Siegwerk anticipates difficult raw material markets and signals selective price increases for 2013. These materials are indispensable for producing print products such as packaging, advertising brochures and newspapers. And in recent years, they have constantly increased in price. This refers to tree resins, pigments, additives such as bonding agents and solvents – the raw materials and components used for the printing ink industry.
Take, for example, titanium dioxide, which has risen by 40% in price since 2010. The weakened euro, the increasing international demand – causing partial supply bottlenecks – on the raw material markets, rising energy and transportation costs, volatile crude oil prices, political instability and speculation all serve to aggravate the situation for the foreseeable future.
“In the longer term we are stuck in a gradual but steady cost spiral with prices rising further, a situation that is exerting pressure on the entire industry. Selective price adjustments in 2013 are therefore inevitable in order to maintain the quality level of our printing inks,” said Herbert Forker, CEO of the Siegwerk Group.
“What makes it problematic for the industry is that raw materials account for a major share of total printing ink manufacturing costs,” explained board member Ralf Hildenbrand, who is also responsible for purchasing at Siegwerk. “Purchase prices in 2012 were, to an extent, even higher than the 2011 prices, which, in turn, dramatically exceeded the 2010 prices in several important categories.”
Price increases in the basic materials needed for manufacturing raw materials for printing inks were one factor that triggered this development. Ethylene and styrene, both made from mineral oil extracts, are one example.
“The price adjustments implemented during the last two years failed to fully compensate the raw material price increase. Therefore we cannot expect a relief on the pricing front either, as market conditions remain unfavorable,” confirmed Hugo Noordhoek Hegt, board member and president Packaging EMEA (Europe, Middle East, Africa) at Siegwerk.
“In-house, we are consistently working on optimizing production processes, streamlining our purchasing organization and increased overall efficiency. Our application technology, noted for its competence and high performance, is also in a position to offer, together with our customers, innovative solutions and new concepts to compensate for the rise in costs as much as possible,” Mr. Forker said.
All told, thanks to its international and highly integrated organization, Siegwerk is very well positioned, and customers will profit in spite of increased costs.
Flint Group announced price increases for all printing inks in Europe, Middle East and Africa (EMEA) as of Jan. 1, 2013. The highly volatile raw material markets in 2012 necessitate Flint Group to increase prices for all coldset, heatset, publication gravure, sheetfed, packaging and narrow web inks and coatings and pressroom chemicals.
In 2012, global raw material markets have continued to be highly volatile. Despite the rather flat economic outlook, there are still many challenges for the supply chain. Demand from the emerging markets is rising while supplier production capacities shrink, putting pressure on the entire ink sector.
The price increase will generally range from 2% to 6%, depending on the product segment. There may be some products that lie outside this range due to the type and concentration of raw materials making up their composition.
“Cost pressure has been constant and the magnitude of the increases requires that we pass some of the increases through the supply chain,” Doug Aldred, president, Packaging and Narrow Web, said. “Flint Group has made every effort to mitigate these cost increases by process optimization and a leaner organization as part of the continuous improvement process. However, consistent product quality is vital to our valued customers and will not be compromised.”
Sun Chemical announced a price increase for its European customers across all Sun Chemical product lines, effective Jan. 1, 2013. The increase will be in the high single digits and will vary dependent on the product composition and product line.
In addition, Sun Chemical increased prices across all product lines for its Brazilian customers, effective Dec. 1, 2012. The increase will be in the high single digits and will vary dependent on the product composition and product line.
Despite average raw material prices stabilizing in 2012, costs have risen on an annual basis and further increases are expected for 2013. These are mainly due to production and environmental restrictions on key materials, weaker value of the euro and high demand levels.
“The high levels of raw material costs are unprecedented, and as a result make it necessary for us to keep our ink prices under review,” Felipe Mellado, Sun Chemical’s chief marketing officer, said. “We work proactively with our supply chain partners to manage and minimize costs, but due to the economic reality, cost pressures have been constant and significant price increases are being passed on to the ink industry. To ensure we maintain high levels of product quality and service as well as profitability, it has become necessary to further increase customer prices.”