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The world market situation and new trends in newsprint

L. Lintu

Leo Lintu is Forestry Officer, Forest Products Division, FAO Forestry Department.

An analysis of potential developments in the newsprint industry through the mid-1990s, with a particular focus on the developing countries.

Newsprint, as the medium on which newspapers are printed, is an important product in all countries and regions. It permits governments, trade and industry and individual entrepreneurs to promulgate information at local, national and international levels. In addition, it provides an important vehicle for the advertising industry. As newspapers are basically mass communication vehicles that are used only once and then thrown away (although recycling is increasing rapidly), newsprint should be inexpensive. This is particularly true in view of competition from other information sources, especially radio and television. Notwithstanding the need for economy, however, newsprint must be a technologically advanced product as printing presses are highly sophisticated and require good strength and printing properties. The need for a low-cost yet high-quality product creates a unique set of challenges and opportunities. This article examines the current market situation for newsprint and the outlook for consumption, production and trade through to 1995.

Newsprint consumption

An analysis of newsprint consumption reveals that two major trends have influenced the weight-based consumption over the past two decades: an 8 percent decrease in the average basis weights of newsprint from the early 1970s to the mid-1980s (from 52 g/m² to 48 g/m²); and major reductions in waste (edgings, trimmings, etc.) by newspaper publishers in the mid-1970s in response to severe cost pressures. Allowing for these two phenomena, it is estimated that world newsprint demand expanded at a relatively uniform annual rate of 3 percent during the past two decades.

In 1988, world apparent consumption of newsprint was 32.5 million tonnes, 15 percent of the total consumption of paper and paperboard. This is compared with 21.5 million tonnes in 1970 and 25.7 million tonnes in 1980 (FAO, 1991).

Newsprint is an important product in all countries and regions

The growth in newsprint consumption has been fastest in the developing countries, averaging 4.9 percent per year during the period 1980-1988. However, because of their comparatively high literacy levels and longer history of newspapers as a communication and advertising medium, the industrialized countries still accounted for some 85 percent of total consumption in 1988 (see Table 1). Over the same period, consumption in the industrialized countries increased by an average of 2.7 percent per year.

Although the developing countries accounted for about 15 percent of the total consumption of newsprint in 1988, this total was highly fragmented. A few countries dominate newsprint consumption while the other countries have very small markets. In Latin America and the Caribbean, for example, Argentina, Brazil, Mexico and Venezuela consumed over 75 percent of the region's total in 1988 (significantly more than their share of total population) while, for 18 of he other countries in the region, the annual consumption of newsprint remained below 10 000 tonnes.

Future consumption of newsprint

According to recent projections produced by the Industry Working Party of the FAO Advisory Committee of Experts on Pulp and Paper (FAO, 1990), the annual world demand for newsprint is likely to increase to 37.5 million tonnes by 1995, representing an average growth rate of 2.5 percent per year, i.e. somewhat lower than the historical rate established over the past two decades (see Table 2). It should be noted that these forecasts are based on long-term projections.

TABLE 1. World apparent consumption of newsprint by region

Region

1980

1985

1988

(Million tonnes)

World total

25.7

28.6

32.5

Total developed countries

22.4

24.8

27.7

North America

11.6

13.0

14.2

Western Europe

5.7

6.2

7.2

Oceania

0.6

0.8

0.8

Other

4.5

4.8

5.5

Other developed countries

2.9

3.0

3.6

Eastern Europe and USSR

1.6

1.7

1.9

Total developing

3.3

3.8

4.8

Africa

0.1

0.1

0.1

Latin America

1.3

1.3

1.7

Near East

0.3

0.3

0.3

Asia

1.6

2.1

2.6

Far East

1.1

1.3

1.7

Asian centrally planned economies

0.5

0.8

0.9

Source: FAO Forest Products Yearbook 1978-1989.

TABLE 2. World newsprint demand by region

Region

1970

1975

1980

1985

1987

1995 *

('000 tonnes)

World total

21 180

20 670

25 220

28 080

30 430

37 520

Latin America

1 200

930

1 330

1 270

1 590

1 800

Asia, excluding Japan arid China

650

830

1 260

1 610

1 810

2 800

Africa

250

320

320

350

320

350

Developing Africa

90

120

160

230

180

n.a.

