The Hindu Business Line : Waste paper prices drop in TN on lower demand

Waste paper prices have nosedived as demand dropped due to the power shortage in Tamil Nadu hitting production in paper mills manufacturing recycled paper and boards.

The prices of waste paper, a raw material for the recycled paper mills, have dropped to about Rs 6-7 a kg at the mill level, down from Rs 9-10 a few weeks back.

The drop is not as severe elsewhere in Karnataka and Andhra Pradesh, where the prices have moved in tandem with the price of imported waste paper. Imported waste paper costs slightly more than domestic waste paper. The power shortage has aggravated the situation in Tamil Nadu for the recycled paper manufacturers who have also been hit by the overall slowdown. When manufacturing is hit, the need for packaging material is also hit – this is a major segment for the recycled paper manufacturers.

According to one large manufacturer of recycled paper, the demand for the raw material is down, as the paper mills stop production for nearly 10 hours daily — they go through a stop-and-start cycle due to the eight-hour power cut. On an average, a recycled paper mill with a capacity of about 3,000 tonnes a month now produces only about 2,000 tonnes.

A leading dealer in waste paper, Mr R. Balasundaram, who handles over 2,500 tonnes of waste paper every month, says that at the household level, old paper would fetch about Rs 5 a kg, a drop of a Re 1 or Rs 2 in the last two months. Recycled paper mills have cut back on raw material purchase, as they are not able to match the supply with production.

However, according to industry sources, the prices of recycled paper and boards are not expected to drop in line with the raw material prices, as production has also been hit. Also, the mills had not been able to pass on the steep increase in waste paper price a couple of months back.

The situation now is in sharp contrast to that prevailing two months ago, when recycled paper manufacturers were facing a shortage of raw material and increasing prices. In August, the paper mills were paying over Rs 10 a kg and importing at about Rs 6 to Rs 20 a kg depending on the quality of the waste paper.

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