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Tuesday, October 26, 2021

PRINT HIT BY RISING NEWSPRINT COSTS

Newsprint cost has risen by over 20% in the past three months and has been forecast to go up further by at least another 10% this month. Hit hard by the pandemic, print publishers are now having to deal with rising newsprint prices.

Newsprint prices, which had dropped below $300 per tonne in 2020, has now touched close to $500 per tonne even as analysts say it is expected to rise by another $100 USD per tonne in the coming months. It now emerges that some of the popular paper mills that exported newsprint to India have either shut shop or have moved into new businesses during the pandemic leading to a serious demand-supply imbalance and escalating newsprint prices for Indian buyers.

However, newsprint consumption had been low throughout 2020, which shows in the financial results of various publishers. Added to it was the fact that no relief was announced for the industry in waiving import duties on newsprint in the 2021 Union Budget.

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M.V. Shreyams Kumar, Member of Parliament (RS) and Chairman & Managing Director, Mathrubhumi

Speaking to media, M.V. Shreyams Kumar, Member of Parliament (RS) and Chairman & Managing Director, Mathrubhumi, one of the two leading Malayalam publishers in Kerala, said “Close to 50-60 per cent of our costs go into acquiring newsprint, and with no relief in import duties from the government, we are only left with increased costs. At tough times like these, increasing newsprint prices are a major concern for the printing industry which also has to pay salaries to the lakhs of the employees engaged in the sector.”

Under the circumstances, smaller publishers take the worst hit with increasing raw material costs. Increasingly, most print players are beginning to use indigenous newsprint to even out costs and planning other aspects of production to hedge against rising costs.

However, turning over to indigenous newsprint may not be an optimal  solution for Indian publishers because imported newsprint in India largely consists of lower grammage while Indian newsprint manufacturers do not produce paper of similar grammage or quality.

What further compounds the matter is that the production capacity of domestic newsprint mills is significantly below market demand. In addition, a large number of the domestic mills have moved their production to other paper grades, which do not serve the purpose of the publisher.

However, experts say supply shortage and increasing costs are at best a short to medium term crisis, attributing it to vessel shortage, which is likely to be a passing phase. Regardless of a pullback of nearly 4.9 mn MT of newsprint capacity worldwide, global demand is likely to pick up sooner than later.

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