Newsprint producers had every intention of raising their prices by US$ 30 to 50 in Asia even before the third quarter of 2002. Newsprint.

Newsprint producers had every intention of raising their prices by US$ 30 to 50 in Asia even before the third quarter of 2002. Newsprint prices have been in the $370 to $420 range over the last six months. The recovery in newsprint prices is based on growth in advertising revenues from events such as the World Cup in Korea this summer and hopes of a general upturn in the holiday and winter season in some countries. Apart from the unsustainability of current newsprint prices, the reason being given for trying to hike prices is the increase in the price of old newsprint by about $40 a ton since the beginning of this year. Old newsprint now costs about $130 to $140 a ton.

Excess North American production, which is about 42% of world newsprint production, is also seen as a possible limiter on Asian newsprint price increases since demand in Canada and the United States has been flat. Inflow of North American newsprint will the limit Asian producers flexibility in raising prices according to a Mumbai based CRISIL analyst. Nevertheless paper companies such as Pan Asia Paper are optimistic on the basis of improved advertising revenues for newspapers in the region. According to the Nielsen Media Research Co, the region's advertising spending has been growing especially in its two fastest growing economies. In a press statement in July, Nielsen said that China and India had recorded a "phenomenal" growth rate of 33% for advertising spending in the second quarter. Strong advertising growth is expected to continue for the rest of the year.

Nielsen's figures reflect that, in the second quarter alone, advertising spend in China and India totaled US$ 3.8 billion and US $1.09 billion (Rs 5,232 crore) respectively, up from US$ 2.88 billion and US$ 827 million (Rs 3,970 crore) posted during the same period last year. South Korea's ad spend for the period was US$ 1.37 billion, up from last year's US$ 1.14 billion. This kind of news is making newsprint producers optimistic of carrying through a price increase since newspapers get about 30% of the total ad expenditure in the Asian region. In India the figure may still be slightly higher although print media is fast losing ad expenditure to television, radio and outdoor media.