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Ink Prices Stay Fluid

“Ink (Noun): A colored liquid used for writing, drawing, printing, or duplication.”

The concept is pretty simple. Where it gets complicated is when you start looking at just what makes up this “colored liquid.” Depending on the particular ink, gum rosin, copper, benzene, titanium dioxide, mineral oils, carbon black, napthenic oils, soy, carbazole violet, phthalo greens and blues, and many other materials can be involved. All are commodities and their prices fluctuate with market conditions, availability, and demand. A study by the Flint Group found that these raw materials cost 15 percent more in 2011 than they did in 2008 and are expected to continue climbing in 2012. However, the most volatile “raw material” component affecting ink prices is crude oil.

Back in January of 2009, a barrel of oil was going for around $34.57. As I write this, oil is on the market for $103 a barrel and the International Monetary Fund predicts there could be a 30 percent increase in the price of oil in 2012, largely due to the oil sanctions on Iran. According to the Flint study, “The ‘silent’ ongoing increase of crude oil is having a major effect on costing, both in raw materials and also for transport, packaging materials (plastics), and utilities.”

“Crude is the single largest cost driver for the ink industry,” says Flint Group senior VP of procurement Jan Paul van der Velde. “Many materials are linked to this such as mineral oils, hydrocarbon resins, carbon black, and solvents, in addition to many other chemicals that are also indirectly linked to crude.”

“Rising cost on major materials and containers are driven by crude oil prices, global economies, and increased environmental regulation,” according to Toyo Ink America’s Bob Wichtendahl, global purchasing and regulatory affairs manager. “These raw materials are used in everything from varnishes, both conventional and UV, pigments, additives, oils, and solvents. The containers used to hold raw materials and the finished ink has been affected by the plastic or steel cost of their raw materials. The transportation of the raw materials to us and then to the customer has substantially gone up. The national average for diesel is at a near record high since July 2008.”

Jeff Koppelman, president of Gans Ink & Supply, adds that: “Without a doubt, raw material costs are the significant driver in increased ink prices. But there are other factors driving costs up as well. These include distribution costs (based on commercial carrier fuel surcharges or in-house delivery expenses), increased energy costs to manufacture the products, and increased employee benefit costs (health insurance, state unemployment taxes, etc.)”

“The last several years have seen raw material increases to the ink industry,” says John Copeland, president and COO of Toyo America. “Virtually all materials have increased in price and various shortages of certain pigments have limited choices and pushed prices up.”

More or Less Than Price

The conventional wisdom is that printers purchase ink based on price, quality, and service—in that order. That may well be true but sometimes buying just on price can be detrimental to the final job.

“The best thing a printer can do is to make sure his products are consistent and run well,” says Copeland. “Buying ink based on cost leaves the printer at the mercy of the product. Weak inks that cost less actually cause many problems including poor mileage, trap, drying speed, and higher VOCs.”

So, quality counts. So does service. That still leaves us with the continuing rise in the cost of ink to deal with. While nobody likes a price increase, perhaps these ink price hikes are not entirely as damaging as some would have us believe.

When asked how a printer can deal with the higher ink prices without having to charge significantly higher prices to their customers, Gans’ Koppelman noted: “Over the years, offset ink’s contribution has averaged two to five percent of the finished job’s sale price. Even if the ink’s contribution was 10 percent, a five percent price increase to the printer would represent a one-half of one percent cost addition to the final job. I really don’t feel that ink is a major contributing factor to any ‘significantly higher prices’ required to be passed on the printers’ customers.”

Offsetting Ink’s Impact

While it is true that offset printing still accounts for the majority of commercial print output, there is a sea change taking place that is driving the industry toward digital. Predictions are that more and more commercial print jobs will be moved from offset to digital. Will that alleviate the pain of higher offset ink prices? Perhaps, but the fact is that toner-based output devices depend on many of the same raw materials as does ink. So simply moving to digital probably wouldn’t solve the ink price problems.

Toyo’s Copeland takes note of an even more significant sea change in the commercial printing industry—diversity. “Some printers continue to reinvent themselves as print service providers, and no longer call themselves printers. They offer a larger portfolio of services, such as digital, printing fulfillment, marketing assistance, Web-to-print, Web hosting, etc., while placing greater emphasis on high-value-added print capability, upscale print or special effects. Those that succeed in making this transition tend to be better off than the average.”

In the end, the broader and more upscale the offerings, the less of an effect ink prices will have on pricing and profitability.

What’s in a Color?

One seldom thinks about the basic building blocks of a particular color. Below are a few colors and the chemicals that make them possible:

  • Blue (Copper and phthalic anhydride)
  • Yellow (Benzine)
  • Red (Toluene and naphthalene)
  • White (Titanium dioxide)