Covid-19: Paper industry in shreds as demand plunges

Abdul Matin, a salesman at Fardeen Traders in the capital's Islamia Market, has never experience such sluggish business in his life. Nilkhet, the largest retail stationery market area in Dhaka, is drawing a significantly low number of customers, especially students, as all educational institutions are closed for the last three months.

"I could sell writing notebooks (khata) worth Tk2,000 a day before the outbreak of the coronavirus. Now the figure has dropped to less than Tk200," said Matin, sitting inside his small shop on a sunny Sunday morning.

With schools, colleges and universities shut, and government and private offices running on a limited scale in the midst of the deadly coronavirus pandemic, people are mostly working from home online. The demand for paper has gone down sharply, putting the paper industry in limbo.

Mohammed Wazed, owner of Sheuly Book Binding, buys reams of paper from the wholesale market in Naya Bazar and produces notebooks for students. His business would supply around 3,000 notebooks to 20 stationery shops in Dhaka every day before the pandemic.   

"The demand for notebooks in the market is no longer the same. Shops are not placing new orders," he said, adding that he now supplies less than 100 notebooks daily.

Before the pandemic, Wazed would buy around 50 to 100 reams of paper every day. Now he buys five to 10 reams only. A ream consists of 250 sheets of paper.  

Like Wazed, many notebook binding enterprise owners have downsized their business due to the marked fall in demand.

The demand for paper in the publishing industry has also decreased. The industry is not publishing books regularly in the face of uncertainty caused by the pandemic.    

Farid Ahmed, president of the Academic and Creative Publishers' Association of Bangladesh, believes the publishing industry buys less than 1,000 tonnes of paper to publish creative books all year round.

He said that less than 50 tonnes of paper have been bought by the creative publishing industry in the last one month. He believes it should have been double at least.    

"We think book publishing will be delayed until the end of the pandemic. Publishers are living in growing uncertainty," said Farid.

Like the retail market, wholesale paper traders are also suffering a lot because of drop in sales and prices. Traders at the largest wholesale paper market in Naya Bazar now wait for hours to get customers.  

Kamal Hossain, owner of Kagojghar in the market, has been living a miserable life for the last three months. He sells locally-produced writing and printing papers. As educational institutions are closed, the demand for writing paper has slumped.   

In normal times, he sells papers worth between Tk50,000 and Tk200,000 a day. Nowadays, the amount is less than Tk2,000.

"I am just opening the shop and closing it. That is my job now," said Kamal.

His business is totally dependent on educational intuitions. He said he has a bleak future ahead unless schools and colleges reopen.   

"I am now selling a ream of paper for Tk2,050. I used to sell it for Tk2,700 before the pandemic," said Kamal.

Not only Kamal, nearly 500 wholesalers in Naya Bazar are facing similar hardships now.  

Bangladesh Paper Merchants Association General Secretary Abul Hossain said there is no demand for paper in the market now, and wholesalers have been incurring the biggest losses for the last three months.

He said wholesalers could sell 1,000 to 1,500 tonnes of paper daily before the outbreak of coronavirus, but they can sell less than 100 tonnes nowadays.

"I bought local papers worth Tk10 lakh four months back. I could not sell even one-tenth of that," said Abul.

Private paper mill owners are also finding it hard to handle the situation as demand for paper has dwindled. Almost all of them are selling papers at a lower price. They have also reduced production.   

Mostafizur Rahman, chairman of the export and market development committee of Bangladesh Paper Mills Association and deputy managing director of Bashundhara Group told The Business Standard that 80 percent of demand for paper has declined due to Covid-19.

"In normal times, the demand for writing and printing papers was around 50,000 tonnes per month. Now that has come down to 10,000 tonnes," he said.  

He said Bashundhara Group's paper mills would produce 15,000 tonnes of writing and printing papers per month before the pandemic, but now it is between 2,000 and 3,000 tonnes.

Mostafizur said that 80 out of 105 private paper mills have already been closed down, and the remaining 25 are running on a very limited scale.

"All paper mills are running on 15 to 20 percent of their production capacity. They have stockpiles of paper too," he said, adding export of writing and printing papers has gone down too.

According to Mostafizur, production of writing and printing papers has virtually come to a standstill. "The annual business of the locally-made paper amounts to Tk4,800 crore."    

With decreasing demand, the price of paper has also fallen significantly. Mill owners are selling papers for whatever they can get. Before the outbreak of coronavirus, mills on average would sell a tonne of paper for Tk80,000. Now, they are negotiating the price with wholesalers.

Bangladesh Paper Importers' Association President Shafiqul Islam Vorosha said that local paper mills can produce a sufficient amount of paper to meet the local demand for writing and printing papers.

He said the monthly demand for writing and printing papers stands between 50,000 to 60,000 tonnes.

Demand for packaging paper for the readymade garment and pharmaceutical industries is between 50,000 and 60,000 tonnes per month. Nearly all packaging papers, including duplex board, Swedish board, art card and art paper, are imported.

"With diminishing demand, import of packaging paper has also come down to 20 to 30 percent in the middle of the pandemic," said Shafiqul.      

"As the readymade garment industry is suffering because of the pandemic, packaging paper is mostly being imported for the pharmaceutical industry nowadays," he added.