Little hope for paper price cut despite dollar decline

LAHORE: The sharp decline in dollar rates have raised hopes that the price hike could be reversed. This may be true for the items we import as raw material of a product, but not products manufactured from domestic raw materials.

We cannot expect any appreciable reduction in the prices of school books and stationary for instance; that are made from the paper produced by local paper mills from local raw material or recycling of waste paper. Pakistan mainly imports newsprint and decline in dollar rates would benefit the newspaper industry.

At present, in Pakistan there are about 100 units in the organised and unorganised sectors. These units produce writing and printing paper, wrapping and packing paper, white duplex coated, un-coated board, chip board and other boards.

Import of paper is subject to duty and regulatory duties that make imports unfeasible. Moreover, the local paper mills have more capacity than the consumption in the country. It is true that the prices of stationery and textbooks reached the roof in the recent past when the US dollar was also appreciating against the rupee. But the increase in prices was mainly due to the higher cost of doing business in Pakistan. The power tariff has almost doubled in the last three years. Petroleum product rates are at historic high increasing the transportation charges.

The local mills also took advantage of high tariffs on imported paper to jack up prices. Paper dealers accuse the paper mills of operating as a cartel to keep rates high. Some dealers allege that the millers also under report production to save sales tax. The paper prices in Pakistan would remain high until these issues are addressed. Given the weak government writ this is unlikely to happen.

Wastepaper is the source of local raw material of the Pakistani industry. The waste paper is recycled, bleached to produce stationary items. In case of oxidative bleaching, chlorine is the basis for commonly used bleaching agents like sodium hypochlorite, bleaching powder, and sodium chlorite. The non-chlorine containing oxidative chemicals are hydrogen peroxide, sodium persulphate, sodium percarbonate, sodium perborate and peracetic acid.

Since Pakistan has very low forest coverage the raw material for the industry is the agriculture waste. Paper can be made without trees. One acre of kenaf, a plant related to cotton, produces as much fiber in one year as an acre of yellow pine does in twenty. Paper can also be made of material such as hemp. Making paper from non-tree sources is currently being done in at least 45 countries including Pakistan in more than 300 mills. Wheat plant residue and rice husk are also used in paper production. Import of pulp is nominal.

After mixing with a certain number of long fibers, the bleaching chemical bagasse pulp can be used to make a variety of high-grade culture and household papers, such as coated base paper, copy paper, double-adhesive paper, high-grade toilet paper, napkins, etc.

The paper and board industry in Pakistan has emerged over the years. The first paper unit was founded in 1952. Later many units were set up in Punjab, NWFP and Sindh. These units now cater around 80 percent of the total domestic demand of Pakistan. The paper industry in Pakistan is important as it has emerged and survived well over the years.

About 70 percent of the paper units are in Punjab, 10 percent are in NWFP and the rest 20 percent are in Sindh. Punjab has the greater proportion as it has the higher availability of underground water as well as wheat straw which is the prime raw material in paper production.