Newsprint makers lose money on local sales
JAKARTA (JP): Indonesian newspaper publishers may have to live with much costlier newsprint as the upward trend in the prices of imported old newspapers, the main input used by local producers, will not likely recede in the near future.
In fact, domestic producers claim to have been losing money from their domestic sales because the current price is set much lower than their production costs.
Informed sources at the Association of Indonesian Pulp and Paper Producers said yesterday the production costs had increased to about Rp 1,500 (US$0.68) per kilogram due to the steady increase in the price of old newspapers from $100/ton in January to as high as $220/ton now.
The sources, who preferred anonymity, were commenting on the demand from the Newspaper Publishers Association that the local newsprint price be maintained at Rp 1,320/kg after March.
The price was raised from Rp 1,170/kg in August to Rp 1,270 for the September-December period and will further be increased to Rp 1,320 for January-March. The price increases were based on consultations between the government, the producers and the Newspaper Publishers Association.
The two newsprint producers -- state-owned PT Kertas Leces in East Java and PT Aspex Paper near Bogor, West Java -- however wanted automatic price increases after March if the price of old newspapers -- their main raw material -- remained at $220/ton.
"The producers may be forced to export all their production if domestic users don't want to accept price increases commensurate with the rise in their production costs," the industry's association executives contended.
They said Aspex, an Indonesian-South Korean joint venture, which has an annual capacity of 190,000 tons, relies almost entirely on imported old newspapers.
"The price of old newspapers has been increasing steadily from $100/ton early this year to $170 in September and $220 today,"they said.
Lower
Soegeng Widjaya, Chairman of the Newspaper Publishers Association, acknowledged early this week that the domestic price is still much lower than international prices.
Newsprint is subject to 20 percent import tariff, five percent tariff surcharge and the 10 percent value added tax.
The executive of a newsprint company said yesterday the international prices of newsprint were now $700/ton and "our export prices too ranged from $680 to $700 for January shipment".
Soegeng argued, however, that since newspapers are not merely a commodity but, more importantly, a tool of education, the newsprint price should not be left entirely to the market mechanism.
Soegeng asked for stability in the newsprint price for one year, or at least for six months, arguing it would be impossible for publishers to raise their subscription prices every quarter, or semester.
According to one publisher, newsprint accounts for between 35 percent and 45 percent of newspaper production costs, depending on the number of pages and amount of circulation.
Industry analysts here do not expect any decline in the price of old newspapers because most newsprint producers overseas have equipped their plants with a de-inking process to recycle waste papers.
"How can we survive if the price is maintained below our production costs?" the executive asked.
He argued that using mechanical wood pulp and chemical wood pulp for making newsprint would not lower production costs because pulp prices also have risen to more than $700/ton.
"Moreover, Indonesia now produces only chemical wood pulp, which makes up only 20 percent of the input for pulp-based paper, as the other 80 percent consists of mechanical wood pulp," he added. (vin)