The packaging industry in Kanpur, India, is facing severe challenges due to sharp fluctuations in paper prices. The local Federation of Packaging Entrepreneurs announced that starting from October 5, it will organize 290 packaging factories in the city to suspend production for a week to protest the frequent and substantial price increases of paper mills. It is reported that in the past three months, paper prices have increased by 25%, from 24 rupees per kilogram to 36-45 rupees. This move not only caused difficulties in cash flow for packaging companies, but also triggered product quality problems and consumer complaints. The collective shutdown of packaging plants will have a certain impact on the local economy and may trigger a series of chain reactions.
At a meeting held at a hotel in Dadar Nagar recently, officials of the Uttar Pradesh Kanpur Corrugated Box Manufacturers Association expressed their deep concern over the current situation. Mr. Vivek Kanodia, Chairman of the Association, expressed strong dissatisfaction with the arbitrary behavior of the paper mills. "Our industry is dominated by small and medium-sized enterprises, with an average of only 25-30 employees per enterprise. However, paper mills continue to raise paper prices at will, causing many enterprises to sharply reduce their output, or even reduce their output by more than half." Vivek Mr. Xi Jinping pointed out that in the past three months, small and medium-sized enterprises have borne the brunt of price increases without warning from paper mills.
In protest, 290 of the city's approximately 300 corrugated box manufacturing companies decided to jointly suspend production for a week. The unreasonable rise in kraft paper prices, by as much as 20%-25%, has put huge financial pressure on these companies. Forced by desperation, they had to take this extreme step.
Entrepreneurs in the packaging and printing industry in Uttar Pradesh took a fateful decision on Friday as they were deeply dissatisfied with the collective actions of north Indian paper mills to hike paper prices. They declared a social boycott of all North Indian paper mills and stopped placing any paper-related orders with them.
Instead, the industry plans to shift sourcing channels to places like Gujarat, Madhya Pradesh, Maharashtra and West Bengal. The paper produced in these regions is not only of higher quality but also more reasonably priced, giving it a clear advantage over North India. This move is not only to protest unfair prices, but also to seek more competitive procurement channels, thereby helping the entire industry obtain better products at lower prices.
A report recently released by the Uttar Pradesh Corrugated Box Manufacturers Association (UPCBMA) shows that due to the recent sharp increase in paper prices, the corrugated box manufacturing industry in the state has suffered an economic loss of more than 10 billion rupees. Among them, Gautama Buddha Nagar and Ghaziabad were the most severely affected, and local industrial production was severely affected. In protest against rising paper prices, the packaging industry across the state is preparing to go on strike on October 3.
UPCBMA chairman SK Chauhan said that Gautama Buddha Nagar and Ghaziabad alone have suffered losses of up to Rs 450 crore due to the increase in paper prices. There are about 1,500 and 500 corrugated box manufacturing companies in these two regions respectively, and the paper they require mainly comes from Muzaffarnagar, Khasipur, Saharanpur, Punjab and Haryana.
Sushil Sood, former chairman of UPCBMA, revealed that as early as four years ago, the Competition Commission of India (CCI) made a ruling requiring paper mills not to increase paper prices arbitrarily to protect the interests of corrugated box manufacturers. However, these paper mills have repeatedly violated their commitments and raised paper prices significantly again. Sood warned that the shutdown of the corrugated box industry could have a serious impact on the market and economy, because without packaging, no product can be sold normally. Rising paper prices are pushing the industry into dire straits, threatening the livelihoods of hundreds of thousands of employees.
Former Uttar Pradesh Corrugated Box Manufacturers Association (UPCBMA) president Rajendra Bhatti pointed out that paper mills deliberately create the illusion of paper supply shortage in order to obtain higher profits. He called on the state government to step in as soon as possible to save more than 5,000 businesses facing the crisis of bankruptcy. There are 300 to 500 companies in Tronika City, Ghaziabad and Sahibabad alone, consuming 200,000 to 250,000 tons of paper every year and generating a turnover of up to 70 billion rupees. The strike will undoubtedly further exacerbate the plight of the packaging industry.
At the same time, more than 250 corrugated box manufacturers in another region of India also issued a warning: If paper mills do not reduce the rising kraft paper prices as soon as possible, they will collectively suspend production for nine days. The companies are indignant at the high-handedness of paper mill owners, who are struggling to pass on rising raw material costs to customers. The HP Corrugated Box Manufacturers Association will hold an emergency meeting on October 1 to discuss measures to deal with this crisis.
Baddi Barotiwala Nalagarh (BBN) Association president Hemraj Chowdhury said: "The high-handed behavior of paper mill owners has seriously affected the corrugated box manufacturers in the state. They have taken advantage of the peak season to create an artificial crisis and continue to raise the price of kraft paper This situation has lasted for three months, and paper prices have been rising by 2 to 2.5 rupees/kg every month. What's more serious is that paper mills are now starting to reduce production, causing corrugated box manufacturers to face serious cash flow difficulties. Due to the monopoly of paper mills, even if an order is placed, it takes 15 to 20 days to receive the goods, which makes it impossible for us to meet customer demand. "
Ashok Rana of the BBN Association said paper mill bosses had formed a "price alliance" for five years. They suddenly stopped production and stopped taking new orders for kraft paper. This is clearly a well-planned conspiracy to create a shortage in the market and thus raise prices at will. "Paper prices have increased by 30% in the past four months. Downstream companies are unwilling to accept such increases. We call on the state government to step in and stop the tyrannical behavior of paper mill owners."
The kraft paper industry in India is an important part of the overall paper and packaging industry. Due to its durable and wear-resistant properties, kraft paper has always been the main raw material for the production of paper bags, packaging boxes and corrugated boxes. The industry has been booming as demand for environmentally friendly, sustainable packaging grows.
Naresh Singhal, president of the Indian Recycled Paper Traders Association (IRPTA), said: "Paper mills have been operating at full capacity as demand for kraft paper and packaging products has increased significantly in the past two months. After a period of slump , the automatic box-making machines that produce packaging boxes are now at full capacity, and various paper mills in northern India are producing at full capacity. "
Naresh Singh Khar said that although kraft paper mills in western Uttar Pradesh have been operating at full capacity, they are planning to suspend production from September 28 to October 2. This was not a temporary decision, but was planned in advance. The real purpose of this move is to further increase the price of finished kraft paper. These factories have begun trying to sign new orders at higher prices, and the price of kraft paper is expected to increase by 1 rupee per kilogram. "Currently, the price difference between kraft waste paper and finished kraft paper has reached 12.5 to 13 rupees per kilogram. We predict that during the shutdown period, the price of kraft waste paper may drop slightly, by 50 paise per kilogram."
In the past four months, the price of finished kraft paper in the western Uttar Pradesh and northern India has increased by 7 rupees/kg, while the price of kraft waste paper (i.e. corrugated waste paper) has only increased by 2.5 rupees/kg in the same period. He added that currently, the price difference between finished kraft paper and kraft waste paper is about 12 to 12.5 rupees per kilogram, while four months ago, the price difference was only 8 rupees per kilogram. Due to sufficient orders, these kraft paper mills are keen on new Orders are demanding higher prices, indicating that the price of finished kraft paper is likely to rise again.