Prospects bright for newsprint

Prices may increase by as much as 20% this year from Rs 25,000 in last quarter.

After witnessing a depressing 2007, newsprint prices are set to see a buoyant 2008 with an expected price increase of over 20 per cent.

Newsprint prices are revised on a quarterly basis and the current (January-March) quarter has already seen companies raising prices by 6 per cent or an average Rs 1,500 a tonne to Rs 26,500-27,000 (for 45 grams per square metre or GSM).

The increase in newsprint prices is bound to affect the profitability of newspapers and other publications. In the last quarter, average prices of locally manufactured newsprint were Rs 25,000 a tonne, down over 16 per cent from the corresponding quarter in 2006.

"Newsprint manufacturers are expected to register gains in the year 2008 as there is a supply shortage and consumption is booming in the country," said Raji Philip, president of the Indian Newsprint Manufacturers' Association and chairman and managing director of Hindustan Paper Corporation.

Newsprint producers in Western countries have shifted to finer varieties of paper for higher profitability. This has caused a supply shortage, added Philip.

Annual newsprint domestic consumption is estimated close to 2 million tonnes, of which about 50 per cent are met through imports. The import duty on newsprint is 5 per cent, whereas writing and printing paper attracts a duty of 10 per cent.

The price of imported newsprint has also appreciated by average $60 a tonne to $635. But importers have the advantage of rupee appreciation here.

The demand is witnessing a double-digit growth, driven by new publications as well as more pages and issues of existing publications. Domestic manufacturers are also adding new capacities, expected to become operational next year.

"The industry had managed to sell newsprint at over Rs 33,000 a tonne in 2006 and it is anticipated that prices will jump in 2008 as well," said V D Bajaj, executive director of Rama Newsprint and Papers (RNPL).

While pulp prices have constantly risen, now there was pressure from high prices of other inputs like coal and chemicals, he added.

COSTLY PRINT

Prices have gone up by 6 per cent or an average Rs 1,500 a tonne to Rs 26,500-27,000 in the current quarter

In the last quarter, average prices of locally manufactured newsprint were Rs 25,000 a tonne

Annual newsprint consumption is estimated close to 2 million tonnes, with 50 per cent met through imports

Price of imported newsprint has also appreciated by average $60 a tonne to $635