Prices of paper in all segments have continued to show a downward trend, with major companies suffering high levels of inventories. Regular supplies and undercutting by Sinar Mas have only accelerated this trend.An Infac price-watch report on paper and newsprint for December 1997 has noted that, despite serious marketing efforts by paper companies, offtake in the domestic market has remained sluggish.
Creamwove paper suffered because of a delay in the beginning of the notebook conversion season which generally commences in the last quarter of every year. This has had an adverse impact on the prices of creamwove paper.
Similarly, in the maplitho and bond paper segment, prices have suffered despite the paper companies deciding on an upward revision, which has only resulted in huge inventories.
"In the maplitho segment, regular supplies from Sinar Mas (reportedly 1,000 tonnes per month) have adversely affected the despatches of other players.
In the bond segment, in the past three months, imports of75-80 tonnes of bond (Signature bond from Asia Pulp and Paper) have reportedly slowed the movement of Executive bond (from Ballarpur Industries) and adversely affected the offtake of Excel bond (from JK)," the report continued. It also added: "In October 1997, certain producers (Tamil Nadu Newsprint Ltd, Hindustan Paper Corporation and Century Paper) had increased prices especially of maplitho paper, by Rs 0.8-2 per kg. Other large producers (besides Sinar Mas) were expected to follow suit. However, not all producers have implemented the price increase."
The report have also alleged that prices of coated paper are under pressure due to significant despatches and competitive pricing by Sinar Mas.
"In November 1997...Sinar Mas reportedly despatched 630 tonnes of coated paper to Mumbai which included 350 to 400 tonnes of art paper, 150 tonnes of chromo paper and 40 tonnes of ivory board and art board. The competitive pricing adopted by Sinar Mas is likely to exert a downward pressure on the prices of coatedpaper and other writing and printing varieties of paper."
The report categorically stated that future prices of these segments of paper will be directly influenced by prices quoted by Sinar Mas. "The future domestic price movement of writing and printing paper and coated paper depends on the pricing policy adopted by Sinar Mas."
However the report added that Sinar Mas in thinking of increasing the prices of these products. "According to sources, Sinar Mas proposes to increase prices of coated paper by Re 1 to Rs 2 per kg. This is likely to have a positive impact on the domestic prices of coated paper and writing and printing paper. However, domestic price increases will be constrained by the landed cost of imports, producer inventory levels and offtake levels (domestic and exports)."
In the first week of December 1997, imports of the art variety of coated paper from Italy, Austria and Indonesia were available at $900 a tonne and $935 a tonne from Yugoslavia.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
