Corrugated box-makers seek 12% hike in prices to cover rising raw material cost

The frequent shut-down of production and the subsequent price hike in the past one month by kraft paper mills has put corrugated box manufacturers in the doldrums.

Kraft paper mills in the western region suspended production for five days from January 27 and followed with another closure from February 11 to 15.

The next shut-down has been fixed for five days from March 11.

Paper mills in other zones have also shut their plant in sync with the western region. South zone mills closed their plants between February 11 and 15, while mills in North India will shut production from March 1 to 5.

Kirit Modi, President, Indian Corrugated Case Manufacturers Association, said the frequent shut-downs have resulted in extreme price volatility, and there seems to be no stability in sight in the near future, either in terms of price or timely supply of kraft paper, the key raw material for corrugated box-making.

The sector plans to pass on the incremental cost and hike in raw-material prices with a 12 per cent increase in final product prices, he said.

Supply disruption

In addition to the cost impact, there is a serious issue of availability of kraft paper supplies in time to the industry due to the frequent shut-downs by paper mills, he added.

The disruption in raw-material supply has put survival of about 12,300 box manufacturers under test. With a manufacturing capacity of 52 lakh boxes per annum, the sector employees 6 lakh people and registers an annual turnover of ₹18,000 crore.

The relentless price hikes will not only cause huge losses to the box industry, but also to the nation as a whole, in terms of lost revenues to the exchequer, said Modi.

Under the current circumstances, the industry does not have any other option but to pass this increase on to end users, he said.

The hike in corrugated boxes will help the industry cover short supply of kraft paper and disruptions in the supply chain.