UPM: Indian newsprint demand to fall by more than 20% in 2020

Indian newsprint demand in 2020 is expected to see more than 20% year on year decline because of the Covid-19 pandemic impact, Anu Ahola, senior vice president, news & retail business unit of UPM said during the WAN-IFRA India 2020 Printing eSummit.* “In the past few years, the rate of newsprint demand decline in India has been close to half of that of the global average. However, this year, it will be higher as India has been especially hard hit by the Covid-19 pandemic,” Ahola said.

Demand for India’s newspapers during the pandemic is severely impacted by the hard lockdown enforced countrywide on 23 March. Circulation and distribution of newspapers were disrupted during the early phases of the lockdown in all major cities. Things have improved since June, but reports suggest that newspaper companies are still facing local-level challenges in getting the physical papers delivered to the doorsteps of multi-story urban dwellings. Home delivery is the backbone of the Indian newspaper business model.

Price volatility to remain in the Indian market

Ahola said that the Indian newsprint market is heavily dependent on imports, and therefore supply remains volatile. Apart from domestic players, India is disproportionately reliant on Russia and North America for newsprint imports. Due to the massive import dependency and volatility in supply, India newsprint prices are also very volatile.

And this scenario is likely to continue, according to her. “I do not see much change in the character of the Indian market, and so I feel the trend of high volatility in prices will continue in the near future,” Ahola said.

At present, Finland-based UPM imports all its products into India and has no plans to start manufacturing locally. Ahola said that volatility is the main reason for this. “We are committed to the Indian market but due to the volatile nature of the market, but we cannot make any long-term commitments in the country,” she said.

Global capacity falling faster than demand

With growing digitalization, global demand for newsprint has been on the decline for some time. However, newsprint manufacturing capacity has been falling faster than demand decline in the 2016-2019 period.

According to Ahola, global newsprint demand decline has been about 4.5 MT per year, or 7% per year, while the capacity decline has been 5 MT per year during the period mentioned above. The capacity decline has been faster than demand decline, especially outside Europe and North America. This year the demand decline has been very sharp due to the Covid-19 pandemic. “The indicative estimate for the global demand decline in 2020 is 17%,” Ahola said.

Ahola believes that only profitable and environmentally sustainable supply will remain going forward. Also, the growth in packaging and fiber scarcity has provided an exit opportunity to newsprint manufacturers. “Producers find better prospects in the packaging segment and are exiting the newsprint manufacturing business. It is all about long-term competitiveness – of cost and sustainability,” she said. 

* Editor’s note: Our quarterly and half-yearly IppStar expert newsprint forecasts are at variance with this forecast by Ahola and put the likely demand drop for Indian newsprint in the financial year closer to 30 to 35%. Some of the demand forecast differences may be because UPM is looking at the 2020 calendar year from January to December and IppStar www.IppStar.com looks at the financial year from April 2020 to March 2020. We believe that the IppStar.com figures are supported by the indicative published raw material consumption numbers of one of the country’s leading Hindi dailies. Table 1 in the IppStar’s third newsprint update shows a 41% drop in newsprint purchases in the 2020 calendar year. We believe that substantial revenue losses from advertising and circulation and the limited pagination and circulation till end-March are likely to bear out the IppStar expert forecast.