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Newsprint demand in India expected to reach 2.8 mn tonnes in FY20

23-May-2018
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Newsprint demand in India expected to reach 2.8 mn tonnes in FY20

With improvement in literacy rates, rising circulation and an increase in number of newspapers and magazines the newsprint demand in India is expected to reach 2.8 million tonnes in FY20 said a study by Care Ratings, the second-largest credit rating agency in India.

Recently, newspapers Amar Ujala, Hindustan and Dainik Jagran hiked their cover prices by Re 1 to tackle the increased newsprint costs. Dainik Bhaskar adopted modern printing technology which is expected to generate mileage advantage of about 4.76 per cent. It also entered into long-term rate and volume contracts with global newsprint partners.

While growth in demand of newsprint means good news for both-the publishing industry and paper industry-the rising prices of newsprint continues to be the main reason of worry not just in India but globally.

Newsprint, a low-cost non-archival paper consisting mainly of wood pulp, is most commonly used to print newspapers, publications and advertising material.

Addressing the issue of prices, the study observed, “tight markets, low Chinese pulp inventories, lack of supply coming to the market, and healthy demand were the primary factors that provide an upside to the prices.”

In the beginning of 2017, paper companies did not undertake price hikes because of factors such as competition from imports, stabilization in wood prices and lower power & fuel cost.

“Since mid-2017, China banned the use of mixed grade waste paper and demand for wood pulp (natural fibre) increased. Major pulp exporters such as Indonesia, Malaysia and Chile diverted pulp to China at a higher price, leading to a rise in price of end product,” it further added.

The supply was affected by unscheduled production downtimes which offset the capacity additions.

In the first three months of 2018, pulp prices in Europe, China and North America increased compared to the last three months of 2017 due to steady demand and lower levels of recycled fiber availability in China due to recent import restrictions.

In FY18, international coal prices increased, which is also expected to increase costs.

Global story

“Globally, over 400 million tonnes of paper and paper products were consumed in 2017. The global paper and pulp mills industry has contracted slightly over the past five years, primarily due to the shift to digital media and paperless communication across most developed economies. However, demand in emerging markets has partially offset the decline, the study said.

Although demand for newsprint, and printing & writing has fallen due to the shift toward digital media and online advertising, the emergence of online retail has increased overall demand for paperboard product input materials.

“The global demand for paperboard has increased marginally in 2016 and 2017, while the Printing & Writing and the newsprint segments have actually witnessed de-growth primarily on account of increased preference towards paperless economy and higher penetration of digital media,” the report said.

On home ground

“Rising literacy rate and universalization of education through legislative steps like Right to Education, governmental measures like Sarva Shiksha Abhiyan and mid-day meal schemes, increased spending on education are the main reasons for growth in the demand for Printing and Writing Paper,” it said.

Printing and Writing Paper forms 29 per cent of domestic paper market. The Newsprint segment comprises 15 per cent of the Indian Paper Industry and grew at a CAGR of 3.5 per cent during FY08-17 to 2.6 mn tonnes, on the back of improving literacy and increasing circulation of vernacular dailies.

“The prospect of newsprint segment primarily depends on its consumption by print media industry. However, imports account for a substantial portion of the consumption. With imported price realisations remaining steady, the share of imported newsprint in the total domestic newsprint consumption increased sharply from 50 per cent during FY13 to approximately 60 per cent during FY17,” the study said.

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