Material Insights · Understanding the Material World

Paper and packaging and Wood products

Indian paper mills and plywood and MDF makers draw on the same farm-grown eucalyptus and other plantation wood, so they compete for logs as well as trading with each other. A plantation gap after the 2020 to 2021 lockdowns nearly doubled wood prices, and wood is now about half of an integrated mill's production cost.

Paper and packaging (industry) and Wood products (industry): 6 relationships.

How they are linked

1. Buys from

Physical flow · ₹1.5 per ₹100 · Paper and packaging buys from Wood products

Pulp and paper mills buy logs, chips and sawmill residues from the wood industry to make virgin fibre.

  • ₹1.5 of every ₹100 of Paper and packaging output, all rounds (India 2022)
  • ₹0.9 bought directly

The share looks small partly because much pulpwood is bought straight from farms, which input-output tables count under agriculture and forestry rather than wood products. Indian wholesale prices for the two show a weak monthly correlation (about 0.12) and a moderate one over 12 months (about 0.35), with no clear lead.

Sources: OECD; Material Insights (World Bank, FRED, IMF data)

2. Buys from

Physical flow · ₹0.8 per ₹100 · Wood products buys from Paper and packaging

Panel and furniture makers buy decor and kraft paper for laminates, and cartons and wrapping for dispatch.

  • ₹0.8 of every ₹100 of Wood products output, all rounds (India 2022)
  • ₹0.4 bought directly

A small but specific need: laminated particleboard and MDF cannot be finished without resin-impregnated decor paper.

Sources: OECD

3. Industry input

Physical flow · Criticality 4 of 5 · Wood products to Paper and packaging

Market pulp producers (rated 4 of 5), pulpwood growers and integrated virgin-fibre mills (3 of 5 each) depend on a steady supply of pulpwood.

  • about 11 Mt annual wood demand of Indian paper mills (IPMA)
  • about 9 Mt domestic wood availability a year (IPMA)
  • 2.46 Mt wood pulp imported by India, FY24

The domestic shortfall is met partly with imported pulp, about a quarter of it from South Africa in FY24, followed by Indonesia and Canada. Globally, wood pulp output rose 3% to 189 Mt in 2024 and pulp trade reached a record 73 Mt, so imported fibre is available but priced in dollars.

Enterprise types that depend on it:

  • Particleboard and MDF makers: decor paper for laminating (criticality 3 of 5)

Sources: Material Insights; Indian Paper Manufacturers Association; The Pulp and Paper Times; UN News

4. Industry input

Physical flow · Criticality 3 of 5 · Paper and packaging to Wood products

Particleboard and MDF makers depend on decor paper for laminating their boards.

Rated moderate: decor paper is a specialised grade with fewer suppliers than packaging paper, but it can be imported, so a supply gap raises cost more than it stops production.

Enterprise types that depend on it:

  • Particleboard and MDF makers: decor paper for laminating (criticality 3 of 5)

Sources: Material Insights

5. Rival buyers of wood

Substitution · Strong · Paper mills and panel makers bid for the same logs

Plywood and MDF plants and pulp mills both use fast-growing plantation wood such as eucalyptus, so when panel makers buy more domestic wood, mills pay more.

  • about ₹8,000 to ₹14,000 wood price per tonne, rise during FY25
  • about ₹15,000 peak wood price per tonne, FY26
  • 50 to 55% wood share of production cost for integrated mills, against 40 to 45% normally

Prices had stayed between about ₹6,500 and ₹8,500 a tonne from 2016-17. Plantings fell during the 2020 and 2021 lockdowns, and because trees take about 2.5 to 3 years to mature, harvests were short in 2023-24 just as plywood and MDF makers switched from imported to domestic wood from 2022. JK Paper reported its eighth straight quarterly profit fall in late 2025, citing high wood costs and cheap imports; its president, A.S. Mehta, expected in April 2026 a significant price correction in FY27 to FY28.

Sources: The Pulp and Paper Times; Reuters via MarketScreener

6. Farm plantations

Physical flow · High in India · Farm-grown trees to pulp mills

Indian mills source almost all their pulpwood from farm and agroforestry plantations promoted by the mills themselves, not from natural forests.

  • 97 to 98% share of pulping wood not sourced from forests (IPMA)
  • about 12 lakh ha cumulative area under mill-linked farm forestry
  • about 5 lakh farmers growing plantations

About 1.25 lakh hectares a year are brought under farm forestry, and plywood and MDF makers buy from the same plantation wood market, which links both industries to farmers' planting decisions. Revised forest guidelines approved by the environment ministry in January 2026 treat plantations on forest land by government or private bodies as forestry activities, exempting them from net present value and compensatory afforestation charges, but projects need state approval.

Sources: Indian Paper Manufacturers Association; Free Press Journal; Down To Earth

For investors

Key learnings

  1. Paper mills and panel makers compete for the same plantation wood, so a panel boom can raise paper costs even if paper demand is flat.
  2. Wood prices move in multi-year cycles set by planting 2.5 to 3 years earlier, so today's plantings indicate costs in about three years.
  3. Integrated mills with their own farm-forestry networks control cost better than mills that buy pulp, which can cost close to 60% of production cost.

What to track

  • Eucalyptus and pulpwood prices at mill gate: A fall signals margin recovery for integrated paper and panel makers (Quarterly · company results, trade press)
  • Plywood and MDF capacity additions: More panel capacity means more competition for logs (Quarterly · company filings)
  • Imported hardwood pulp prices and India pulp imports: Set the cost of filling the wood gap (Monthly · DGCI&S, trade press)

For policymakers

Key learnings

  1. India's paper industry depends on about 5 lakh farmers and 12 lakh hectares of farm forestry, so tree-felling and transit rules directly affect industrial supply.
  2. Domestic wood availability of about 9 Mt a year against demand of about 11 Mt leaves a gap that is filled by imports.
  3. The January 2026 easing of rules for plantations on forest land could raise pulpwood supply, but state approvals and environmental safeguards will decide how much land is used.

What to track

  • Area brought under farm forestry each year: Signals wood supply three or more years ahead (Annual · IPMA, state forest departments)
  • Wood pulp import volume: Shows how far domestic wood falls short (Monthly · DGCI&S)

India

Indian mills get 97 to 98% of their pulping wood from farms rather than forests, and wood prices nearly doubled in FY25 after a lockdown planting gap and a switch by panel makers to domestic logs; India also imported about 2.5 Mt of wood pulp in FY24.

Sources

  1. OECD Input-Output Tables 2025 edition, India 2022, OECD
  2. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  3. Materials and criticality: Paper and packaging, Material Insights (2026)
  4. Materials and criticality: Wood products, Material Insights (2026)
  5. Agro forestry, Indian Paper Manufacturers Association (2025)
  6. Paper industry urges govt to allow pulpwood plantation in degraded forest land, Free Press Journal (2021)
  7. From Rs 8,000 to Rs 15,000 per tonne: wood cost surge hits paper industry margins, relief expected by FY27-28, The Pulp and Paper Times (2026)
  8. India's JK Paper logs eighth straight quarterly profit decline as wood costs pinch, Reuters via MarketScreener (2025)
  9. Overview of exports of select type of paper and key raw material used in the industry by CRISIL Intelligence, The Pulp and Paper Times (2026)
  10. Paper and wood: forest products show signs of recovery, UN agency says, UN News (2025)
  11. Union government removes financial and ecological obligations on private plantations in forest areas, Down To Earth (2026)