The unprecedented escalation in prices of all key raw materials, that has dominated the ink manufacturers’ supply chain throughout 2010, continues to dramatically affect the costs of producing heatset, coldset and publication gravure inks. In some cases, raw materials have risen by more than 100% in the last six to nine months, and the outlook for 2011 is for this trend to continue.
As a result, price increases are being communicated by the Print Media Europe Division of Flint Group to the market effective from Jan. 1, 2011: heatset inks will increase by €0.45/kg, coldset inks by €0.35/kg, and publication gravure by €0.40/kg.
“These price increases will only partially cover the real increase we have absorbed in 2010 and that are forecasted for the first quarter of 2011” explained Fredrik Broman, vice president of product management, Web Print, Flint Group Print Media Europe. “We have been under severe pressure all year and our hope was that the short supply of certain materials and rise in costs that accelerated at the end of 2009 would be a temporary factor. Unfortunately this has not been the case. Ongoing increases which have been sustained throughout this year seem to be here to stay and have significantly affected the cost of our inks.”
Of particular concern is the gum rosin situation, which continues to be volatile. The short-term challenge is security of supply. Low crop yields, low stocks and increased demand from non-ink industries are causing difficulties for the phenolic resin manufacturers and therefore ink producers.
The phenolic resin suppliers are facing serious challenges securing the gum rosin and have no other option than to pass on their increased costs, otherwise they may not survive the current situation, or they will at least stop production until cost increases are passed on. There are currently no signs of relief to this situation, which could well last for the next six to nine months.
In addition, the pigment supply chain is being hit hard by environmental issues in India and China, where many producers are exiting the market due to increased regulation. In particular blue, yellow and red pigments are under severe pressure.
Flint Group continues to work very hard to mitigate the increases and material shortages, through various cost containment initiatives and close cooperation with supply partners. Open communication with its customer base has been a feature of Flint Group’s reaction to the spiraling costs, but its ability to continue absorbing the increases has come to end due to the magnitude and widespread nature of the situation.
“Should our raw material costs remain at current levels or escalate further, then we see the need for further price increases in 2011,” Mr. Broman concluded.