More than 2,000 corrugated or carton box units in Tamil Nadu and Puducherry are on the verge of closure due to export-based shortages and a sudden increase in kraft paper prices.
Subsequently, the South India Corrugated Box Manufacturers Association (SICBMA) has urged the Center to immediately ban the export of kraft paper in any form as its supply to the local market was reduced by more than 50% in recent months.
Kraft paper is the main raw material in the production of corrugated boxes mainly used by sectors such as pharma, FMCG, food products, automobiles and electrical appliances. President of SICBMA G. Nagaraj said production and hundreds of SMEs have been affected by the sudden increase in Tamil Nadu and Puducherry.
However, the demand for the box has been steadily increasing since COVID-19, with manufacturers not able to ensure supply, as thousands of tons of kraft paper are leaving Indian shores for export markets high and dry to local industry. SICBMA said in a statement, the huge reduction in the price of kraft paper due to unprecedented reduction has pushed manufacturers to the brink of closure.
According to Mr. Nagaraj, the cost of kraft paper is usually 85% of the production cost of corrugated boxes. With the rapid rise in the price of kraft paper, the export-led shortage started on a large scale, with a 60% increase in the cost of manufacturing corrugated boxes.
This is a highly competitive field and box manufacturers operate on very thin margins. Most industries can neither accommodate a sudden increase in raw material costs nor pass it on to end customers. Until exports are banned and the supply of kraft paper is ensured, many industries will have to consolidate their business.
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