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Paper prices to rise on import costs

By VM Sathish




The price of paper is to be increased by $25 (Dh92) per tonne by a leading UAE manufacturer because of the rising cost of imported virgin pulp and chemicals used in paper mills.

The hike, which will come into force in the next quarter, comes after Crown Paper Mills of Ajman pushed up the price by $100 per tonne last year. Other factors behind the rise include a shortage of pulp and higher fuel and freight costs. The company has already informed 28 paper converting units in the UAE of the latest increase, which will affect paper used for packaging, tissue manufacturing, newsprint and other purposes.

“We currently produce 70 tonnes of tissue paper per day and are adding 30 tonnes more daily to meet the growing export demand,” said Majid Rasheed, the company’s managing director.

“Three paper manufacturers – Emirates Paper Mill, the Abu Dhabi Paper Mill and us – together produce about 83,000 tonnes per year.

“The import cost of a tonne of virgin pulp has gone up between 25 to 30 per cent to $800. The rate keeps going up due to high crude oil prices.

“The raw material used for tissue manufacturing is sourced from Indonesia, the United States, Finland and other countries. Increases in the crude price have a chain reaction on paper prices.

“Pulp supply is limited because of the pressure on jungles around the world. This trend is applicable to all paper industry units in the UAE, the GCC and the world. International paper and pulp prices have been shooting up due to high crude prices, the strengthening euro and increased freight charges.”

Rasheed said there was a shortage of pulp around the world and as a result the company was trying to use more recycled paper at its expanded plant.

“Last year we had to increase the price of a tonne of tissue paper by $100 to $13,750. As the prices of all raw materials are going up we have informed our clients that there will be an additional $25 per tonne charge because we have no other option other than to pass on the additional cost to the converting units.

“Our profits are under pressure and the margin of the local paper converting units is also under pressure. Gone are the days when profit margins in the paper industry were remarkable.

“The price is still competitive compared with those charged by European firms, which are facing closure. The costs of chemicals, mostly imported, labour and fuel have also gone up, putting pressure on manufacturers.”

The numbers

$25: will be the price increase for each tonne of paper by Crown Paper Mills of Ajman

$100: was the hike last year