The increase, effective Nov. 1, 2007, comes in response to rising costs resulting from well publicized changes in Chinese export trade policy, coupled with record price levels within the petrochemical business sector.
On July 1, the Chinese government eliminated its Value Added Tax (VAT) refunds to Chinese exporters, which has impacted many domestic industries including inks and colorants.
Additionally, supply of some materials is becoming increasing limited due to plant closures as China moves to reduce the negative impact of these facilities on the environment.
“The availability of low-cost pigment supply from China has caused capacity to diminish in the United States and Europe,” said Kent Wishart, president of Graphic Sciences. “China now produces 75 percent of the world’s organic pigment, which is used not only in printing inks, but in virtually everything that has color.
Intermediates that are used to manufacture pigment are also largely produced in China. After being awarded the 2008 Olympic Games, the Chinese government has become increasingly active in its focus on environmental quality. As a result, plants that are significant polluters are being closed, which could lead to shortages of pigment supply. This could result in further raw material price increases, in addition to those resulting from elimination of VAT refunds. Graphic Sciences has excellent relationships with its suppliers so no interruption is anticipated, but costs are still going up significantly.
“Graphic Sciences will continue to explore every opportunity to reduce operational costs to help offset the impact of these events, while maintaining the high level of product quality and service its customers have come to expect,” he added.