Ink Industry Hopeful, Despite Adversities
January 2006
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INK IS THE colorful part of the package-printing process. Metallics, phosphorescents, pearlescents, fluorescents—ink is often the most eye-catching component of packaging. That may be why, even in the face of rising production and product prices, the ink industry saw growth in 2005.
For the last two years, ink manufacturers have had to boost the price of their products between 5-15 percent, with some offerings soaring as much as 30 percent. While some of the price hikes appear to be exorbitant, it's what ink companies have had to do to sustain margins and survive.
At the root of this problem is the escalating cost of raw materials used to make inks. In the recent past, ink manufacturers were able to absorb the price increases. However, today, ink makers aren't so lucky.
The bad news
The price of petroleum, natural gas, and acrylic acid—three ingredients that make up many feedstocks used in the production of inks—continues to rise and Mother Nature isn't helping. Oil and natural gas prices were upward bound before hurricanes Katrina and Rita rocked the Gulf of Mexico and shut down production facilities this past summer. Since then, prices have been further affected by lost production.
As of Dec. 29, 2005, almost 20 percent of the yearly production of oil (approximately 547.5 million barrels) and more than 15 percent of the yearly production of gas (approximately 3.65 Tcf—trillion cubic feet) in the Gulf was shut-in, according to the Mineral Management Service, an agency of the U.S. Department of the Interior.
Making matters worse is the soaring cost of acrylic acid. The chemical is used in the making of acrylic resins, solutions, and emulsions for water-based acrylic inks, and is also a component used by makers of energy-curable monomers and oligomers. Back in 2003, the problem with acrylic acid wasn't price but a shortage, which forced some distributors into allotments and force majeures. However, according to Don Duncan, director of research, Wikoff Color Corp., "the acrylic acid shortage was largely an non-issue by the end of the first quarter of 2005. While there was plenty of anxiety, yelling, and screaming, the 'shortage' was primarily just a substantial price increase. There was plenty if you anted up."
Corey Soeldner, purchasing director, Sun Chemical North American Inks, echoed that thought, adding that the cost of other materials have also hurt ink manufacturers' pocketbooks. He said, "Although the market for acrylic acid has been fairly tight, there is no shortage as the market saw in 2004-2005. Acrylic acid prices increased over 100 percent since January 2004 … (and furthermore) in the last year there have been double-digit price increases on resins that are used to manufacture printing inks. Even though acrylic acid availability is improving, there is still pressure being exerted from elevated propylene prices. Propylene reached unprecedented highs at the end of 2005 as a result of curtailed refinery capacity from the hurricanes."
For the last two years, ink manufacturers have had to boost the price of their products between 5-15 percent, with some offerings soaring as much as 30 percent. While some of the price hikes appear to be exorbitant, it's what ink companies have had to do to sustain margins and survive.
At the root of this problem is the escalating cost of raw materials used to make inks. In the recent past, ink manufacturers were able to absorb the price increases. However, today, ink makers aren't so lucky.
The bad news
The price of petroleum, natural gas, and acrylic acid—three ingredients that make up many feedstocks used in the production of inks—continues to rise and Mother Nature isn't helping. Oil and natural gas prices were upward bound before hurricanes Katrina and Rita rocked the Gulf of Mexico and shut down production facilities this past summer. Since then, prices have been further affected by lost production.
As of Dec. 29, 2005, almost 20 percent of the yearly production of oil (approximately 547.5 million barrels) and more than 15 percent of the yearly production of gas (approximately 3.65 Tcf—trillion cubic feet) in the Gulf was shut-in, according to the Mineral Management Service, an agency of the U.S. Department of the Interior.
Making matters worse is the soaring cost of acrylic acid. The chemical is used in the making of acrylic resins, solutions, and emulsions for water-based acrylic inks, and is also a component used by makers of energy-curable monomers and oligomers. Back in 2003, the problem with acrylic acid wasn't price but a shortage, which forced some distributors into allotments and force majeures. However, according to Don Duncan, director of research, Wikoff Color Corp., "the acrylic acid shortage was largely an non-issue by the end of the first quarter of 2005. While there was plenty of anxiety, yelling, and screaming, the 'shortage' was primarily just a substantial price increase. There was plenty if you anted up."
Corey Soeldner, purchasing director, Sun Chemical North American Inks, echoed that thought, adding that the cost of other materials have also hurt ink manufacturers' pocketbooks. He said, "Although the market for acrylic acid has been fairly tight, there is no shortage as the market saw in 2004-2005. Acrylic acid prices increased over 100 percent since January 2004 … (and furthermore) in the last year there have been double-digit price increases on resins that are used to manufacture printing inks. Even though acrylic acid availability is improving, there is still pressure being exerted from elevated propylene prices. Propylene reached unprecedented highs at the end of 2005 as a result of curtailed refinery capacity from the hurricanes."
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