Newsprint rates may rise 11%

This may fail to help producers as they are losing out to cheaper imports.

Newsprint prices, which have remained depressed for the last three quarters, are set to move up by about 11 per cent in the next quarter. With international suppliers announcing a price hike of $50-60 a tonne from next quarter, domestic producers are contemplating a similar increase.

However, the hike might not help the domestic producers who have been losing out to cheaper newsprint imports (at nil duty). Industry officials said that nearly half of the domestic capacity has either shut down or shifted to the writing and printing paper.

Industry players expect this year’s domestic output falling to 600,000 tonnes from 850,000 tonnes in the previous year. This indicates imports to be in the region of over 1.2 million tonnes which is an all-time high. In 2008-09, imports stood at one million tonnes. Annual domestic newsprint consumption is estimated at 1.8 million tonnes.

“The producers are losing heavily at current price of $450 a tonne (for the 45 gm per square metre or GSM variety). In our case, we are losing $100 on every tonne. The cost of waste paper, which is the main input, has moved up from about $110 a tonne in November last year to $190 a tonne and we require 1.4 tonnes of waste paper for producing every tonne of newsprint. Even energy cost has jumped due to rise in coal prices,” said P S Patwari, executive director, Emami Paper Mills. The company has a newsprint capacity of 130,000 tonnes.

“Mills have been bleeding due to lower realisation. While the price increase for the next quarter is almost certain, another hike in the quarter beginning January looks inevitable,” said V D Bajaj, executive director, Rama Newsprint and Papers.

However, he added that an encouraging factor for the Indian producers was that newsprint consumption was still positive as compared to the US and even some European nations.

The government had brought down the import duty to nil in February last year when newsprint prices were at a high of $800-850 a tonne. “With a crash in prices to $500, the five per cent duty should be restored,” Patwari said. Industry sources also said that the continuous surge in imports would cripple the domestic industry.

“The foreign suppliers are selling newsprint to India at a price which is much lower to their domestic realisation. However, since only small quantities are supplied to India, it does not affect their overall realisation,” said another newsprint producer.