In order to help printers and converters understand why their ink prices may be on the rise, the National Association of Printing Ink Manufacturers, Inc. (NAPIM) issued a bulletin that provides insight into the current volatility facing the raw material printing ink market supply chain.
The bulletin, sent to NAPIM's members, reviewed the availability of critical raw materials likely used in the inks that printers' purchase in all of the major printing processes—lithographic, gravure, flexographic, and inkjet.
Availability, driven by capacity and demand from competing regions and industries, remains the determinant on how much product any one manufacturer can obtain and at what cost. Some of the key raw materials causing price increases include: rosin, acrylic acid, carbon black, titanium dioxide, nitrocellulose, crude oil and natural gas, vegetable oils, and colored organic pigments.
Rosin is a major ingredient in resin production. Gum rosin has experienced a nearly threefold increase in price during 2010 and supply remains constrained with very low inventories. The resins produced from rosin are not only used in offset, flexographic and rotogravure printing inks but are also used in adhesives, road markings and rubber.
Numerous production problems around the world and increased demand from other industrial applications have created a taut market that has experienced sales control initiatives from major producers. The cost pressure and supply constraints are expected to continue through 2011. These dynamics cause significant and on-going challenges in the water-based and UV markets.
Reduction in available capacity has been seen and lead times have increased significantly. Automotive demand is increasing as well as the demand in several other markets. Two major carbon black suppliers are for sale.
Titanium Dioxide (TiO2)
Suppliers are not taking on new business as supply remains tight and inventory levels are very low. Global capacity, during the economic downturn, was reduced by 15 percent over the past 18 months and there is no indication that investment will be made to accommodate future growth in the industry.
Growing demand coupled with wood pulp production issues and harvest disappointments with cotton linters have created a difficult situation for nitrocellulose in 2010 that is not expected to improve in 2011. China has reduced exports to meet internal requirements and some industrial product will be removed from the supply chain when Maxam closes a facility in 2011.
Crude Oil and Natural Gas
The refining of crude oil and the cracking of natural gas provide many of the precursor chemicals for printing ink raw materials and their intermediates. World oil consumption is expected to grow in China, Brazil, and the Middle East which will sustain the regional competition for products and place the supplier in the advantageous position to sell where the profit is best.
Vegetable oils, primarily linseed and soybean oil are in a volatile and complex market. Prices are driven by several factors including: the acres planted, harvest yield per acre, weather, exports, value of the dollar, crude petroleum oil prices, bio-diesel production, and commodity prices. Based on these factors, it is expected that for the first half of 2011 prices will remain high versus last year.
Colored Organic Pigments