The shifting sands of Indian paper over time

Paperex 2022 from 9 to 12 January in Greater Noida

Billerudkorsnas divests the Beetham Mill photo Billerudkorsnas

The global paper industry is at a crossroads where publication paper is losing out to packaging paper. Publication paper machines are being decommissioned and rebuilt for producing packaging boards. Global newsprint demand has plummeted with the decline of newspapers and to some extent so has the demand for lightweight coated magazine papers. The international paper companies are trading mills (selling, acquiring, and rebuilding machines) to refine their product mix. They are realigning just like pharma companies which give up a wide range of remedies and drugs to specialize in diseases where they have the best research and most clout – and foresee the greatest profit.

The most recent manifestation and harbinger of the coming shakeup and perhaps consolidation in the global paper industry is the announcement on 20 December 2021 by Sweden-based BillerudKorsnäs which is acquiring North America-based Verso to ‘ignite’ its growth in that continent. Verso is a leading producer of coated papers and the acquisition by BillerudKorsnas for US$ 825 million in cash will create what it says will be, “one of the largest providers of virgin fiber paper packaging board with a cost and quality advantage.”

BillerudKorsnäs says it will build one of the most cost-efficient and sustainable paperboard platforms in North America by converting some of Verso’s assets into paperboard machines with an estimated Capex of up to SEK 9 billion (US$ 986 million). This is in line with BillerudKorsnäs’ strategy to drive profitable growth in paperboard. 

The divestment of its Beecham Mill to British investment group Inspirit announced just 50 days ago on 1 November must also be seen as a part of this re-alignment of BillerudKorsnas’s strengths and resources. Although the transaction was much much smaller, the Beetham mill produced thinner papers for medical equipment, food packaging, and industrial papers.

Global paper manufacturers disinclined to invest in India 

While the leading European and North American paper manufactures are focused on premium quality papers based on virgin pulp, the demand in India is growing for recycled 40 gsm newsprint, recycled liner for corrugation, and for paperboards of several varieties that use both recycled inputs and sustainable virgin fiber. Our problem is that waste and recycled fiber are in short supply globally, and even if they were available, the current logistics are near impossible with the high prices and low availability of containers.

While Indian paper manufacturers have demonstrated that they are capable of sustainable and trackable fiber sourcing from ‘agroforestry’ without encroaching on forests, apart from the ten leading manufacturers there seems to be little or limited interest in structured investment in improved quality production of newsprint, corrugation liner of carton boards.

Although paper demand in India has a healthy CAGR, it seems that the time is not right for the International paper companies to hazard the challenges that Indian paper demand represents. The one recent attempt ended with International Paper exiting its acquisition of AP Mills. Meanwhile, the leading Indian paper companies have been able to upgrade the quality of paper produced and it is they who understand both local demand and the evolution to better quality papers and boards.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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