MLM Group is working on a storage and distribution strategy to maintain a stock level of 8000-10,000 tonnes of pulp at key Indian ports, ensuring a steady and reliable supply for its domestic mills. MLM Group has a strong presence in over 60 countries, with offices in Asia, Europe, East and West Africa, and more. This was revealed by Mr. Chirag Jain of MLM Group, during an interaction with Paper Mart.
Paper Mart: Given the increasing demand for premium qulity pulp in India, what strategies and opportunities can paper mills leverage to remain competitive in the market?
Chirag Jain: Paper mills are poised to become more sustainable in producing various types of paper and paperboards, positioning themselves competitively in the global paper market. To cater to paper products with higher virgin pulp content, mills need to either find more cost-effective raw materials or explore alternative pulp substitutes, or they should focus on becoming more integrated in pulp production. Presently, India stands as an appealing market for premium quality pulp on the global stage. Given Russia’s limited presence in other markets, we anticipate the country will be a valuable and novel contributor to India’s pulp supply. Russia is increasingly targeting the Indian market for its pulp exports.
PM: List the challenges faced by India in the global pulp market. Can consistent quality and reliable supply be maintained in the current fluctuating market conditions?
CJ: As we know, an Asian country currently dominates the pulp market as one of the largest global buyers, significantly influencing market dynamics. While maintaining consistent quality and quantity for the Indian market is feasible, controlling prices is not. India, still being an emerging player in the global pulp market, needs more leverage to set prices and must instead follow the pricing trends established by leading market players. Another challenge is that the majority of mills in India still rely on spot buying, with very few having established long-term collaborations for pulp supply. To enhance sustainability and price stability, there is a need for more long-term contracts with Indian mills, similar to the approach of many global mills that engage in future contracts. Consistent pricing can only be achieved through such long-term agreements. Currently, India is a consistent market for only a few suppliers, while for the majority, it remains a spot market.
PM: In the backdrop of the Red Sea crisis as well as other global logistic challenges, how, in your opinion, have the issues affected the pulp and paper industry?
CJ: Suppliers are facing significant challenges due to the Red Sea crisis, including higher freight charges, shipment delays, unavailability of vessels, and overall uncertainty. For importers, these issues are further compounded by significant shipment delays and the increased risk of damage due to longer and more complex transportation routes. These factors collectively elevate the overall risk associated with importing goods, creating additional challenges and uncertainties in the supply chain process. The situation is particularly critical for bleached and unbleached softwood, which is heavily dependent on Western countries like South America, North America, and Russia. However, bleached hardwood shipments from Southeast Asia are less affected, as the Western situation is expected to improve soon. Currently, the Western situation has caused difficulties in container circulation in Southeast Asia, impacting India as well. Nonetheless, since the majority of India’s bleached hardwood imports come from Southeast Asia, the impact on these imports is less severe compared to bleached and unbleached softwood.
Watch: Top Paper Companies 2023
PM: The Indian paper industry relies heavily on pulp imports. In your opinion, Is there anything that can be done to reduce this dependence?
CJ: India’s dependency on pulp imports cannot be significantly reduced. Even major players in the pulp market rely on pulp imports. In fact, they have strategically expanded their imports to include wood chips as part of their efforts to broaden and enhance the pulp supply. This move aims to increase the availability and diversity of raw materials, ensuring a more stable and robust supply chain for pulp production. By incorporating wood chips into their import strategy, they are addressing supply constraints and reinforcing their ability to meet growing demand in the pulp market. However, to mitigate supply issues to some extent, the government could initiate and promote the aggressive cultivation of hardwood trees on barren lands in India to maximize efficiency. Additionally, exploring and utilizing agro-pulp, which is already a sustainable solution, could be beneficial.
PM: To what extent do you think pulp-integrated mills play a role in India paper industry?
CJ: Pulp-integrated mills are pivotal in the pulp industry, as their production for the Indian market substitutes imported finished paper. They play a crucial role in shaping the industry in India and addressing supply shortages for specialty papers and high-virgin-content products that would otherwise need to be imported. Additionally, these mills bolster the local paper industry by enhancing the ecosystem in various ways, fostering creativity and promoting greater product diversification.
At MLM, we intend to maintain a stock level of 8,000 to 10,000 tonnes of pulp at key Indian ports. This proactive approach is designed to ensure a steady and reliable supply for our domestic mills, enhancing their operational efficiency and integration.
PM: What are your insights on the current trends and challenges in importing pulp for the Indian paper industry?
CJ: This year, the market appears weak and is anticipated to remain so until the first quarter of 2025. The downward trend is influenced by economic turbulence in China, North America and Europe, with some countries facing recession, leading to weakened demand and logistics challenges. With no change in FED rates, market growth depends on demand; without it, the market is likely to continue its decline. Another challenge is the growing shift towards pulp substitutes driven by their lower cost and easier availability. This trend is primarily observed among small to medium-sized mills.
Furthermore, as India is not a major player in the global pulp market, it lacks the influence to regulate prices and must instead follow the trends set by leading market players. The pulp industry also faces significant issues from forest fires occurring globally. There is a pressing need to explore alternative solutions, such as agro-pulp and plantation approaches, to reduce our reliance on natural forests for pulp production.
Also Read: Shitla Papers Aims to Strengthen International Presence
PM: Looking ahead, how do you see the import market evolving in the next few years? Are there any specific growth areas or emerging trends you anticipate?
CJ: We are anticipating robust growth in the import market of India as new tissue paper mills, three coated paper mills, apart from other projects, will be coming up in the near future. All these projects will require substantial pulp supplies. Since pulp has no sustainable substitutes and is essential to various industries beyond paper, its demand is likely to remain significant, if not increase.
At MLM, we are actively working to improve the efficiency of the supply chain by implementing a storage and distribution strategy. We intend to maintain a stock level of 8,000 to 10,000 tonnes of pulp at key Indian ports. This proactive approach is designed to ensure a steady and reliable supply for our domestic mills, enhancing their operational efficiency and integration. By securing these inventory levels, we aim to mitigate potential disruptions and support our mills with a consistent and effective supply chain, ultimately contributing to their long-term success and stability.
