Print media breathes a sigh of relief as newsprint price stabilises

The price now stands somewhere close to 700 USD per tonne, as compared to an all-time high of 820 USD per tonne

newspaper

In the past year and a half, the newspaper industry in India faced a huge hike in the cost of production as the price of newsprint shot through the roof. The prices went up by as much as 60 per cent. However, October brought the much-awaited relief to the industry as the newsprint price started stabilising.

As it turns out, the price now stands somewhere close to 700 USD per tonne, as compared to an all-time high of 820 USD per tonne.

Though there is no immediate impact of this price reduction on the profitability of publishers, the industry is cheering the stabilisation.

Sharad Saxena, Executive Director – Operations, HT Media, remembers the tough time that the publishers had to face because of the “sudden and abnormal” increase in the price.

“The industry went through extremely difficult time with a sudden and abnormal surge in newsprint prices, worsened by a depreciating rupee. At least, we have got a breather on one of the two factors now.”

According to Saxena, the price may decline further. “The newsprint prices have significantly declined over the last quarter and are expected to come down more in the coming quarter before they stabilize in a range,” he says.

Saxena believes that that reduction in the price may not have an impact immediately, but will eventually bring down the cost. “As of now, the impact is yet to materialise because of the high-cost inventory that needs to be first consumed. Post that, over the year, there should be about 8-10 per cent reduction,” he adds.

As it was a difficult time for the newspapers, the publishers resorted to their own ways to deal with the high cost of newsprints.

Naval Seth, media and entertainment analyst at Emkay Global, shares, “With the shooting newsprint prices, newspapers have tried their best to control their usage of the newsprint. They altered the pagination or brought changes to the circulation model. With these initiatives, the impact of the price rise was about 20-25 per cent for them.”

Seth too is of the opinion that the impact of the reduced prices will be visible only in the numbers of Q2 of 2020 because most newspapers are already stocked up with inventory that is going to last them till the end of Q1 of first quarter.

“Newspapers had stocked up in anticipation of further price rise. Once they start using the newsprint that they procure at the present prices, there will definitely be a margin expansion for them,” he adds.

While the price of newsprint may have brought some relief, there are some other concerns. Business leaders are uncertain about the future of newsprints and their fluctuating prices as they are the biggest cost centre for them.

M V Shreyams Kumar, Joint Managing Director of Mathrubhumi Printing and Publishing Co Ltd, explains, “Newsprint buying is the single big expenditure of newspapers. So any increase or instability in price impacts the whole newspaper industry in a big way. Circulation money is never enough to cover cost because even the most expensive paper in Kerala costs about Rs 7, and that can definitely not bear the brunt of the kind of hike newsprints saw last year, which was up to 60 per cent.”

Defining the parameters of stabilised newsprint price, Shreyams says, “For the Indian market, anything above 600USD per metric tonne will bleed the newspaper industry.”

Experts feel that only a hike in advertisement revenue paired with newsprint price stabilisation can bring profitability to newspapers.  

Varghese Chandy, Vice President- Marketing, Adverting Sales, Malayala Manorama, shares, “Any raw material cost reduction is good news, especially after last year’s 50-60 per cent hike in newsprint rates. Any sort of reduction this year is a relief, but advertisements have to pick up drastically this year to stabilize profitability of newspapers.”

“Standing where we are now, the future of newsprint is unstable because we heavily depend on imports from markets such as USA and Canada which might one day just decide to stop manufacturing newsprint and shift to manufacturing of more commercial paper materials,” adds Varghese.

As it turns out, the industry is still uncertain about the newsprint prices and whether they have stabilised for the good. So, what could be the possible way out?

Switching to indigenous newsprint might be one, suggests Vijay Kumar, Secretary General of the Indian Newsprint Manufacturers' Association.

“There used to be 132 mills in India. But at this point, we have only 32 of them running. All others shut shop in the last few years. The newspaper industry should turn to domestic produce because once all the domestic mills close down the international market will obviously take the industry here for a ride. Indian newspapers should promote Indian newsprint because that creates a win-win situation for both,” Kumar adds.

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