Why Paper Stocks Rallied 5-20% in this Week

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Why Paper Stocks Rallied 5-20% in this Week
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- Shares prices of paper stocks have been on an upswing this week. JK Paper Ltd (NS: JKPA ) has gained 20% in the last five trading sessions while Emami (NS: EMAM ) Paper Mills Ltd (BO: EMAP ) is up 6%. Star Paper Mills Ltd (NS: STPM ) has gained 5.61% and West Coast Paper Mills Ltd (NS: WSTC ) has closed up 5.18%. Pudumjee Paper Products Ltd (NS: PUDJ ) closed 6.56% higher in the last five days.

Two major factors are responsible for the sudden rally in these stocks: The reopening of the economy and the rising price of lumber across the world.

The reopening of the economy is an easy factor to understand. The world will start consuming more paper and associated products as business activity starts to improve but why have lumber prices suddenly started to go up around the world?

This is because of massive wildfires in parts of the US and Canada which could lead to a supply constraint in lumber. Prices of lumber in China have also moved up sharply which will give Indian players a significant advantage.

The paper industry was one of the hardest hit by the pandemic. Printing and writing almost came to a standstill as children and office-goers stayed home. While there was some relief in the form of packaging for online deliveries, it was nowhere enough to compensate for the lack of business.

 

 

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