Paper mills in Morbi, Gujarat, are running at full capacity as a revival in the region’s ceramic industry drives fresh demand for kraft paper packaging, while exports to China have spiked and prices have strengthened, according to industry trade reports. The turnaround marks a sharp reversal for mills in the region, which had earlier faced sluggish demand tied to a slowdown in ceramic tile production, one of Morbi’s dominant local industries and a major consumer of kraft paper for packaging.
The recovery comes even as the broader pulp and paper industry contends with global trade volatility. The escalation of the US-Iran conflict in early 2026 introduced disruption across the Red Sea and Strait of Hormuz shipping routes, adding sustained pressure on costs and supply chains for the sector. Against that backdrop, Morbi’s kraft paper mills running at full capacity stand out as a rare bright spot for regional manufacturers.
Why Is Morbi’s Kraft Paper Sector Rebounding Now?
Morbi is one of India’s largest ceramic tile manufacturing clusters, and kraft paper is a core packaging input for tile exports and domestic distribution. As ceramic production has picked back up, demand for kraft paper packaging has followed directly, pushing local mills to run at full capacity for the first time in several quarters. Rising kraft paper exports to China have added a second demand channel, helping mills push through price increases.
What Does This Mean for India’s Regional Paper Industry?
A localised demand recovery in Morbi illustrates how closely tied paper manufacturing is to downstream industrial activity, in this case ceramics, rather than moving purely on national-level packaging or printing paper trends. Mills benefiting from the ceramic revival may use improved cash flow to invest in capacity or efficiency upgrades, even as the broader Indian paper industry navigates import pressure and elevated input costs.
Market Reaction and Industry Response
Kraft paper producers in the region have welcomed the price strengthening as a relief after a difficult stretch, while trade watchers note the export spike to China adds a layer of resilience against domestic demand volatility. However, the same Red Sea and Strait of Hormuz disruptions affecting the wider pulp and paper trade could eventually weigh on freight costs and shipment timelines for Morbi’s China-bound kraft paper exports if geopolitical tensions persist.
What Happens Next?
Industry watchers will track whether Morbi’s ceramic revival, and the kraft paper demand it generates, proves durable through the rest of the fiscal year, as well as how sustained the current export spike to China remains amid ongoing shipping-route disruptions. Mills running at full capacity may also face a decision point on further capacity investment if demand holds through the coming quarters.
Frequently Asked Questions
Why are Morbi paper mills running at full capacity?
A revival in Morbi’s ceramic tile industry has driven higher demand for kraft paper packaging, pushing local paper mills to full capacity utilisation.
How are exports affecting Morbi’s kraft paper industry?
Kraft paper exports to China have spiked, adding a second demand channel alongside the domestic ceramic industry recovery and helping mills push through price increases.
What risks does the region’s paper industry still face?
Disruptions across the Red Sea and Strait of Hormuz, tied to the escalation of the US-Iran conflict in early 2026, continue to pressure costs and supply chains for the broader pulp and paper trade.
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