“This rise has also unfortunately been mirrored within other Gum producing markets who use the Chinese GR grade as a reference point to base their own costs.
“Finally, we have also seen significant increases in pigment costs. This has mainly been driven by the ongoing and increasingly stricter enforcement of environmental rules in China and India - both for pigment suppliers and the suppliers of base chemicals for pigment production. Rightly so, the rules of the game in these countries have changed, leading to governmental imposed factory shut downs, reduced production capacity due to effluent plant restrictions as well as major investments in waste water treatment. All of which has contributed to placing fixed costs at a completely new level to those previously seen.
Questioned on the effect currency fluctuations may have on raw material costs Jan Paul again revealed that the reality is often quite different to what is generally assumed. He explained “One remark I have frequently heard over the last few months relates to the current weakness of the Indian Rupee and whether this has been beneficial in lowering prices? While it has undoubtedly had an effect on local costs - in general the vast majority of raw materials are imported in India or are priced at international levels, and are therefore not helped by the relative cost position as a result of the weak Rupee.”
In closing, Jan Paul summarised, “It is clear that the ink industry is again being confronted with the rising cost of raw materials and unfortunately it does not look like this situation will quickly disappear. The result of these rising costs to some of the key raw material markets will inevitably have an increasing impact on the costing of publication inks.”
Flint Group’s next Raw Material Data presentation is expected to be available to download from mid-October.