Rising Costs Affecting Raw Materials for the Print Industry
Due to rising petroleum prices, printers are seeing cost increases in finishing products, inks and substrates. “We are seeing five to seven percent increases,” said Jerry Hill, vice president of sales and marketing, Drytac Corporation. “Almost all the components used to make our overlaminate and adhesive products have risen,” agreed Angela Mohni, director of marketing, Neschen Americas. This includes base film carriers, such as PVC, polyester and polypropylene. “We have seen unprecedented and relentless increases over a period of three years in plastic substrates and adhesive. It is clear there is limited availability of some of the highly engineered components of our laminates,” explained Gideon Schlessinger, GBC vice president of marketing, product technology and development. “Simultaneously, significant increases in the cost of oil and spiking demand for all petrochemical products out of Asia have created a situation in which suppliers have more customers than capacity, and they are able to demand higher prices.”
Said Mohni, “The basic chemical infrastructure behind the adhesive and films in our sector is based on natural gas. U.S. natural gas pricing per thousand cubic feet has nearly doubled since 2000.” While petroleum-based products, such as polyester and vinyls, are among those most affected, costs of acrylates--the main components in adhesive products--have risen 18 percent to 30 percent since December 2005, according to Mohni. Another affected component in overlaminate and adhesive products is paper-based release liner. “Domestic pulp paper pricing is up 18 percent year on year through November of 2006,” she said.
Of the two percent of raw materials that don’t derive from petroleum or gas, some come from trees or crops, others from mines, and all are affected by supply and demand. In addition, the further from the original source a raw material is produced, the more steps and costs required to produce it, and the more complicated the supply-side becomes. For example, pigment feedstocks are intermediate materials which are further processed to create materials in inks. “BON acid (Beta Oxynaphtoic acid) accounts for nearly 50 percent of the material required to make most red pigments,” observed Diane Parisi, vice president of procurement for the Flint Group. “BON acid is five steps removed from its crude oil origins, and its price has jumped 20 percent since the beginning of 2006.”