GST, imports dampen paper manufacturing

Paper manufacturers are glad to have gotten past the second quarter, a lean season normally, but aggravated by the demands of a shift to a new tax regime, GST.
The industry is also seeing significant imports of copier paper and maplitho, a major concern for the domestic industry, in addition to coated paper, a segment that is traditionally import-dependent.
But towards the second half of September, the domestic trade has started settling down to the new tax regime and enquiries from bulk consumers have started ahead of the diary and calendar season.
Demand could set in after Deepavali in mid-October, say senior executives in paper companies.
A marketing executive said the shift to GST, coinciding with the start of the second quarter, impacted “liquidity, and there was stress on payments”. Ahead of the second quarter, the supply chain had dried up as traders wanted to avoid the complication of holding on to stocks during the transition period. “Demand went for a toss” early in the quarter, but now the supply chain has settled down.
The demand for coated paper is expected to grow in the next couple of weeks as converters get into the job of making calendars and diaries. More than half the domestic demand for coated paper, estimated at about 8 lakh tonnes, is met through imports. In April-June, supply from China was down due to demand elsewhere, and this had made importers send out additional orders in subsequent months. Along with GST kicking in, there has been a stock pile up in ports, the executive said.
In October-November, arrivals are bound to drop and the stock situation will ease with the demand picking up from converters.
The copier paper segment is “seeing a major onslaught”, especially due to dumping from Indonesia. In July alone, about 18,000 tonnes, nearly 25 per cent of the domestic demand, has come in, causing serious concern, he said.
North-South divide
According to a leading trader in Chennai, South has been particularly hard hit due to imports because of the port infrastructure. Mills to the North are relatively insulated. Small traders in the unorganised sector are finding the going tough as GST discourages cash dealings.
Source :  The Hindu Business Line


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