Shortage of Press Paper

If supply is still weak, printing houses will certainly lack paper for printing newspapers.

An official from Tan Mai Paper Joint Stock Company said his company turned out 11,958 tonnes of newspaper paper, 6 per cent higher than design capacity, and sold more than 12,630 tonnes in the first quarter, a rise of 13 per cent against the same period last year, but market demand was still higher.

Also in the first quarter, the company changed the selling price twice. In January 2008, the price was VND11,949,000 per tonne (VAT included) and in February the rate was VND12,022,500. The company plans to increase the price to VND12,350,000 a tonne, exclusive of VAT.

Mr Vu Ngoc Bao, General Secretary of the Vietnam Paper and Pulp Association, said the price of newspaper paper increased since 2006. From late 2007, the price has been increased almost every month. However, this move was only a measure to deal with business loss of local producers.

To tackle this difficulty, news agencies and publishers have tried to cut supplements, reduce newspaper size and publish on the internet. At the same time, the paper price in the Asian market averaged US$580 per tonne in December 2007 but the rate was roughly US$800 in April 2008, a rise of nearly 40 per cent.

Besides, Japanese paper producers added US$100 per tonne from April 1, 2008. On April 2, Beijing Xinhua (China) also increased its paper prices by 20 per cent compared with early 2008. Mr Bao said there were a lot of reasons for the price hike. The record high of oil and coal prices pushed up the energy and chemical costs.

In addition, timber prices in Poland and Russia (the world’s largest timber suppliers) also grew. On the other hand, in Canada, negotiations between forestry associations and trade unions continue. These hurt the global supply of materials. What’s more, the ban on cutting down tropical wood in Indonesia since 2006 reduced regional supply.

Last but not least, sea shipments from North America and Europe to Asia encountered many difficulties in combination with repeated shortage of containers.

Although demand has increased in the first months of 2008, several major global producers closed their business. In the third quarter of 2007, China, the world’s second largest paper producer, closed 1,569 pulp and paper production plants because of environmental pollution and poor productivity.

As a result, the supply dropped 15 per cent in this country. In addition, the power shortage caused small plants to operate under their designed capacities. Many companies in the US, Canada and Europe are operating below capacity or have suspended operation, with supply and demand seriously imbalanced from the third quarter of 2007.

Regarding the Vietnamese newspaper printing paper market, demand soared nearly 60 per cent in the first quarter against the same period of 2007, therefore, the volume of imported paper reached nearly 21,000 tonnes, a rise of 2.08 folds against the same period of 2007.

With this import pace, Vietnam is estimated to import 120,000 tonnes, doubling local output. Then, total demand for newspaper printing paper will be 180,000 tonnes, equal to the forecast for 2015. In Vietnam, there is only one company resizing newspaper formats, Tan Mai Paper Joint Stock Company, which can process 46,000 tonnes per annum.

However, the company operated above the designed capacity at 58,871 tonnes in 2007. The company will produce 60,000 tonnes (the maximum volume) in 2008. Due to low profit, this sector is unattractive to investors, who prefer packing, tissue, printing and writing paper.

Thus, in the next three years, the newspaper printing paper output will remain unchanged at 60,000 tonnes. If the price rise and supply shortage continue, newspaper printers will be sent into deeper difficulty. The reduction of publication volume and size seems inevitable.

One measure is to increase newspaper printing paper import. The import tariffs on pulp, papers from ASEAN countries and papers from non-ASEAN countries are 0 per cent, 5 per cent and 30 per cent, respectively. The price of paper from Scandinavian nations (the world’s largest suppliers) is too high. The sources from China are small, even less than from Indonesia and the Philippines. Meanwhile, South Korea and Japan are not strong suppliers of newspaper printing paper.

In addition, producers and importers of newspaper printing paper are also experiencing pressure from the price rise of most commodities.

Ms Thu, Chief Accountant of Military Printing Factory No. 1, said news agencies will have to increase the selling price of newspapers because paper accounts for 60 per cent of the newspaper production costs.

Mr Nguyen Quynh Thang, Director of People’s Printing Factory, said news agencies will have to take the initiative in seeking suppliers to avoid this dilemma. Cooperation between news agencies and printers, printers and paper producers and distributors should be consolidated.

In the next three or four years, Vietnam will still rely on imported paper for printing newspapers. To seek sufficient supply, printing houses and producers should closely track market movement to take the initiative in materials, cooperate with relevant organs to reduce intermediaries and determine major suppliers of imported paper.

VNE