The IppStar Indian newsprint expert outlook and update

Indian newsprint demand in Q4 2020 and 2021

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newsprint
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 CompaniesK’pogaS/KamskyKrugerResoluteNorskeSS.EnsoOthersTOTAL
2020175,000 100,000 100,00050,00045,00025,00025,000545,000
2019250,000175,000125,00075,000 75,000 75,000 100,000925,000

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)

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

It is the right time to support our high-impact reporting and authoritative and technical information with some of the best correspondents in the industry. Readers can power Indian Printer and Publisher’s balanced industry journalism and help sustain us by subscribing.

– Naresh Khanna

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