As paper sales drop, industry shifts focus to tissue, diversified products

The paper industry in Bangladesh – like elsewhere in the world – is standing at a crossroads.

While the consumption of newsprint and printing paper has been in steady decline because of digital disruption, the diversified products segments such as tissue and hygiene are doing well and achieving healthy growth. Especially, the Covid-19 pandemic has given a real shot in the arm to the hygiene product segment of the paper industry.

An analysis of the business data of Bashundhara Paper Mills, a major stakeholder in the sector, might provide a vivid picture of the situation the industry is currently in.

In the pre-Covid fiscal 2018-19, Bashundhara's printing paper and newsprint contributed 56% – or Tk618 crore – to its annual turnover of Tk1,105 crore. Two years later, in FY21, the segment's contribution to the company's overall business of Tk888 crore came down to 43% or Tk376 crore, according to the company's revelation.

During the period, however, the hygiene product segment's contribution to Bashundhara's yearly turnover climbed to 19% from a paltry 4%. The tissue segment's share remained rather static, with an insignificant 2 percentage points decline from 39%.

To cope with this changing trend in demand, some of the entrepreneurs in the paper industry are reducing paper manufacturing and, instead, are increasing the production of diversified paper products. Some others are even focusing solely on diversified products.

According to entrepreneurs, the use of paper in public and private offices is declining due to the proliferation of digital media and people's growing online dependence. Academic activities' going online also has been contributing to a gradual decline in the demand for paper.

They say it may take a few more years for the industry to recover from the setback caused by the pandemic-induced school closures for nearly two years and return to normalcy.

According to the Bangladesh Paper Mills Association, around 50 mills that used to produce paper products only have been shuttered due to declining demand amid the pandemic.

The association says some 41 out of over 100 paper mills in the country produce diversified paper products alongside printing paper and newsprint.

Encouraged by the increasing demand for diversified paper products, these mills are boosting their production capacity in this segment, people concerned told TBS, adding that they fear the demand for printing paper and newsprint will shrink further in the coming days.

M Mazdul Islam, general manager of Bashundhara Paper, told TBS that his company – which caters to nearly 80% of domestic demand for tissue papers – also has concentrated on enhancing the production of tissue and hygiene products.

The listed company also has plans to launch several new diversified paper products in near future, he added.

Nonetheless, soaring prices of raw materials have emerged as a major challenge for the paper industry in recent times.

Industry insiders say the Russia-Ukraine war has further pushed up the prices of raw materials, while an increase in shipping fares has only added to their cost burden.

Meghna Pulp and Paper procures new tissue plant

Meghna Pulp and Paper Mills, which holds 8-10% share in the local tissue market with its "Fresh" brand tissue, is increasing its production capacity.

To this end, the company has already procured a new production plant from Italy. It had earlier imported another plant.

According to the online news portal pulpapernews, Meghna Pulp and Paper Mills inked a deal with Recard SpA in June 2021 to buy a brand new tissue and MG paper production plant.

The machinery installations are slated for September this year.

The new turnkey plant includes three preparation lines for pulp where waste paper can also be used as raw material.

The paper machine with a fourdrinier formation section is designed to reach a maximum operating speed of 1,000 metres per minute and a production rate of 70 tonnes per day.

A fourdrinier is a paper machine with a horizontal, moving, fine mesh, woven wire cloth or plastic fabric upon which the pulp slurry is deposited, forming the web.

A special rewinder – suitable for both crepe papers and smooth papers like the MG – completes the plant.

Demand and production

The demand for different types of paper in the country is about 9 lakh tonnes, but local manufacturers – 20-30 large and the rest small – have the capacity to produce 16 lakh tonnes a year.

The size of the country's paper market is about Tk5,000 crore. Writing and printing paper products account for 60-70% of the local market.

People involved in the sector said Bangladesh was completely dependent on paper imports even a decade ago.

Although the domestic paper industry began to develop in the 1980s, large industrial groups started investing in this sector in the '90s, and gradually the industry became self-sufficient.

The country's paper mills are currently exporting their products after meeting the local demand. This sector employs around 15 lakh people.

According to the BPMA, entrepreneurs have invested Tk70,000 crore in the country's paper industry.

Around 300 sub-industries and ancillary industries such as printing, publishing, ink making, decoration, packaging, and binding are also related to this sector.