Amid increasing problems for India’s print industry, there are signs that newsprint prices are decreasing. This has been one of the largest factors for print media and have been rising since mid-2007 contributing to weakening profitability at most of India’s print media firms.

According to newsprint buyers at media houses, the situation is starting to improve and they hope to drive down prices by $100-200 per ton when new contracts are signed in January. The average official price for imported newsprint in India for the current quarter is $960 per ton. The cost of newsprint generally accounts for 55-65% of the total cost of a newspaper’s operation and a big surge, from $560 per ton in early 2007 to $960, had sharply cut into profitability of publishers, most of whom resorted to reducing pages, copies printed or switching to inferior, domestic newsprint.

Another contributing factor is an unexpectedly unfavorable exchange rate as one dollar could be bought from Rs40.30 in March, now costs about Rs50, effectively raising the price of newsprint by another 20%. In the United States, consumption is down by 10% and demand is growing only in Asia, particularly India and China. There has also been a sharp drop in the price of old newspaper, a key raw material used to produce fresh newsprint.

With falling advertising sales due to global economy downturns, newspapers face new pressures next year as newsprint producers try to push through steep price increases. The world’s second-largest newsprint producers are currently negotiating with customers to increase prices by up to 20%. Newsprint producers believe that recent capacity cuts give them the market power to compensate for years of rising costs, flat prices and falling margins.

Newsprint producers claim to have been under a drastic margin squeeze for several years and see a momentum for increased prices. All of Europe’s big newsprint producers are dealing with losses as demand continues to fall because of the switchover to Internet publication. However, woo, energy, and transport costs have risen significantly.

In response, European producers have committed to cut some 1m tons of capacity – 6% of the total. As cost pressures begin to ease, producers raise margins. European producers are also benefiting form a decline in imported newsprint as North American producers ignore their home markets. North American producers saw even more falling demand because the switch to Internet has taken hold faster, but they have been quicker to consolidate.