pressures, and the paper sector is no exception. Higher energy and chemical costs will further compound the input cost inflation for mills.

However, the impact is not limited to the supply side alone. Demand may also soften in the near term. Exports of paper and packaging materials to the Middle East and certain other international markets could slow down due to disruptions in trade flows and economic uncertainty. Reduced export demand may offset some of the upward pressure on domestic prices.

Ultimately, market forces are expected to find a new equilibrium. While rising input costs will push prices upward, weaker demand could moderate the pace of increase. Industry participants anticipate that kraft paper prices may stabilize ₹3 to ₹4 per kilogram higher than the levels seen in February, reflecting the net impact of higher raw material and logistics costs.

Additionally, the US dollar touching record highs has further intensified cost pressures, as most imported inputs—including waste paper and pulp—are denominated in foreign currency. This currency movement adds another layer of inflation to already rising procurement costs.

In conclusion, while the long-term trajectory will depend on how quickly geopolitical tensions ease, the short-term outlook suggests a period of volatility for the paper industry, with higher input costs and cautious demand shaping market behavior.
 

Web Title: Kraft paper prices may stabilize Rs. 3 to Rs. 4 per kilogram higher than the levels seen in February; domestic short-fiber availability will come under pressure