Paper stocks on a roll, up nearly 70% in 2 months

Share prices of paper mills have risen by 67 per cent in two months, anticipating the central government’s expected levy of an anti-dumping duty on import, to protect domestic manufacturers. Over two months, the paper index outperformed the Sensex.

Share prices of paper mills have risen by up to 67 per cent in two months, anticipating the central government’s expected levy of an anti-dumping duty on import, to protect domestic manufacturers. Over these two months, the paper index outperformed the benchmark Sensex by 27 per cent. From a base of 100, the Sensex stood at 107.25 points on Friday, compared to 136.25 of the paper index.

In this bull market, the stock of writing paper manufacturer Satia Industries rose the highest, by 67 per cent to close on Friday at ~619. Those of JK Paper and International Paper APPM shot up 61.8 per cent and 57.4 per cent, respectively, to ~179.6 and ~501.3. Others seeing a significant rise include West Coast Paper, N R Agarwal Industries, Seshasayee Paper and Emami Paper Mills. “The Directorate General of Foreign Trade had initiated investigation on import of paper from Asean (Association of Southeast Asian Nations) under the free trade agreements (which India has signed with the trade bloc). This had led to a sharp increase in import of paper over the past few years. The investigations started in November last year and (should) take nine to 12 months. There is an expectation that the government will impose anti-dumping duty (ADD). The restriction will result in a shortage and, thus, price increases. This is set to help improve the margins of domestic mills,” said a senior industry official. Depreciating rupee will make imports costlier.

Official data showed the country’s total import of paper and paperboard more than trebled to nearly 1.9 million tonnes (worth $1.5 billion) in 2017-18 from a little over 0.5 mt in 201011. Import from Asean rose 42 per cent in these seven years.

“Paper import has been rising consistently due to everincreasing demand from local consumers,” says Rohit Pandit, secretary-general, Indian Paper Manufacturers Association.

The Union ministry of commerce and industry said in early November last year that it had initiated an investigation on uncoated copier paper import from Indonesia, Thailand and Singapore, based on complaints from Indian manufacturers.

A similar notification issued in late January stated the ministry had initiated investigations on an ADD for coated paper import from China, the EU and America. Looking at the likely coming shortage, Indian mills had raised their product prices.

“Prices of all varieties — newsprint, writing and printing paper, packaging and speciality paper — have gone up by five to seven per cent this calendar year, primarily because of the China factor and a sudden upsurge in consumer demand,” said Saurabh Bangur, vicechairman, West Coast Paper.