Flint Group Provides Insight into Expected Raw Material Cost Developments in 2012
“The crude oil costing has a significant knock on effect and is a good example of the challenges that the ink producers have these days, due to the high costs of phenolic resins, many ink producers introduced hybrids in 2011, which are based on a combination of Phenolic - and HydroCarbon resins. However due to the crude increases this cost effective alternative is gone.
“Unfortunately I believe we are running out of alternatives to protect our customers fully for the inevitable; costs will continue to rise in the next few years due to the trend of increasing raw material costs caused by the global increased shortages and the better cost / price management of the chemical giants. Further speculation on major commodities will only further serve to compound the negative price effect,” van der Velde predicts.
“The ink industry is somewhat dependent on materials coming from China,” he continues. “Actually if you produce pigments, in China, India, Europe or the US, many of the intermediates are only available from China. Also for key intermediates for UV-materials and other specialty materials China has the key for the costs.
“Further, 70 percent of the world production of gum rosin is Chinese origin. With the strength of the Chinese currency (Yuan) vs. the USD and the ongoing 5 percent revaluation annually, pigments and all other Chinese origin materials will continue to increase in cost. Add to that the increased costs of environment in China and India, the container transport costs and for those based in Europe the weakness of the Euro and you already have quite a difficult cost scenario,” adds van der Velde.
“Specific materials also have their own issues. Yellow pigments are expected to increase sharply in price in Q2, driven by the sharp increases of Benzene in China. Blue pigments are under pressure due to Copper and PA. The story of TiO2 is even more frightening with all producers again announcing major price increases which will be the 6th quarter in a row. Further due to the increases in styrene and propylene we will also see water based resins and UV resins increase,” he says.