21 Oct 2022

Paper price increase puts pressure on publishers

12:33 pm on 21 October 2022

Infometrics said StatsNZ data showed pulp, paper, and paperboard input prices had risen 7.2 percent to June 2022. (file photo) Photo: 123RF

In 1974, the rising price of paper prompted the New York Times to ask: "The rising cost of newsprint, newspaper executives say, is changing the business more than any other factor ... What will happen when the economics of newspaper production clashes with the public's need for information?"

Fast forward half a century and paper prices are through the roof, ramping up the pressure on newspaper publishers everywhere, including in New Zealand.

As media group Stuff restructures its regional newsrooms, the head of the Beacon Media Group in Whakatāne, Aaron Buist, said he was now doing "similar sorts of reviews of how we do things, how are we organised and structured".

"And a big driver of that process is the impending and ongoing cost increases that we're facing predominantly in print, because at the end of the day, print is far and away the most effective way to get news and information in front of people," Buist said.

"And it's ... causing quite a lot of stress and pressure."

Beacon prints 65 titles and has had to absorb a 20-30 percent rise in the price of newsprint in the past year, as well as being forced to pick up the paper itself from the port.

Norske Skog used to make it at Kawerau, and deliver it to Beacon just down the road, but it shut down last year in 2021.

Australian paper industry analyst Tim Woods said New Zealand was vulnerable without its own manufacturer, due to the "tyranny of distance".

Buist mostly now gets his paper from Norske's Tasmania mill, the only one left in Australasia, but his latest pick-up from the wharf will be paper from Korea and Japan.

"It's close to twice what we would be paying closer to home in terms of the product we get from Australia," he said.

He has shopped in Asia because he had to be sure they had an alternative supplier of paper their presses could use, in case the Tasmania supply got interrupted.

The strength of the US dollar was making it worse, and Buist expected newsprint prices to rise another 25-35 percent by mid-2023.

"It's a headache. But I think it's kind of a reality," he said.

"Rather than mass restructuring, it's always, 'OK, is there a different way we could do this? Do we need to replace that position?'.

"In the case of journalists, we're actually out recruiting.

"So it's not that we've taken the decision to do that [cut jobs]. But we're always sort of looking at how best to set up all of our business."

Back in May, Buist told The Detail that free community papers were at greatest risk.

Woods, of Industry Edge in Victoria, said Australian newspapers were under similar pressure.

"Every grade of printing and communication papers, the price has gone through the roof over the last 18 months or so," Woods said.

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Head of the Beacon Media Group in Whakatāne, Aaron Buist, was managing director at the Tasman mill (pictured) up to 2017. Photo: Norske Skog

For years, paper prices had dropped, so this was a justified correction from being 35-40 percent behind, he said.

"If you think back to when the Norske were making newsprint at the Tasman mill in New Zealand, you could argue that one of the reasons why a mill like that closed was because the prices were unable to keep up with their manufacturing costs.

"So they've contracted down to one newsprint mill operating out of Tasmania, trying to supply the whole of the region", but it could not keep up with demand, he said.

Buist was managing director at the Tasman mill up to 2017.

He said power prices were "far and away" the biggest problem, and the government could have done more to address energy-intensive industries.

"There could have been more examples of woods being processed here in New Zealand rather than going across our ports."

Infometrics said StatsNZ data showed pulp, paper, and paperboard input prices had risen 7.2 percent to June 2022, the fastest annual increase since the data series started just over a decade ago.

A sub-category of books, newspapers, and other printed material grouping went up even more, the price rise averaging 3.7 percent a year for a decade, compared almost four times that of pulp, paper, and paperboard input prices.

Freight costs, demand, and energy costs had played a part, "but the single biggest part of the puzzle appears to be higher pulp prices over the last year", said principal economist Brad Olsen.

Globally, pulp markets were "seeing record high prices, with major players announcing new price hikes almost weekly", said market tracker fastmarkets, with transportation costs and bottlenecks a big factor.

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