Newsprint price lowered by 7.7 percent

Newsprint price lowered by 7.7 percent

JAKARTA (JP): Newsprint producers and the Union of Newspaper
Publishers have agreed to reduce the price of newsprint by 7.7
percent for deliveries through June.

Chairman of the Association of Indonesian Pulp and Paper
Producers M. Mansur told The Jakarta Post on Thursday that the
lower price was made possible by the large supply of old
newspapers on the international market.

Based on an agreement reached this week, the price of
newsprint has been lowered from Rp 1,950 (84 U.S. cents) per
kilogram to Rp 1,800 during the April-June period.

Mansur said, however, that the price may go up again after
June.

"The trend seems to be that prices are going upwards... We'll
know that for certain when we review the price again for the
July-September period," he said.

Mansur explained that the prices of old newspapers -- which
are imported as raw materials for producing newspapers in
Indonesia -- on the international market fluctuate heavily.

Prices of old newspapers, he said, make up 60 percent of the
costs of newsprint production, while the remaining 40 percent
consist of other operational costs such as electricity, labor and
bank interest payments.

"We wouldn't dare set a fixed price for the newspaper
publishers during a one-year term because the price fluctuations
of materials on the world market are too strong," he said.

Prices of old newspapers on the international market are
presently at about $160 to $180 per ton. Last December, prices
were as low as $70 per ton. In October they reached a five-year
high of $400 a ton, causing newspaper publishers and printing
companies to increase the prices of their products.

Indonesia currently has to import 2.2 million tons of old
newspapers a year from the 3.3 million tons it needs for the
production of newsprint and industrial paper, while the domestic
market, according to Mansur, can supply only 800,000 tons.

But, Mansur pointed out, newsprint prices may stay low with
the establishment of two new factories owned by the Pos Kota and
Jawa Pos newspaper groups.

"The new newsprint factories will encourage competition and
this is good," he said.

Currently, newsprint is manufactured only by PT Kertas Leces
and PT Aspex Paper, which have a combined production capacity of
280,000 tons a year.

Prospect

Commenting on the long-term prospects of the pulp and paper
industry, Mansur said the demand for paper will continue to
increase with the growth of the world's population.

Presently, North Americans use up to 300 kilograms of paper
per capita per annum, while Japanese and Europeans use 250 kg per
capita.

"Indonesians currently use only 13 kg per capita per annum, so
there is still huge potential for the paper industry here to
grow," Mansur said.

He said that raw materials coming from the world's forests
will continue to decline and that new pulp and paper factories
will have no choice but to plant timber estates for their raw
material supplies.

"This will also mean that they will maintain the forests'
sustainability," Mansur said.

Raw materials for pulp mostly come from and are produced by
North American and Scandinavian factories. (pwn)