Local corrugated carton industry faces growing concerns over skyrocketing prices of paper

The corrugated carton industry in Sri Lanka faces pressure and unprecedented challenges as the global prices of all types of papers continue to skyrocket since October last year. Many corrugated and brown box manufacturers here are going through the toughest situation in the industry’s history and fears grow as it’s the longest period as well with no sign of it easing up any time soon, stressed the Lanka Corrugated Carton Manufacturers’ Association.

The prices of brown kraftliner and brown recycled grades including testliner, and corrugated medium papers will 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 as much as over 50pct in Sri Lanka with no price stability, anticipating that this situation will only get worse without adequate support and involvement from key stakeholders.

This comes in the wake of a drastic shortage in paper due to the pandemic coupled with disruptions in supply chains including costly freight charges. Further, there has been a significant rise in demand for papers from China to meet its domestic needs following the country’s ban on importing all wastes from various countries, mainly direct recovered paper, from earlier this year. This resulted in Chinese paper mills importing recycled brown pulp and both recycled and unbleached Kraft linerboard to use it as a pulp or a fiber 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.

It goes without saying that cartons produced in Sri Lanka have a far more superior quality when compared to other countries, as source materials, i.e. waste paper from topnotch suppliers in Europe, USA and Australia. However, the recent second wave of coronavirus taking its toll in these countries has affected waste paper collection, leading to problems in its availability and rise in prices. And on top of all these is the freight shortage.

Just as the economy seems to recover from the detrimental impact of the pandemic this only adds a growing worry, 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, and about ten of them make up a whopping 70pct plus market share. Many manufacturers today are equipped with fully-automatic, state-of-the-art plants with an appetite to continuously invest in innovation, research and development to increase quality, consistency and durability of their cartons.

Needless to say that corrugated box manufacturing is an eco-friendly industry recycling brown boxes as well as waste paper. And 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.