Throughout 2004, pigment and pigment preparation costs have risen sharply. Raw material prices, including intermediates, bulk chemicals, resins and vehicles, have increased steadily throughout the year and more increases are anticipated over the coming months. In addition to raw materials, the costs of energy, regulatory compliance, freight and employee health care have all escalated this year.
Sun Chemical has invested heavily over the last few years in improving productivity and in capital equipment to improve efficiency in the factories. These investments have helped to offset some of the increases in cost to manufacture pigments. However, the rapid escalation of costs this year has outpaced gains in productivity, resulting in the necessity to raise prices.