Price of imported newsprint, the single biggest cost factor for newspaper publishers, is down some 40% to $550, from $920 two quarters ago in September. Contracts for the April-June quarter are getting signed at $550 and according to industry sources, even lower for bigger orders. While this should have come as a big relief to publishers reeling from a painful ad slowdown, most big publishers are unable to benefit from the price drop because they piled up inventory at the much higher rates of October-December 2008 due to a scare that newsprint supply might dry up. And the expnsive inventory is now serving them longer as newsprint consumption at major dailies is down with publishers cutting the number of pages. So the lower prices will get booked probably only by the third quarter of this year.
“Prices are down, but part of the benefit is offset by the rising dollar,” said Mohit Jain, director (business and commercial) at Bennett, Coleman & Co. Ltd, which accounts for some 0.5% of global newsprint consumption. Jain is also the chairman of the newsprint committee at the Indian Newspaper Society.
“Prices are at $550 and even lower, but everybody is sitting on big invetories and hence nobody is placing large orders,” said N. Murali, managing director of Kasturi and Sons Ltd, publisher of The Hindu. “So it will be a while before the lower priced newsprint starts getting used. Right now, the pain is severe, as advertising is completely drying up and we are all using expensive newsprint,” he added.
The cost of newsprint typically accounts for 55-65% of a publisher’s costs.