Supply Disruptions Push Paper Prices Higher by Up to 7%

Geopolitical instability in West Asia is once again disrupting the flow of recovered paper into India, creating fresh uncertainty in a market that had only recently begun to stabilise. The situation is leading to shipment delays, rising freight costs, and limited supply visibility, all of which are driving prices upward.

Over the past month, imported recovered paper prices have increased across most grades, with hikes ranging from 1% to 7%. Brown grades have seen the sharpest rise, climbing by 6–7%, while white grades have increased by 1–6%. Prices for POC (non-Americas) remain stable, as do BBC offers. Other categories, such as scan board and mixed paper, have recorded modest gains of 1–2%.

The ongoing crisis in West Asia has significantly impacted shipping and logistics. Freight rates have become increasingly unpredictable, with fluctuating surcharges and frequent revisions by shipping lines. In several cases, buyers have not received fresh price offers for weeks, while already confirmed shipments are facing delays.

Higher fuel costs are compounding the issue, pushing up both sea and air freight rates and increasing operational expenses. Ships transiting through or waiting near the Strait of Hormuz are experiencing indefinite delays, creating uncertainty around delivery schedules. In some instances, cargo that had already been containerised has been offloaded, while suppliers have indicated that certain consignments may not be shipped at all despite prior agreements.

These disruptions are expected to have a broader impact beyond the paper industry. Rising logistics and material costs could increase the price of everyday goods, including plastic products, construction materials, and household items. The plastics sector is particularly vulnerable, given that the region accounts for approximately 85% of global polythene supply.

In India, the effects are already visible. Paper mills have raised prices of kraft paper and duplex board by approximately ₹3–₹4 per kg. At the same time, imported coal costs have increased by ₹2–₹2.5 per kg, adding further pressure on production costs. Industry experts warn that higher logistics expenses, especially for low-value, high-volume goods, could contribute to inflationary trends.

Looking ahead, market participants expect conditions to tighten further. Freight costs are likely to continue rising, and insurance premiums for shipments through affected regions are already increasing. Additionally, the strengthening US dollar against emerging market currencies—including the Indian rupee, now around 93.9—has further increased the cost burden on importers.

As imported supply becomes more constrained, domestic recovered paper prices in India are also trending upward. Mills may increasingly rely on local sourcing, but limited availability within the country could restrict production capacity if disruptions persist.

At the same time, rising input costs are squeezing profit margins, while weak demand is making it difficult for mills to pass on price increases to customers. A slowdown in finished paper exports is adding to the challenge, as excess supply is redirected to the domestic market, putting downward pressure on prices until inventories stabilise.

Recent developments in the conflict suggest continued uncertainty. While the United States has indicated a temporary pause in strikes and hinted at possible negotiations with Iran, Tehran has denied any such talks and remains firm on its position regarding the Strait of Hormuz. Meanwhile, Israel has intensified military operations in Lebanon, signalling that tensions are far from easing. The ongoing conflict continues to disrupt global supply chains and fuel volatility across markets.