Publishers economize as newsprint prices soar
With prices poised to rise up to $730/tonne by Q3, newspaper houses have been strategising to minimise losses at a time when print still recovering from the pandemic
Newsprint prices, which had gone below $300/metric in 2020, have again started going up, touching $670/tonne-$700/ tonne in the last month and a half. According to the Indian Newspaper Society (INS), the prices are expected to go up to $730/metric by the third quarter of FY22.
Already struggling to recover from losses incurred due to the ongoing pandemic, the increasing newsprint price is an additional burden for newspaper houses that are on a cost-cutting spree.
What led to the increase in newsprint costs?
According to L Adimoolam, President of the Indian Newspaper Society (INS), multiple reasons led to the increase in the price of newsprints. “Paper mills that exported newsprint to India have either shut down or migrated to new businesses of producing brown paper or craft paper that is much in demand for online delivery across the globe. The other reason that has contributed to the massive increase in newsprint price is the increase in costs of getting a container vessel from Europe to India. The lockdowns had kept the vessels stuck in some port or the other leading to an increase in price in the route from €600/container to a whooping €1500/container.”
The demand-supply imbalance
While newspapers were just recovering from the losses incurred in 2020, the second wave of the pandemic hit the country putting an abrupt pause to recovery. A lot of paper mills that exported newsprint to India migrated to producing papers other than newsprint, causing demand-supply imbalance for newsprint buyers in India who were already struggling with dwindling top lines.
According to market and consumer database company, Statista, India imported newsprint valued at over Rs 49 billion in the fiscal year 2020, a decrease from the previous year’s Rs 68 billion, clearly indicating a fall in demand led by increasing costs and stressful finances that promoted a lot of publishers to cut down on pagination.
“A popular English daily that used 15000 metric tonne of newsprint is now using 340 metric tonne for the entire year due to decrease in the number of pages. Many other newspapers have been forced to cut down on pages to save on production costs,” said an industry insider who did not wish to be named.
What publishers are doing to save on costs?
To minimize impact price volatility a lot of newspapers did the same. Jagran Prakashan Limited for instance in their latest investor presentation said saving in newsprint cost due to lower page levels had led to substantial cost savings for the company. The cost of raw material as a percentage of sales was 22% in Q4 of FY 21.
“Use of low grammage newsprint generated savings in newsprint cost for a lot of publishers. Some publishers are also using the past inventory that they bought for close to $475/tonne at an exchange rate of Rs 72. The drop in pagination helped publishers survive on the past stock. The struggle will begin when they have to procure fresh stocks at current rates,” said an industry expert.
Dainik Bhaskar’s last annual report also mentions purchase strategy. “Optimized purchasing strategy by adopting a mix of short-term contracts, long-term contracts and spot purchases for imported and domestic newsprints. While long-term contracts provided insulation against price fluctuations and also ensured seamless supplies, spot purchases gave immediate price benefits at a lower level,” the report said.
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