The Hindu Business Line : Paper prices to go up

ALMOST all the paper mills in the country are revising prices of writing and printing paper and paper products with effect from January. The average increase will be Rs 750 a tonne in the case of writing and printing paper, while the revision will be higher for paper products.

Unlike the last few quarters, medium and small paper mills are also revising prices along with large mills in the quarter beginning from January. The revision is considered to be unusual, contrary to the trend in the international paper market where pulp and finished paper prices have softened in recent weeks due to a comfortable stock position.

Informed sources say that domestic mills are free to ignore the international price trend due to prevailing demand-supply gap in the country. Consumers have limited options but to accept the revision, as there is no possibility of changing the demand-supply scenario and a substantial capacity addition in production is unlikely in the near future. Moreover, imports of paper and paper products may not take place due to high incidence of custom duty. Local paper traders have thus demanded that the duty be reduced from 15 per cent to 5 per cent to make the imported paper competitive.

They said that the mills have revised prices four times in 2005. The State-owned Hindustan Paper Corporation (HPC) is an exception, which had to offer discount from mid-August to November this year due to its plan to liquidate the "unsold" stock at its mills in Assam. The stock has been cleared since then, and the corporation is also revising prices from January 2006.

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