The IppStar Indian newsprint expert outlook and update

Indian newsprint demand in Q4 2020 and 2021

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Newsprint storage of one of the major South Indian daily newspapers

According to our latest quarterly Indian newsprint expert update, there is no fixed or ruling price today with hardly any buyers for newsprint and some Indian newspapers having eight months of paper consumption in their warehouses. Nevertheless, a reference price would be US$ 375 for 42 gsm and US$ 365 to 385 for 45 gsm newsprint. 

This price is likely to hold till the end of the 2020 calendar year. Moreover, some of the mill offerings’ prices are likely to remain at this level until the end of the financial year in end-March 2021.

Consumption and demand

There is a severe drop in both demand and consumption of newsprint of almost 30-35%. This has contributed to high inventories, in many cases, to nearly excess levels. The Indian annual consumption in 2020 is less than 2 million tons, of which 90% is imported newsprint. The domestic suppliers are also trying their best to sell their newsprint (available only in 45 gsm), but there are hardly any significant orders to date.

Both the news media publishers and the newsprint manufacturers and distributors are pinning their hopes on the coming festival season. They hope that newsprint consumption will substantially increase in the season that begins in September and goes on till the new year.

Hardly any of the Asian newsprint manufacturers are availing special trade concessions or free trade agreements to avoid import duties, pr selling newsprint to Indian customers. South Korean mills are selling at prices matching those of the other global newsprint suppliers. As per Table 1, it is clear that newsprint sales in 2020 at 545,000 metric tons are 41% lower than in 2019, in which newsprint sales to India were at 925,000 metric tons.

Table 1.
Newsprint sales by major suppliers to India in 2020 vs 2019 (in metric tons)

Paper Companies K’poga S/Kamsky Kruger Resolute NorskeS S.Enso Others TOTAL
2020 175,000 100,000 100,000 50,000 45,000 25,000 25,000 545,000
2019 250,000 175,000 125,000 75,000 75,000 75,000 100,000 925,000

The three leading indigenous newsprint manufacturers are Khanna Paper Mills, Rama Newsprint, and Emami Papers. Of these, Emami has switched from newsprint to other more remunerative grades of paper. Apart from the low prices and insufficient demand, there is currently a lack of funds to finance raw material purchases. At the same time, pollution control measures and environmental regulations have become very strict. The weakness of the Indian Rupee viz a viz most currencies has also affected both imports and indigenous supplies.

Table 2. Newsprint paper mills and machines changes in output
Fresh capacity, closures, and changes of output grades

Outlook and assessment for the future

Currently, the Indian newspapers are suffering from low demand in both circulation and advertising. The fragile economic conditions prevailing are keeping advertising revenue low. The economic slump is likely to worsen, and there is no sight of relief or any silver lining. On the contrary, in the minds of the newsprint buyers, there are fears of anti-dumping duties being applied to newsprint imports at globally competitive prices. There are fears that the lights may go out of the industry sooner than expected.

Conclusion

The newsprint industry will go through a significant change with some mills or paper machines closing down and some converting to other grades of paper. In the last few months, 1.9 million tons of European and Scandinavian newsprint production from just two companies has been scheduled for shutting down and change to other grades. 

The switchover of printed news media consumers to digital channels is already almost 35% currently, and it is growing! As far as newsprint prices, there may be some recovery by Q2 or Q3 of 2021 to US$ 500 per metric ton.

The Indian Rupee and oil prices

The Indian Rupee may oscillate in the range between Rs 75 to 77 to the US dollar. As far as oil prices, they will continue to range below US$ 50 a barrel. Oil is likely to vary between US$ 45 to 40 per barrel. Here also demand has to pick up, and the oil price could go even lower!

Editors note: (Table 2 has been added on 15 September morning IST)