Rising Raw Material Costs Require Price Increases

By David Savastano, Ink World Editor | 11.02.09

For countless years, people in the ink industry have longed for ink prices to rise. Instead, there has been a relentless downward spiral in the price of most inks, as many companies compete with an eye toward market share, and margins have suffered greatly. Meanwhile, printers have reaped the rewards of this approach.

During 2004, the battles over pricing have finally run into a major roadblock and ink industry leaders must be thinking about what is really happening to the industry. Many key raw material prices have dramatically increased, partly due to the skyrocketing price of a barrel of crude oil and also due to supply shortages. Terms such as force majeure and allocations are now unfortunately commonplace.

Simply put, there are not enough of key components such as feedstocks and acrylic acid to go around, and as prices rise quickly, suppliers to the ink industry have no choice but to raise their prices.

With this happening, ink companies are put in a precarious position. Their printer customers are used to beating back prices, and now it would seem the ink industry has to be serious about making price increases stick. When ingredients rise 50 percent, there is no company that can absorb those increases, no matter how much cost they take out of their business.

It’s not like the printing industry is unaware of what is happening with raw materials. The price of oil affects everyone, whether it is a motorist or a business owner. Rising prices are a simple reality.

The time has clearly come for price increases. Sun Chemical, the leader in the industry, has announced increases for its packaging inks of 3 percent to 7 percent, and other companies have also had to make similar decisions.

Whether these companies will have the discipline necessary to follow through on their decision will ultimately tell the fate of the ink industry. A failure now to try to secure reasonable price increases will sadly show printers that ink is a commodity, and ink companies don’t believe they should earn a profit. One can only hope that the industry will do what’s right.
David Savastano
Ink World Editor