Other Africa

160

200

160

120

140

n.a.

North America

9 530

9 030

11 280

12 680

13 650

16 000

Canada

650

780

980

1 030

1 180

1 500

United States

8 880

8 250

10 300

11 650

12 470

14 500

Western Europe

5 270

4 980

5 640

6 110

6 830

8 600

Nordic countries

480

490

550

660

730

900

Other Western Europe

4 790

4 490

5 090

5 450

6 100

7 700

Japan

1 970

1 960

2 610

2 750

2 940

3 900

Oceania

550

570

640

740

770

970

Centrally planned economies

1 760

2 050

2 140

2 570

2 520

3 100

* Forecast

Source: The outlook for pulp and paper to 1995. Paper products: an industry update. Rome, FAO.

The Industry Working Party based its predictions on several key assumptions:

- the rate of world economic growth

- will remain comparable to that of the past decade, with a slower growth in North America being offset by a pickup in growth in Europe; there will be no deep or extended recession in any of the major regions during the period;

- there will be only a modest further reduction in average basis weight (to slightly below 47 g/m²) by the mid-1990s, as the drive to lower basis weights as a cost-saving measure is blunted by the growing demands of advertisers and readers for improved printability and more colour printing;

- advertising will remain a growth industry worldwide, with major additional gains likely in Europe;

- the growth potential for newsprint will continue to be limited by increasing use by advertisers of higher-quality grades of paper for upper market segments;

- changes in the mix of printing processes will be limited; offset printing will maintain an eminent role.

Based on these assumptions, regional and key country forecasts are given below, again extracted from the Industry Working Party study.

North America. Based on economic and demographic projections (and assuming continued growth in advertising) North American newsprint consumption should grow at a rate of approximately 2.25 percent until 1995. This forecast presupposes a decrease in the basis weight from 48 g/m² to 47 g/m²; the stabilization of Sunday newspaper circulation; continued but less vigorous growth in newspaper advertising inserts; and increasing competition from new forms of electronic communication. In 1995, North American newsprint consumption is therefore expected to reach 16 million tonnes, two million tonnes more than in 1988.

Western Europe. In the Nordic countries (Finland, Norway and Sweden) increases in newsprint demand up to 1995 are projected to parallel overall economic growth (some 2.5 percent per year). Therefore, demand should be some 900 000 tonnes in 1995. This forecast, a slow-down from the nearly 4 percent annual growth recorded in the 1980s, assumes a decrease in average newsprint basis weight from 44.25 g/m² at the end of the 1980s to 44 g/m² in 1995; increases in the average number of pages per newspaper; and burgeoning non-newspaper end-uses.

In the rest of Western Europe, in spite of low population growth and a reduction in average newsprint basis weight from the current 47 g/m² to about 46.5 g/m² by 1995, newsprint consumption should be sustained by increased leisure time and continuing improvements in non-newspaper end-uses, with strong gains in advertising. Therefore, total newsprint demand in Western Europe (excluding the Nordic countries) is projected to grow by about 2.5 percent a year and reach 7.75 million tonnes by 1995.

Oceania. Over the past 15 years there has been a very close relationship between the increase in the gross domestic product (GDP) and growth in newsprint demand. Assuming that this relationship continues to hold, and based on an average basis weight of 48.8 g/m², Oceania's newsprint requirements could reach almost one million tonnes in 1995.

Japan. Over the past two decades, Japanese newsprint demand has lagged behind domestic economic growth. However, a number of factors may contribute to a change in this trend. Japanese newspaper publishers have invested heavily in modern equipment that has significantly enhanced the marketability of newspapers as an advertising vehicle. In addition, over the next few years the role of newspapers may assume more importance as the Japanese economy becomes increasingly knowledge-based and personal income and leisure time continue to rise. Tempering factors will include a further drop in the population growth rate to a projected 0.5 percent per year. Newsprint requirements in Japan are expected to increase to 3.9 million tonnes by the mid-1990s.

