Analysis of Paper Industry’s prospects in the next 5 years!

PaperEkart - Admin

08/07/2022 911 Views

Posted by Admin / July 02, 2022

Analysis of Paper Industry’s prospects in the next 5 years!

Since time immemorial, Indians have used "Toddy Leaves" (Tala Patra) to communicate written opinions. The Indian paper industry, one of the oldest and most important industries with a substantial impact on socio-economic development, has undergone a tremendous transformation over the last three decades.

This sector is critical to India's overall industrial development and plays a prominent role in propelling our knowledge-based economy forward into the new century.Paper consumption in India is primarily domestic, with GDP development driving demand.

The key drivers of paper industry demand include an increase in government funding for education (6% of GDP), an improvement in quality of life, a booming retail industry, an unprecedented rise in demand in sectors such as food, pharma, and apparel, as well as a rise in advertising and packaging expenditures. The per capita paper consumption in India at a little over 13 kg is way behind the global average of 57 kg.

The Paper industry market size which was around 70000 cr to 80000 cr in 2020 has more than doubled with addition in capacity and rise of paper prices across the globe. According to the industry group IPMA, paper consumption in India is expected to expand by 6%-7% per year over the next five years,reaching 30 million tonnes by FY27, making it the world's fastest-growing paper market.

In 2022, the worldwide consumption of paper and paperboard stands at 416 million tonnes. Consumption is expected to rise further over the next decade, reaching 466 million tonnes by 2031. Packaging consumes the majority of worldwide paper and paperboard output.

Moreover, the prohibition on plastics and the consequent trend towards a cleaner environment is positive for the paper converter business. Paper and paper board items are appealing and clean alternatives to plastic. It is time to look beyond typical substitutes and investigate new areas, such as paper straws or paper-based packaging.

The global market share for different paper industries like packaging is 7%, specialty 20%, tissue and fluff -47%, and printing and writing 26%. Packaging and printing are expanding at an annual rate of 14%. As a result of the 1.2 billion-person population and changing demographic profile, which will place over 65% of the population in the working class and half of those under 30 years old, there will be an even greater demand for paper and paperboard.

Estimated production in terms of raw material use

Market Segmentation Based On Application/Products:

Based on application or products, the Indian paper industry can be classified further as below:

1. Newsprint
2. Writing & Printing Paper
3. Packaging & Paperboard
4. Other Paper (Tissue Paper, Specialty Paper, etc.)

Therefore it is essential to learn about the paper industry's future trends to adapt to this sector's dynamic scenario. Read on to learn all about this in the article below -

Current trends in the paper industry with a focus on the future scope for expansion

All the paper companies have seen their values rise in the last decade. There are now about 600+ small, medium and large paper mills with a total capacity of 18.38 lakh tonnes. Paper packaging for pharmaceuticals, consumer goods, food, automobiles, and electrical appliances is made using corrugators.

Corrugated Kraft paper is the industry's essential raw material. Its costs have risen by almost 90-100% since 2020, with nearly 25% of the increase occurring in the past few months alone. In FY 21-22, India's paper and paperboard exports hit an all-time high of Rs. 13,963 crores (US$ 1.79 billion), an increase of about 80% yearly.

During the same period, India's paper exports climbed in volume from 0.66 million tonnes in FY17 to 2.85 million tonnes in FY22. In addition, its value increased from Rs. 3,041 crores (US$ 391.97 million) to Rs. 13,963 crores (US$ 1.79 billion). This expansion extends over many paper grades. Coated paper and paperboard exports increased by 100% in value, uncoated writing, and printing by 98%, tissue paper by 75%, and kraft paper by 37%.

Over the previous 5-7 years, paper mills in India, notably in the organized sector, have spent more than Rs. 25,000 crores (US$ 3.22 billion) on new capacity and clean-green technologies. During the previous two fiscal years, India has been a net exporter of paper in terms of volume.

The future of the paper industry - A deep analysis

Regardless of whether it is well-positioned for future growth or still has a long way to go to gain expansion rights, a company can anticipate an increase in the demand for paper and board goods over the next decade due to shifting demand and manufacturing processes. Additionally, the paper business will concentrate on supplying more specialized markets. Thus, the global demand for cardboard and packaging paper will remain strong.

1 .Growth in demand for paper bags Between 2022 and 2030, the global paper bags market is expected to grow at a CAGR of 4.1%. During this time, it is expected to reach US$7.3 billion. The post-covid period has seen an increase in demand for paper bags. By volume, the pinched bottom open mouth bags sector will likely surpass the other categories and account for more than 30% of the worldwide market by the end of 2030. These paper bags are used for medium to large items with varied densities and delicate products. Among the other material categories, the brown kraft sector is expected to account for approximately 3/4 of the value share and present an incremental potential of US$ 1.9 billion by the end of 2030.

2. Rigid Box for eco-friendly packaging - Global regulatory authorities' growing concern about the growth in plastic waste from packaging and its inappropriate disposal is expected to boost the paper and paperboard product market in the coming years. Rigid packaging made of paper and paperboard is environmentally friendly and biodegradable. These items may be landfilled, composted, or recycled without causing damage to the environment. Luxury rigid boxes provide packed items in a luxury, attractive, and sophisticated manner. These boxes are mainly intended to attract consumers' attention and increase sales at the time of purchase. As a result, most sectors are focused on ready-to-display or shelf-ready packaging through luxury boxes. Furthermore, the safety of sensitive and costly items is the primary concern of end-users; thus, zero deformation packaging solutions that assure an eye-catching look of the product are often utilized.

3. The future will be ‘recycled’ - As the industry shifts toward more sustainable and ecologically friendly methods, recycled fiber is becoming a key source of raw material for the paper industry, with consumption increasing from 65% to 73% in recent years India. For the foreseeable future, recycled fiber will be the most important raw material source, owing to its easy availability and cheaper rates on the global market.

4. Online sales - Online sales of paper products are increasing. This tendency is projected to continue beyond 2022 as well. The need for packaging innovation is partly due to increased online shopping. The expansion includes increased demand for raw materials and corrugated boxes. There is also a rise in the number of items needed immediately and with minimal lead time. This covers services for same-day and next-day goods delivery. The purpose of manufacturing is to supply services quicker without compromising on quality.

The Indian paper business is undergoing a dramatic shift, with leading firms investing in facility upgrades and gaining market dominance. Multinationals in the paper sector may explore entering this rising market based on entrance investment requirements and current strategic considerations.