The newsprint industry is going through a world-wide churn with different trends taking hold in different parts of the world. These trends largely mirror that of the newspaper industry, where Asia is experiencing a new golden age whereas North America and western Europe are at saturation levels.
Newsprint capacity in North America has declined from 13.6 million tonnes in 2004 to 12.6 MT in 2006. It is projected to hit 12 MT in 2007. The decline in North American demand has been even more precipitate from 11 MT in 2004 to 10 MT in 2006 and further to 9.6 MT in 2007.
The EU has experienced stagnation rather than decline, with both capacity and demand increasing marginally between 2004 and 2006. In contrast, Asia is witnessing a mini-boom with capacity increasing from 11 MT to 12 MT between 2004 and ’06 and is projected to reach 13 MT in ’07.
Demand has been shooting from 12 MT in ’04 to close to 14 MT by the end ’07 driven by rising demand in India and China. In India, demand has risen from 1.15 MT in ’03 to an estimated 1.65 MT in ’07. The decline in North America, historically the world’s largest market, has led to a softening in newsprint prices.
In January ’07 prices for Indian consumers were $630 per MT compared to $670 in September ’06. Leading Indian media organisations are increasingly able to demand finer prices for themselves thus helping the whole fraternity.
Globally, demand and supply (capacity) of newsprint remain finely balanced. Falling demand in North America should exert a downward pressure on prices for sometime though a prolonged fall would lead to market forces kicking in. Supply will shrink as newsprint suppliers will inevitably cut production.
One obvious strategy which North American publications can resort to is the free newspaper model. The European Union leads in the number of free publications with circulation increasing by 66% during the period 2005 to February 2007.
There are as many as 118 titles in the EU. In contrast, both the number of titles and circulation of free dailies has been stagnant in North America. A greater emphasis of free papers in North America could well be the antidote to falling circulation.