Asia (excluding Japan and the Asian centrally planned economies). The medium-term economic outlook does not appear to indicate a major change in regional growth disparities. The four newly industrialized Asian economies (Singapore, Hong Kong Territory, Republic of Korea and Taiwan, Province of China) are expected to continue to head development. For the rest of the continent, there may be room for cautious optimism since major conflicts have come to a halt or are nearing an end, and thus facilitating the resumption of economic growth.

Although the overall annual growth in newsprint consumption in this region has averaged 6 percent during the past two decades, the rate in the 1980s was somewhat lower, indicating a slackening trend. However, consumption is still expected to grow at 5.5 percent per year through 1995, largely driven by continuing strong economic growth in the newly industrialized countries and in India.

Latin America. The economic outlook for Latin America remains clouded by limited external financing, which is having a serious negative impact on business investment; a significant debt-service burden; and uncertain commodity export prices. Under these circumstances, newsprint demand is forecast to rise from 1.6 million tonnes in 1988 to 1.8 million tonnes by the mid- 1990s. A more optimistic scenario, based on positive results in the area of debt forgiveness and the expansion of domestic newsprint capacity, could raise newsprint demand to as much as 1.9 million tonnes. In a pessimistic scenario, implying a deadlock in debt negotiations, newsprint demand could drop below current levels, perhaps to a low of 1.4 million tonnes.

TABLE 3. World newsprint production by region

Region

1980

1985

1988

(Million tonnes)

World

25.4

28.2

32.0

Total developed countries

24.1

26.2

29.0

North America

12.9

13.9

15.4

Western Europe

6.0

6.8

7.6

Oceania

0.5

0.7

0.6

Other

4.6

4.8

5.5

Other developed countries

2.9

2.9

3.4

Eastern Europe and USSR

1.7

1.9

2.0

Total developing countries

1.4

2.1

3.0

Africa

0.0

0.0

0.1

Latin America

0.5

0.8

1.1

Near East

0.1

0.1

0.1

Asia

0.8

1.1

1.7

Far East

0.4

0.6

1.0

Asian centrally planned economies

0.4

0.5

0.7

ource: FAO Fores' Products Yearbook 1978-1989.

Africa. During the 1980s African economies suffered sharp declines in commodity prices and sluggish export volumes which, combined with strong population growth, led to in a steep decline in per caput income. In the context of these poor economic conditions, which also put a limit on education expenditures and newsprint imports, newsprint consumption in Africa has declined since 1981 and little growth is expected in this continent's requirements over the next few years.

Centrally planned economies (encompassing the Asian CPEs, Eastern Europe and the USSR). The projections by the Industry Working Party were prepared while the recent political changes in Eastern Europe were just starting and consequently may not be totally reliable. The economic outlook for the countries in this category will be subject to significant uncertainty for several years. Newsprint demand in these countries is expected to grow by about 2.5 percent per year, thereby reaching just over three million tonnes by 1995.

Newsprint production

World newsprint production increased from 25.4 million tonnes in 1980 to 32.0 million tonnes in 1988, indicating an average annual growth of about 3 percent (see Table 3).

To keep costs down, newsprint is usually produced in large-scale operations; mills with an output of 150 000 to 250 000 tonnes per year are common. The necessity for large-scale production units has resulted in newsprint production being concentrated in industrialized countries.

Despite the rapid increase in developing countries' newsprint production in the recent past, their total newsprint production was only about three million tonnes in 1988, over 90 percent of the world total newsprint production still took place in the developed countries. Six countries (Canada, the United States, Japan, Finland, Sweden and the USSR) produced 23.7 million tonnes, or nearly 75 percent of the world's newsprint.

