Newspaper Business after Covid-19

An alarming situation for newsprint continues

39
Newspaper
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.

Newspaper
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.

Newspaper business
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.

 

Indian Printer and Publisher started in April 1979 enters its 43rd year as a monthly magazine in print. Our web platform which started in 1998 is now in its 24th year. We have a wide readership in both print and on the web but we need continuous financial support from our readers to keep evolving and growing. Please subscribe to our website and our eZines.

Subscribe Now

LEAVE A REPLY

Please enter your comment!
Please enter your name here