[Reader-list] Imported Newsprint Prices Head Downward in India

[Kshmendra Kaul]

"Imported Newsprint Prices Head Downward in India" 
 
Jan. 29, 2009 - After more than a year of climbing steadily, the prices for imported newsprint in India have dropped to $650 per ton, down 27.7% from $900 last quarter. 
 
According to the Indian news service ContentSutra, over the past week Indian publishers have struck deals with representatives of Pan Asia Paper Co. Pte Ltd., and most of the deals have been struck in a window of $650-$690, depending on the quantity of the order. This will make a lot of difference for publishers of English dailies and magazines. Indian language publishers mostly use Indian newsprint, the price of which usually moves in line with that of imported newsprint. Indian newsprint mills are selling at $500 per ton, down 28.5% from $700 last quarter, industry sources tell us, ContentSutra said. 
 
So far, the Anand Bazar Patrika Group and the so-called southern cartel, a newsprint buying consortium of south India-based dailies such as The Hindu and Malayala Manorama, are understood to have bought some quantity of newsprint at the new, lower prices. Many publishers may not be in a position to immediately take advantage of the lower prices as they bought large quantities at high prices during the previous quarter and are still sitting on large inventories, ContentSutra noted. 
 
Still, even for those publishers the drop represents an opportunity to lower the average costs of their inventory by buying some newsprint now at a lower price, it said. 
 
The lower prices are likely to prevail at least for two quarters, said Anil Vig, managing director, Anika International Pvt. Ltd, a newsprint agent that represents Pan Asia in India. “This quarter and the next we should see these levels. After that we will have to reassess the supply-demand situation to say where the prices will head.” Two quarters present plenty of buying opportunity even for publishers with a full inventory now. 
 
Vig said the demand is exceptionally low this quarter, despite such low prices. “This quarter, it doesn’t look like publishers are even buying 40% of what they normally buy in a quarter,” he said. India’s annual newsprint import is estimated at one million tonnes, which translates into 250,000 tons per quarter. 
 
Cost of newsprint represents the single largest expense for a publishing house, typically accounting for 55-65% of total costs. Newsprint prices, which were at $560 in early-mid 2007, climbed steadily to reach $920 by end-2008, sharply eating into publishers’ profitability. Dealing them a double blow was the appreciating rupee. While in January 2008, you could buy a dollar for Rs39.4, by December last year, you had to pay Rs50, ContentSutra explained. 
 
Around September last year, it looked like the commodity would breach the all-time high price of $1,000, last touched in 1995. Panic set in and many big publishers mopped up all the stock that was available in the market, due to worries that solvency issues at big newsprint manufacturers such as AbitibiBowater could result in capacity-cutting and complete unavailability of newsprint. 
 
Publishers adopted several measures to tide over the high costs, such as cutting pagination, width and thickness of pages and discontinuing supplements. They also successfully lobbied the government to raise the heavily discounted rates it paid for advertising for various government agencies and programs through the department for advertising and visual publicity. 
 
SOURCE: ContentSutra (India) 
 
http://www.paperage.com/2009news/01_29_2009newsprint_india.html