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Market snapshot: February 2010
Recovered paper market: IndiaRecovered paper demand in India has
increased strongly over recent decades asdomestic paper production
has increased. This trend seems likely to continue aspaper
consumption rises further. Domestically-sourced recovered paper
istypically cheaper than imported recovered paper. Paper
manufacturers aretherefore expected to try to satisfy their
increase in demand for recovered paperby stimulating domestic
collections. However, there is likely to be an opportunityfor a
modest increase in exports of UK recovered fibre.
Paper production and consumption
Around 10 million tonnes of paper was consumed in
India in 2008, of which 9 million tonnes was
manufactured in India (Table 1). Paper production
and consumption have both grown at around 7%
per annum on average over the past 10 years, broadly
in line with the increase in GDP. Nevertheless, paper
consumption per capita, at around 8 kg per annum,
remains low by international standards.
Although packaging paper grades account for the
largest share of paper production and consumption,the share is
smaller than some other Asian countries
(e.g. China) because the export manufacturing sector
is less important. This also means that most of the
paper produced in India is consumed domestically
rather than being exported overseas.
Table 1: Indian production and consumption of paper
andboardSource: Pyry Forest Industry Consulting
2008, million tonnes Production Consumption
Newsprint 0.8 1.7
Printing and writing 3.3 3.6Tissues 0.1 0.1
Packaging 4.5 4.5
Other 0.4 0.4
Total 9.00 10.2
Structure of the paper industry
The Indian paper industry is fragmented with
hundreds of mills with low production capacities. The
top 10 producers cover 30% of the Indian total paper
production capacity.
Recovered fibre accounts for just over half of the fibre
used in paper manufacturing (Graph 1), with the
remainder evenly split between virgin wood pulp and
non-wood fibres (such as bagasse, jute, bamboo,
straw and cotton). The majority of the recovered
paper is used by packaging mills, although some is
used to manufacture newsprint and lower quality
printings and writings paper.
Graph 1: Indian paper sector fibre consumption, 2008Source: Pyry
Forest Industry Consulting
Non-wood
pulp24%
Virgin wood
pulp
21%
Imported
recovered
paper
21%
Domestic
recovered
paper
34%
Recovered paper imports
Around 60% of the 5 million tonnes of recovered fibre
used by Indian mills is imported. The US was the
largest supplier of recovered paper to India in 2008,
with a 34% market share (Graph 2). The UK was the
second largest, with a 17% share.
Graph 2: Recovered paper imports to India in 2008Source: UN
Comtrade
UK
17%Other
18%
Other
Europe
18%UAE
8%
Sri Lanka
5%
US
34%
The UK exported 380,000 tonnes of recovered paper
to India in 2009. HM Revenue and Customs data
suggest that the main grades exported to India are
mixed grades and old corrugated containers (OCC).
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However, Indian customs statistics suggest that almost
all recovered paper imported from the UK is recorded
on entry as mixed grade.
There is pressure from Indian government authorities
to intensify pre-shipment inspections for imports to
India. However, at present, these are not perceived to
represent a major barrier to high quality exports.
Recovered paper collectionThe Indian paper recycling rate is low
by international
standards - under 30% - but has increased
significantly over the past few years. This reflects
efforts made by national and local governments and
large paper companies to develop more efficient
collection systems. For example ITC, a large paper
producer, has established the Wealth out of Waste
(WOW) initiative to help secure its fibre supply from
domestic market. ITC pays households and civic
bodies a small fee for the recovered paper, plastic and
metal they collect.
Domestically-sourced recovered paper is cheaper than
imported recovered paper, because the cost of the
latter is pushed up by a number of factors, including:
shipping costs (which are higher than those to China);
import duties; higher quality; and strong demand from
e.g. Chinese paper manufacturers. The small size of
Indian paper mills presents a further barrier to
procuring imported recovered fibre.
Recovered paper market outlook
The Indian economy is expected to continue to grow
rapidly over the next 5-10 years, providing continued
momentum to the paper industry. Pyry forecasts that
paper production could more than double by 2020 to
reach nearly 19 million tonnes, while paper
consumption is expected to grow at a similar pace
(Graph 3). This could lead to a 6 million tonne increase
in annual demand for recovered fibre.
Graph 3: Paper production and consumption in IndiaSource: Pyry
Forest Industry Consulting
Million tonnes
0
5
10
15
20
25
1980 1985 1990 1995 2000 2005 2010 2015 2020
Paper production Paper consumption
2008:
9.0
2015:
14.6
2020:
18.9
However, the price factors identified above mean that
the increased demand for recovered paper is likely to
be met through increases in domestic collections
rather than increased imports of recovered fibre
(Graph 4). Accordingly, Pyry forecasts that the
Indian recycling rate will increase from the current
estimated 30% to 44% by 2020, in order to meet
much of the increase in demand.
Graph 4: Consumption of fibre raw material in IndiaSource: Pyry
Forest Industry Consulting
Million tonnes
0
2
4
6
8
10
12
14
16
18
20
1980 1985 1990 1995 2000 2005 2010 2015 2020
Wood pulp Non-wood pulp Domestically collected RCP Imported
RCP
This suggests that there may be only modest potential
for further growth in UK exports to India. However,
there may be further market opportunities should the
gap between domestic and imported recovered paper
prices narrow
