Naresh Khanna based on industry expert sources
In the early quarters of 2021 and latest by Q2 of 2021, global newsprint prices are expected to rise to to US$ 500. Together with the lower demand, there is the effect of newsprint and publication paper machines being shut down or changed to other grades. Newsprint imports are encountering strong headwinds in shipping and freight costs as suggested by American Freight Inc as well.
While Indian manufactured newsprint works on single-width web presses, it is not as productive on the larger publishers’ double-width presses. It tends to be supplied with more splices and is generally supplied at basis weights above the 40 to 43 gsm that the publishers would prefer to run.
Imported newsprint prices have already risen from last year’s lows of US$ 375 to US$ 425 and to US$ 450. As the inventories run out and circulations and pagination recover, in the first quarter of 2021, newsprint prices have risen to US$ 450. The prices are now closing in on US$ 500 a ton and spiraling upward towards US$ 600 in a situation reminiscent of FY 2018-19.
In 2020, the pandemic year, Indian newspaper demand shrunk as we had forecast – by 40%. The entire circulation and pagination decline in the pandemic has still not recovered. However, many of the more prominent dailies that had inventories meant for half a year till June 2020 could have kept their leaner newspapers running till December or January without purchasing more paper.
|Newsprint prices||2021 Q1||2020 Q4|
|45 gsm||US$ 400-600||US$ 350-400|
|42 gsm||US$ 420-620||US$ 360-450|
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On the other hand, the major global manufacturers announced plans at the beginning of 2020 to remove at least 1.9 million tons from newsprint production and altogether approximately 2.2 million tons from publications papers. The mills have not yet implemented all the machine shutdowns and changes to higher-value grades they announced. Nevertheless, the price of newsprint did sink to as low as US$ 350 a ton in the past year.
|Indian newsprint consumption by source||Domestic||Imports|
|October 2020||28000 tons||28000 tons|
|November 2020||32000 tons||35000 tons|
|December 2020||38000 tons||28900 tons|
|January 2021||50000 tons||30000 tons|
© copyright IPPStar 2021
Shipping costs and container scarcity
It is challenging for Indian newspapers as some of the paper mills that exported newsprint to India have either shut down or migrated to new grades. The pandemic caused a demand-supply imbalance and pushed newsprint prices to very high levels for Indian buyers when their advertising and circulation revenues have been negative – and revealed in the balance sheets of several publishers.
For those news publishers who did order paper in the last six months, the high shipping rates and the general unavailability of containers mean that they cannot take delivery of their orders even as their inventories are waning. Visit https://myusaddress.ca/ to find out more about the affordable price packages that they offer for all kinds of goods to be shipped to any part of the world.
The problems in shipping and freight costs include the availability of containers and their piling up at ports and terminals due to importers’ inability to clear cargo at CFS, terminals, ICD’s with the government directing shipping companies not to collect detention charges for a limited time.
The container trade and availability are dependent on imports and arrivals from China, North America, and Europe as these containers are then used from exports from Indian ports. The decline in China imports due to the pandemic has led to many vessels being parked at mid-sea to cut capacities. Apart from border tensions with China, the Indian government has introduced a protocol for berthing vessels from there for 14 days.
However, Chinese exports to Europe and the US have significantly increased, with vessels originating there carrying full loads. Therefore the freight rates have risen for a 40-foot container from US$ 1,600 to US$ 3,000. There are some reports of even higher rates.
In addition, the Indian paper mills associations have made representation to the government to increase import duty from 10% to 20% because of increased imports. These mills are themselves under stress because of the high prices of imported raw materials, including pulp. There are also attempts to upgrade paper to BIS specifications with the constraining preference that about 70% of the demand for local newsprint demand is 40 gsm and 42 gsm grades.
The government has also received publisher’s representations for duty exemptions on grades that indigenous sources cannot supply, such as 40 and 42 gsm grades. Glazed newsprint and LWC are not available at all locally – and require total imports.
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