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)