Paper demand expected to soar high in FY20: Study

Recently, the domestic rating agency, Care Ratings said that it expects the overall paper demand to grow at a compounded annual growth rate (CAGR) of 6.7% to touch 20.7 million tonnes in FY20. It noted that there was a drastic growth in the domestic demand in the country. The growth was from 9.3 million tonnes in FY08 to 17 million tonnes in FY17 at a CAGR of 6.9 %. 

Due to increased urbanisation, requirement of better quality packaging of FMCG products marketed through organised retail, and increasing preference for ready-to-eat foods - the demand for packaging paper and board segment that caters to industries like FMCG, food and beverage, pharmaceutical, and textiles among others, is expected to grow at a CAGR of 8.9 % and reach 11.4 million tonnes in FY20.

Printing and writing segment demand is anticipated to grow at a CAGR of 4.2 %. It is expected to reach 5.7 million tonnes in FY20 on the back of an anticipated pick-up from the education sector with improving literacy rates and growing enrolment as well as increasing number of schools and colleges. 

It is observed that the primary factors that provide an upside to the prices in 2018 are tight markets, low Chinese pulp inventories, lack of supply coming to the market, and healthy demand.