This Finnish paper machine, in operation in France, is capable of producing 1500 m of a nine-metre sheet of newsprint per minute, i.e. more than 875 tonnes par day

In the developing countries, newsprint production was equal to more than 60 percent of total consumption in 1988, meaning a significant increase in self-sufficiency from just over 40 percent in 1980. However, this production is concentrated in only a very few countries. In Africa, only four countries (Kenya, Nigeria, the United Republic of Tanzania and Zimbabwe) produced newsprint in 1988, with a total output of 88 000 tonnes. In Latin America and the Caribbean region, production was equally concentrated. Together, Argentina, Brazil, Chile and Mexico produced 1.1 million tonnes of newsprint in 1988. Eight countries in Asia (Bangladesh, China, India, Indonesia, the Republic of Korea, the Philippines, Turkey and Viet Nam) are newsprint producers, and they had a total production of 1.8 million tonnes in 1988. All the other developing countries were totally dependent on newsprint imports.

Newsprint production capacity forecast

Global newsprint production capacity is expected to increase by 5.8 million tonnes in the 1989-1994 period (see Table 4). Some 4.7 million tonnes of the total are expected to be concentrated in the industrialized countries with an annual average increase of some 2.9 percent.

The developing countries' annual average percentage increase will be almost double that of developed countries. The total increase of some 1.1 million tonnes in the developing countries' newsprint capacity between 1989 and 1994 will represent a 5.9 percent annual increase, which is higher than the foreseen increase in consumption. Although this will contribute to a further increase in self-sufficiency, most of the developing countries will continue to remain heavily dependent on imports for their newsprint requirements in the near future.

The two key factors in the development of newsprint production capacity in the developing countries are the availability of sufficiently large domestic markets and access to suitable raw materials. As noted earlier, in many developing countries the absolute size of the domestic newsprint market is smaller than the minimum efficiency level for a single production facility. Therefore, any plans for domestic newsprint production in these countries must be based on the availability of export markets.

At the moment, however, most of the newsprint export markets are already supplied by large producers with highly developed production and marketing facilities. Consequently, competition in the export markets is extremely keen and any new supplier has to be able to meet it with high and constantly uniform product quality, accurate delivery conditions and competitive prices. It is noteworthy that importing developing countries are very quality-conscious as the newspaper printing presses there tend to be relatively new and usually very technically advanced. Furthermore, most of these markets are currently supplied by highly efficient producers from industrialized countries who can assure the specific quality characteristics required by the printers. Producers in developing countries therefore have to pay equal attention to quality as do their competitors in developed countries. This requires both access to the latest production technology and a well-trained human resource at all levels, from the procurement of raw materials to company management.

In the developed countries, the primary source of raw material for newsprint production is extensively managed natural softwood, i.e. coniferous forests. In most developing countries, this type of forest formation is far less common. However, even in the developing countries the major producers of newsprint are using softwood from plantations - as their main raw material. The newsprint industry in Chile, for example, is based on plantation-grown radiate pine. In other developing countries, an increasingly important trend is the development of technologies based on waste paper and non-wood raw materials such as bagasse (see Box).

TABLE 4. World newsprint capacity by region

Region

Total capacity increase

Average annual increase

1984

1989

1994

1984-89

1989-94

1984-89

1989-94

('000 tonnes)

(Percentage)

World total

31 227

34 814

40 661

3 587

5 847

2.2

3.2

Developed countries

28 885

31 398

36 175

2 513

4 777

1.7

2.9

North America

15 124

15 717

17 728

593

2 011

0.8

2.4

Japan

2 829

3 412

4 360

583

948

3.8

5.0

Western Europe

7 393

8 547

10 379

1 154

1 832

2.9

4.0

Eastern Europe

468

505

506

37

1

1.5

0.0

USSR

1 950

1 950

1 950

0

0

0.0

0.0

Oceania

695

825

810

130

-15

3.5

-0.4

Other

426

442

442

16

0

0.7

0.0

Developing countries

2 342

3 416

4 486

1 074

1 070

7.8

5.6

Africa

15

132

249

117

117

54.5

13.5

Latin America

945

1 193

1 786

248

593

4.8

8.4

Asia

1 382

2 091

2 451

709

360

8.6

3.2

Source: Pulp and paper capacities. FAO survey 1989-1994. Rome. FAO.

