There has been a lot of pricing increases that have been announced recently for key raw materials for ink manufacturing. In addition, there have been shortages in important products.

Ink manufacturers have done what they can to contain costs, but increases of more than 50% for feedstocks and critical ingredients has overwhelmed the ink companies. As a result, Sun Chemical and Flint Group have announced a series of price increases of their own in the last two weeks. These increases are as follows:

• June 7, 2010: Sun Chemical Europe announced that a 5-10% price increase will be implemented for its sheetfed and UV products effective July 1, 2010.

• June 2, 2010: Sun Chemical will implement a 6% price increase for heatset and directory inks in North America effective July 1, 2010. Prices will also increase for all of Sun Chemical Rycoline blanket and roller washes, specialty solvents, isopropyl alcohol, alcohol replacement and aqueous coatings. The price of solvent-based washes will increase by $0.50 per gallon and aqueous coatings by $0.05 per pound.

• June 1, 2010: Flint Group advised a price increase of 5-8% for narrow web inks with effect as of July 1, 2010.

• May 31, 2010: Flint Group raised heatset inks by €0.25/kg, coldset black by €0.15/kg, coldset colors by €0.25/kg, conventional sheetfed inks by 5% to 8% depending on the product and some pressroom chemicals by 5% to 8%.

There are major reasons behind these price increases. Increased global demand for raw materials is a key driver, and Flint Group officials noted that some raw materials have gone up in cost by more than 50 percent, and there seems to be no relief in sight. In Europe, the decline of the euro is adding pressure to manufacturers.

In response to the situation, Flint Group released its own comprehensive analysis of the present state of raw material pricing. I shall quote a few of the points below; the full text can be found at http://www.flintgrp.com/en/news-information/press-releases/1140_RawMat_PNW.php

“The economic collapse at eh end of 2008 was followed by a significant de-stocking of most raw material supply chains. As a consequence, especially costs of base chemicals increased continuously since early 2009. All key raw materials the ink industry relies on, like benzene, toluene, ethylene and propylene, see double-digit price increases. Another factor driving up raw material cost is a number of ‘force majeure’ situations and key base raw material suppliers moving away from the ink industry, like Dow exiting their vinyl resin business.

“Reductions in capacity are impacting on all areas of the industry with the packaging and narrow web ink markets also similarly affected by global shortages in key materials such as acrylates or acrylic resins which are derived from acrylic acid. Acrylic acid is facing a global shortage, which started in North America after the production incidents at Dow and Arkema, but has now spread around the world. Shortages have hit China and recently BASF announced it will take out capacity for maintenance. Many suppliers have now put in allocations to customers and clearly prices for acrylates and acrylic resins are now under upward pressure as a consequence – latterly this has also been as a result of the prices for styrene, which is used as a co-monomer in styrene acrylic resins almost returning to the record levels of 2008...

“Following on from the impending situation with solvents, it is very clear that most pigment intermediates will also see increased pricing, particularly blue and red, while materials like TiO2 and many specialty chemicals will also follow the same trend.”

Flint Group and Sun Chemical officials understand the pressure that printers are under, and add that that raising their prices is a last resort. Considering the state of raw material prices and supply, volatility is the only certainty going forward.