Newspaper Business after Covid-19

An alarming situation for newsprint continues

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Newspaper business after Covid-19 photo IPP

In the Wan-Ifra webinar on 14 October 2021, Ruud Van Den Berg, senior vice president, global sales, UPM Communication Papers, addressed the newsprint business after Covid-19. In this session, he said, the global demand for newspapers declined after the Covid-19 pandemic, but demand more or less started dropping from 2006 onwards. There was an intense dip in 2009 during the financial crisis, from 2010, and the demand for newspapers has not come back in most markets. The trend shows a significant decline in newsprint demand dictated by Covid-19 lockdowns around the world. 

Graphic paper demand impacted by the lockdown

For graphic papers, the demand in 2021 has declined more than 20% in comparison to 2019, according to UPM. (However, according to our sister organization www.ippstar.org, based on the lower consumable purchases of Indian newspapers, the Indian newsprint demand in the 2020-21 financial year declined by 40%.) According to Van Den Berg, the trend decline continues to be influenced by digital readership, although there may be a saturation of digitalization. The new consumption habits of users are the economic model for digital subscriptions.

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Newspaper demand graph

Nevertheless, according to Van Den Berg, the newspaper demand due to pandemic caused the largest ever annual fall in global newsprint consumption in 2020 – 22% from 2019 to 2020, and with 2021 likely to be 3% lower than 2020. This accelerated decline in the global newsprint demand will lead to a harmful effect on the industry, he warned.

According to him, in the current year, North American newsprint demand will decline by 17%, Europe by 13%, and India, which is still a market with robust demand for printed

newspapers, is also facing a decline of 26%. The presentation by UPM indicated that only China is close to stabilization, with newsprint demand increasing by 1%.

The presentation indicated that users globally mainly prefer digital news content and, to avoid the effects of Covid-19, tend to move to digitalization, giving preference to digital news. The demand for digital subscriptions is increasing rather than the demand for printed newspapers. “Newspaper publishing is a regional business with all the logistics challenges growing, as we see in the pandemic. Users are not taking a newspaper because of Covid-19, and the delivery of the newspaper has to go through specific steps for the users to read them.” 

Newsprint capacity halved

There have been many changes in the newsprint producers table in just the past five years. The behemoths of newsprint production, like Resolute FP, which had a capacity of more than 3 million tons in 2016, UPM, Nippon and many more, with a tremendous capacity of newsprint, are now at just half the capacity in 2021. The company that topped the table earlier is now in the eighth position because of the continuous decline of newsprint demand. It kept adjusting its capacity to the need and demand.

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Newspaper producers graph and position in 2016 to 2021

Input costs rise 

After the pandemic, production costs increased. Of the paper producers, more than 25% have started to run a negative cash flow, according to Van Den Berg. This is an unsustainable situation, and the companies can’t continue to work. The paper mills and machines that have already implemented adaptations (to other paper grades or machine shutdowns) for their survival have to be further adapted in 2022 — the latest level of energy pricing reinforcing the profitability challenge. The rise in the price of electricity and gas will also negatively impact the industry.

Recycled paper availability is also a growing issue driven by high packaging demand and declining print consumption. Paper demand is not coming back to the average levels before the pandemic. Recycled fibre is increasingly used in packaging papers spurred by eCommerce that proliferated in the Covid-19 period. The newsprint producer cannot pay for poor quality recycled paper. With poor inputs, the paper machine efficiency and paper quality will decrease, and users (newspaper printers) will not purchase it again.

 

In 2024, we are looking at full recovery and growth-led investment in Indian printing

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. It created the category of privately owned B2B print magazines in the country. And by its diversification in packaging, (Packaging South Asia), food processing and packaging (IndiFoodBev) and health and medical supply chain and packaging (HealthTekPak), and its community activities in training, research, and conferences (Ipp Services, Training and Research) the organization continues to create platforms that demonstrate the need for quality information, data, technology insights and events.

India is a large and tough terrain and while its book publishing and commercial printing industry have recovered and are increasingly embracing digital print, the Indian newspaper industry continues to recover its credibility and circulation. The signage industry is also recovering and new technologies and audiences such as digital 3D additive printing, digital textiles, and industrial printing are coming onto our pages. Diversification is a fact of life for our readers and like them, we will also have to adapt with agility to keep up with their business and technical information needs.

India is one of the fastest growing economies in nominal and real terms – in a region poised for the highest change in year to year expenditure in printing equipment and consumables. Our 2024 media kit is ready, and it is the right time to take stock – to emphasize your visibility and relevance to your customers and turn potential markets into conversations.

– Naresh Khanna

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