In conjunction with our Annual Buyers’ Guide issue, I also write an annual report on trends in raw materials. For example, the past few years have focused on higher prices of raw materials, driven primarily by dramatically higher prices in crude oil and, more recently, China’s reduction and outright elimination of its VAT subsidy on pigments and intermediates.
The subject of higher raw material and operational costs are well documented, and nothing in the past year has changed. In fact, crude oil prices continue to skyrocket, surpassing $140 per barrel before coming down slightly in the past month. By contrast, oil was less than $100 a barrel less than nine months ago.
However, there is another major challenge facing ink manufacturers and suppliers that is coming fairly quickly, and will likely have an even greater impact on raw materials. This is the European Union’s legislation on chemicals, Registration, Evaluation, Authorisation and Restriction of Chemical substances, more commonly known as REACH. Right now, the pre-registration phase is going on; companies have until November to register all of the required chemicals. After that, any unregistered chemicals can no longer be sold in the EU.
Once pre-registration occurs, testing is required to determine the safety level of these chemicals. This will be an expensive process, covering virtually every chemical in use. In some cases, suppliers will pay for the testing, and in others, ink manufacturers will have to share the burden.
The implications of REACH are likely to be far-reaching. In the case of raw materials that are not sold in high volumes, suppliers may find it economically impossible to continue production. In other cases, suppliers may even choose to abandon the market altogether.
In speaking with ink manufacturers for my report, “Preparing for REACH,” which begins on page 16, the one thing that is clear is that there is much uncertainty about the end results of REACH. The leading ink companies reported that they have done their preparation, and are waiting to see what the future holds. All in all, REACH is another major challenge ahead for the ink industry.
Ink World Editor