Newsprint price to be cut by 13.7% next month

Newsprint price to be cut by 13.7% next month

JAKARTA (JP): The price of newsprint will be cut by 13.7
percent for the October-December period to Rp 1,993 (88 U.S.
cents) per kilogram.

The decrease, which has been widely expected due to the
current drop in raw material prices, was announced at the
ministry of industry yesterday after four hours of negotiations
between the Association of Newspaper Publishers and the
Indonesian Pulp and Paper Association.

"The negotiations were solely between newsprint producers and
consumers. The government did not meddle in the negotiations but
only served as a facilitator," Minister of Industry Tunky
Ariwibowo told a press conference.

On hand at yesterday's negotiations were executives from both
associations, including the president of PT Aspex Paper, Lee Won
Je, and president of PT Kertas Leces, Kusmadi, as well as
officials from the ministries of industry and information.

Leo Batubara of the publishers' association said both
producers and consumers of newsprint agreed to cut the ex-factory
price of newsprint by 13.7 percent to Rp 1,993 because of the
decreasing international prices of waste paper and long-fiber
pulp -- the main raw materials for newsprint production.

According to the ministry of industry, waste paper, mainly old
newspaper, now sells at US$330 a ton, as compared with $410 in
June, while long fiber-pulp sells at $950 a ton, as compared with
$1,100 in June.

A source present at the negotiations, who asked to remain
anonymous, said that the negotiations were tough because each
party stuck to its position.

Newsprint producers contended that waste paper sold at $330,
but the publishers argued that it sold much lower, for $310 or
even $285. In the end, they agreed to set the waste paper price
at $330.

Leo said that the waste paper price has become the main
determinant of the price of newsprint. Therefore, in case the
producers and consumers of newsprint could not reach consensus on
the price of waste paper in the next negotiation, Leo said that
both parties had agreed to check price developments at designated
places.

Waste paper accounts for 90 percent of raw materials, while
the raw materials account for some 80 percent of newsprint
production costs.

Leo stressed that next month's decrease in the newsprint price
would not automatically lead to a decline in the prices of
newspapers, given the last sharp increases in newsprint prices
since last year.

Local newsprint prices increased from Rp 1,270 a kilo last
December to Rp 1,320 in the January-April period, to Rp 1,700 in
the May-June period and to Rp 2,310 in the July-September period.

Most newspaper publishers increased their subscription rates
in May or June to cope with the increasing costs resulting from
the newsprint price increases. However, they could do nothing
when the price of newsprint increased again in August. Instead,
they reduced the number of newspaper pages published, as
suggested by President Soeharto.

"With the decrease in newsprint prices, the newspapers which
were affected by the last increase of newsprint prices can now
appear more regularly with complete pages," Leo said.

Currently Indonesia has over 285 publishers of both newspapers
and magazines, with some 13 million copies in circulation.
According to the ministry of industry, the publishers need a
total of 12,000 tons of newsprint per month, of which Aspex Paper
supplies 10,500 tons and Kertas Leces the rest. (rid)