Changing in raw materials for newsprint production

Wood is the most common raw material in newsprint production. The special fibre characteristics of softwoods have made them the preferred raw material. The development of new wood pulping processes has contributed to the reduction in size of an economically viable operation, a change which is expected to benefit developing countries in particular, given their relatively small markets. The minimum quantity of newsprint output, however, is still about 50 000 tonnes per year.

In developing countries, where suitable wood for newsprint production is not always readily available, non-wood fibres are receiving increasing attention as a raw material. For example, there are currently four newsprint mills based on bagasse - the cellulose-rich remains of sugar cane after pressing (Papel del Tucuman in Argentina; Cuba-9 in Cuba; Tamil Nadu in India; and Aspex Paper in Indonesia). The mill in Cuba is a pilot plant.

Kenaf (Hibiscus cannabinus) is another non-wood fibre which is being considered as a raw material for newsprint production, although there are no commercial-scale newsprint operations based on this raw material as yet. The technology for producing newsprint from kenaf is already known and its main constraints are related to land use and economics. Interest in this raw material appears to be greatest in the United States where the American Newspaper Publishers' Association has promoted research.

Waste paper is attracting increasing attention as a raw material in newsprint production and a number of newsprint mills based either entirely or partially on waste paper are already in operation. Problems of solid waste disposal, particularly in the United States, have resulted in proposals for legislative measures to make it compulsory for newspaper publishers to use newsprint containing minimum amounts of waste paper for fibre content. This is expected to increase the use of waste paper in newsprint production by industries, both in the United States and Canada, which supply the American market.

Stacked bagasse in Cuba

Newsprint mills using wood as their raw material have traditionally been large in order to justify the production of chemical pulp which is needed as a part of the fibre composition of newsprint. The development of new wood pulping processes, including CTMP (chemo-thermomechanical pulping) and TMP (thermomechanical pulping), has contributed to an improvement in the economies of wood utilization by reducing the need for chemical pulp input in newsprint production. In some instances, newsprint is even produced without any chemical pulp input. These new pulping processes render smaller-sized operations economically viable; this is expected to be of particular benefit to developing countries with their relatively limited markets. However, the minimum size newsprint mills are still in the order of 50 000 tonnes per year.

Environmental issues are also an important consideration in newsprint production. Although mechanical wood pulping technology is now within environmentally acceptable limits, newsprint production requires a minimum amount of chemical pulp to provide the necessary strength. Special precautions must be taken with the new mechanical pulping processes to prevent the chemicals used from polluting the environment. Pulping of non-wood raw materials tends to pose its own environmental challenges, in part because the yield per unit weight of raw material tends to be lower than that from wood.

Regional cooperation among developing countries might help solve some of the problems associated with the size of markets, the need for joint research and development as well as the need for the pooling of financial resources and development of raw material resources. However, the potential political impact of newsprint supply has led to difficulties in implementing cooperative efforts. For instance, efforts to establish a newsprint mill in Honduras for supplying newspaper publishers in the Central American Common Market (CACM) countries are yet to produce concrete results.

TABLE 5. World newsprint trade by region

Region

1980

1985

1988

Imports1

Exports2

Imports1

Exports2

Imports1

Exports2

World

12.6

12.3

14.2

13.8

15.0

14.5

Total developed countries

10.6

12.2

12.2

13.6

13.0

14.3

North America

6.6

7.9

7.7

8.8

7.8

8.9

Western Europe

3.2

3.5

3.6

4.2

4.2

4.6

Oceania

0.3

0.2

0.3

0.2

0.3

0.1

Other

0.4

0.6

0.6

0.7

0.6

0.6

Other developed countries

0.2

0.2

0.4

0.3

0.4

0.2

Eastern Europe and USSR

0.2

0.4

0.2

0.4

0.2

0.4

Total developing countries

2.0

0.1

1.9

0.2

2.0

0.2

Africa

0.1

0.0

0.1

0.0

0.1

0.0

Latin America

0.9

0.1

0.6

0.1

0.7

0.1

Near East

0.2

0.0

0.2

0.0

0.2

0.0

Asia

0.9

0.1

1.1

neg.*

1.0

0.1

Far East

0.7

0.1

0.8

neg.

