Local corrugated carton industry calls for relief from skyrocketing paper prices

• Says prices have increased 50% over last 4 months and warns will get worse without Govt. and stakeholder support
• Warns e-commerce boosted by COVID-19 and other sectors could be affected

The corrugated carton industry yesterday said it was facing unprecedented pressures and challenges due to skyrocketing global prices, as of last October, for all types of paper, and called for Government and stakeholder support.  

Fears are growing amongst several corrugated and brown box manufacturers, who are currently going through the toughest situation the industry has ever faced - and there’s no sign of it easing up anytime soon.

“The corrugated box manufacturing is an eco-friendly industry, recycling brown boxes as well as waste paper. It certainly deserves various avenues and opportunities to sustain and thrive in its operations, and this is a critical moment for key stakeholders, authorities and officials to step in and help support the industry,” stressed the Lanka Corrugated Carton Manufacturers' Association said in a statement. 

The prices of brown kraftliner and brown recycled grades – including testliner – and corrugated medium papers, will likely continue to soar, with various sources predicting further price hikes in the coming weeks. During the last four months alone, prices have gone up by over 50% in Sri Lanka, with little to no price stability, and the anticipation is that this situation will only get worse without adequate support and involvement from key stakeholders, the statement added. 

This comes in the wake of a drastic shortage in paper due to the pandemic, coupled with disruptions in supply chains and costly freight charges. Further, there has been a significant rise in demand for paper from China to meet its domestic needs following the country’s ban on importing all waste from various countries – mainly direct recovered paper – earlier this year. 

This resulted in Chinese paper mills importing recycled brown pulp and both recycled and unbleached Kraft linerboard, to use as a pulp or fibre source to produce paper – apart from counting on other sources such as local recovered paper within the country, imported recycled, as well as virgin pulp.

Cartons produced in Sri Lanka have a far superior quality when compared to other countries, as they source materials – i.e. waste paper – from top notch suppliers in Europe, USA and Australia. However, the recent second wave of coronavirus is taking its toll on these countries, which has in turn affected waste paper collection, thereby leading to problems in its availability and an increase in prices. To compound matters, there is the freight shortage on top of all these other issues. 

While the Sri Lankan economy is slowly recovering from the detrimental impact of the pandemic, this has added a growing new concern, burdening the packaging industry – which plays a pivotal role in various industry sectors from electronics and FMCG, to various products brought through e-commerce, a sector that is experiencing exponential growth resulting in higher demand for corrugated carton. 

Sri Lanka’s total carton production stands at 150,000 metric tons annually, primarily serving the B2B market. There are more than 40 corrugated carton manufacturers, with about 10 of them making up over 70% of the market share. Many manufacturers today are equipped with fully-automatic, state-of-the-art plants, with an appetite to continuously invest in innovation and research and development, to increase quality, consistency and durability of their cartons.