Newsprint manufacturers are hopeful that the demand for their products will remain robust throughout this year. Though there Newsprint manufacturers are hopeful that the demand for their products will remain robust throughout this year. Though there has been upward demand for uncoated paper in India and abroad, production has not increased as much. As a result, supply is bound to be tight and prices likely to remain buoyant.

There has been some increase in the production of coated paper. The production of newsprint has also gone up thanks to the hike in prices. The demand for newsprint this year is expected to be 16.5 lakh (1.65 million) tons against last year's 15 lakh tons. Thus, there will be a demand-supply gap of 1.5 lakh tons. Encouraged by the buoyant situation, a section of the domestic newsprint manufacturers has increased prices by Rs 1,500 a ton with effect from the New Year. Newsprint prices now rule around Rs 31,000 per ton (US$ 700).

According to Indian Newsprint Manufacturers Association, current domestic production of newsprint is about 7 lakh tons and none has taken any initiative to raise capacity. The main manufacturers of quality newsprint, which is estimated at 4.5 lakh tons, are the state-owned Hindustan Newsprint Ltd, Rama Newsprint and Paper Ltd, Mysore Paper Mills Ltd and Emami Paper Mills Ltd. The price of standard quality newsprint is about Rs 27,500 per ton, while the landed cost of the same variety when imported is about Rs 32,000 per ton. Thus, there is a price difference of Rs 5,000 per ton.

Since the economies of China and other Asian nations are buoyant, these countries are expected to consume more paper, which would result in upward revision of newsprint prices. In India too, the prices of newsprint is expected to increase in a month in view of the new academic session. Printing of textbooks generally starts in March, that would consume lot of paper.

While the prices of uncoated paper are on the increase, manufacturers of coated paper have also reason to celebrate. The gap in prices between high-end uncoated papers and coated papers has narrowed down and printers find coated paper remunerative.

The prices of coated papers are at around Rs 46,000 a tone and that of high bright is Rs 43,000. Over a year ago, the price difference was Rs 10,000. The entry of JK Paper was the prime reason for the drop in prices of coated paper. Earlier, the couintry mainly depended on imports. The only other domestic player was Ballarpur Graphics' unit in Pune.

Paper manufacturers are optimistic that the prices of uncoated papers and newsprint will go up soon. Newsprint prices were raised by Rs 1,000 on April 1, 2005. This year's proposed increase of about Rs 500-Rs 750 a ton is primarily to offset the cost of raw material. This is likely to be the last opportunity to offset the hike on raw material prices in 2005-06.