Paper stocks face dilemma of rise in pulp prices

In the near future, Indian paper manufacturers are expected to feel the blow of the hiked imported pulp prices. Of-late, imported pulp prices have peaked to 7 year highs and are expected to remain higher for some period. The prices of Hardwood and Softwood pulp prices are trailing at around US$700 per tonne and US$860 per tonne, respectively. Sooner, paper manufacturers would have to add-on the operating cost rise to their paper selling price.

Amongst the top paper manufacturing companies, the stock of Ballarpur Industries posted a loss of 4.6 per cent on Monday. Even Kushal Limited and JK Papers were off their day’s highs, but closed a little higher from their previous closing.

However, the broader view suggests that Kushal Limited has continued its consolidation since January 2018 and remains indecisive for now. Other stocks of JK Papers, Ballarpur and West Coast Papers are already trading with lower tops and lower bottoms and do not seem to give immediate breakout with the news prevailing in the industry.

Talking of the paper industry as a whole, the DGAD (Directorate General of Anti-Dumping & Allied Duties) under Commerce and Industry Ministry, has unlocked anti-dumping investigations regarding paper import from 7 major producing countries. This might come as a relief to the paper manufacturers. Hence, despite rise in prices, the demand for paper would remain intact refraining further drop in share prices of domestic manufacturers.