0.8

0.1

Asian centrally planned economies

0.2

neg.

0.3

0.0

0.2

neg.

*neg. = less than 0.1.
1 Volume as reported by importers.
2 Volume identified with specific exporters.
Source: FAO Forest Products Yearbook 1978-1989.

TABLE 6. Newsprint exports by major exporting countries in 1988

Country

Total exports

To developed countries

To developing countries

('000 tonnes)

Canada

8 554

7 908

646

Sweden

1 754

1 541

213

Finland

1 203

1 095

108

Norway

715

650

65

USSR

334

176

158

United States

388

248

140

Germany, Fed. Rep.

355

330

25

Subtotal

13 303

11 948

1 355

Total world exports

14 464

12 733

1 730

Source: FAO Forest Products Yearbook 1977-1988.

International trade in newsprint

From the previous discussion, it is apparent that newsprint is a highly international product. In 1988, the total export quantity amounted to 14.5 million tonnes, or 45 percent of total world production (see Table 5). The major newsprint exporting countries, Canada, Finland and Sweden, accounted for 80 percent of total world exports (see Table 6) with a great majority going to other industrialized countries. Their exports of just less than one million tonnes to developing countries represent only about 8 percent of their total exports.

Total exports to developing countries amounted to 1.8 million tonnes of which just over 1.5 million tonnes were supplied by the developed countries. Canada, Sweden, Finland, the USSR and the United States were the main supplying countries. Of the 215 000 tonnes that came from developing country suppliers, 119 000 tonnes came from Chile alone. As already pointed out, most of the developing countries are fully dependent on imported newsprint. There are also a number of developed countries which are wholly or partially dependent on imported newsprint. The United States, by far the largest importer of newsprint in the world, imported 7.8 million tonnes in 1988, i.e. some 60 percent of its total consumption. Canada was the main supplier (7.2 million tonnes) with most of the balance coming from Finland, Norway and Sweden. In Europe, the EEC imports newsprint equivalent to 70 percent of its total consumption. Imports in 1988 were 4.3 million tonnes, with Sweden, Finland, Norway and Canada as the main suppliers.

CORRIGENDA

In a previous article by L. Lintu on Changing perspectives in the recovery, trade and use of waste paper Unasylva, 42(163): 42-49, the captions of some of the pictures and graphs were misleading The caption on page 46 incorrectly identifies a bale from Sweden as waste paper when, in fact, it is pulp. The correct subtitles of the three graphs on page 47 showing trends in waste paper use are, from top to bottom: Major European pulp importers; Major non-European pulp importers; Major pulp exporters.

Conclusion

Newsprint consumption is projected to continue increasing worldwide. Although, in quantitative terms, consumption will be dominated by the developed countries, the relative share of the developing countries should continue to grow.

A few emerging factors are likely to contribute, at least to some extent, to an increase in self-sufficiency in individual countries which have relatively small domestic markets. New mechanical pulping technologies that permit the complete elimination of chemical pulp in newsprint production will allow newsprint fibre lines to be operated on a relatively small scale. Moreover, only the developing countries really have hands-on experience in using non-wood raw materials (particularly bagasse) in newsprint production. Interest in the use of bagasse in newsprint production will depend on alternative fuels being made available to replace this product in the sugar mills.

Newsprint production based on waste paper could be an alternative approach of particular interest to countries with small domestic markets. However, as many of these countries are dependent on imported waste paper, adequate attention will need to be paid to the assurance of long-term availability (Lintu, 1990). Finally, regional and subregional cooperation among developing countries still represents a potential force for the creation of large enough markets to justify local newsprint production.

Bibliography

FAO. 1990. The outlook for pulp and paper to 1995. Paper products: an industry update. Rome, FAO.

FAO. 1991. FAO Forest Products Yearbook. Rome, FAO.

Lintu, L. 1990. Changing perspectives in the recovery, trade and use of waste paper. Unasylva, 42(163): 42-49.


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