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Jan 1, 1995 12:00 AM
Watch for changes in ink pricing, consolidations and other developments
The fortunes of the printing ink industry are dictated primarily by events within the graphic arts industry it serves - and 1994 could not be considered a banner year for either one. The printing industry continued to consolidate as companies as struggled with ongoing overcapacity. This situation created fierce competition that further eroded prices and profits, with the inevitable negative effect on pricing among suppliers to the trade.
Printing ink volume increased seven percent to eight percent in 1994. Flexographic inks were the biggest gainer, primarily water-based materials in the packaging area. The volume of news ink flexo produced remained flat, indicating no further incursions by newspapers into that process. Lithographic inks were the next largest gainer, mainly in web offset.
However, the dollar value of shipments rose only five percent. Raw material prices increased in January 1994, but it was not until May or June that a price increase in ink took effect, so profitability most likely did not improve throughout the year.
Now, ink manufacturers face further raw material price increases scheduled for early January 1995. This time, pigment manufacturers are the predominant thrust for the hikes. Pigments are traditionally the most expensive ink component and, therefore, cost increases in that product dramatically affect ink prices. Given the already slim margins on which ink companies operate, this situation almost certainly will result in further price escalation early in 1995 - approximately five percent, experts predict.
An added dimension to pigment price increases is concern over the availability of some components in their manufacture:
* Yellow. DCB, one chemical component of yellow, is produced by only three companies worldwide, and all are on allocation programs with their customers. Concern exists that in 1995 demand will exceed supply. The price of arylide, another chemical component, rose this past summer by as much as 10 percent.
* Red. BONA is derived from beta napthol, which comes from napthalene. The price of the latter increased 17 percent this past year.
In addition, 70 percent of C-Amine, an important agent in red pigments, is controlled by one producer in Asia.
* Blue. The price of phthalic anhydride, a principal ingredient in process blue pigment, doubled in the fall due to supply problems. Fires at two major producers contributed to the situation and also may lead to a shortage in the early part of 1995.
* Carbon black. The tire industry is enjoying tremendous growth. While such growth is good for auto workers, it puts heavy demands on carbon black manufacturers. Supply will be tight for inkmakers, and a four percent to six percent price increase is expected. This hike will impact black inks, including news ink and web offset heatset material.
These materials are produced from derivatives of paper-making (rosin resins) and the petroleum industry (hydrocarbon resins and ink oils), which increased in price during the past year, resulting in more expensive ink vehicles.
Ironically, tall oil rosin, a principal ingredient in ink resins, is a byproduct of paper-making (it is extracted when trees are pulped). Because recycling reduces the number of trees processed, it creates a shortage of this chemical intermediate.
In addition, the price of heatset ink oils increased five percent, effective in late 1994 or January 1995. The price of toluene, a major solvent for the publication gravure ink market, rose 20 percent this past year, and indications are it will rise five percent to eight percent early in 1995.
While no one is anticipating a shortage of pigments or other intermediates for the ink industry, price boosts will be the only way to ensure an adequate supply.
Ethylene, a chemical building block for many plastic products, is in tight supply due partly to Exxon's plant problems in Baton Rouge, LA. The short supply will affect pricing of materials such as acrylic resins (water-based coatings and flexographic inks), waxes (rub resistance for all inks) and, in particular, polyethylene containers including plastic ink pails. The latter's cost skyrocketed 100 percent during the past year.
But, prices aren't the only aspect of the industry that's changing. Since my last ink industry review, we've seen considerable consolidation activity among ink suppliers.
For instance, Sun Chemical Corp. purchased U.S. Printing Ink, a major producer of news ink, and merged the company into its own news ink group, creating a formidable supplier to the newspaper industry. Sun also "bought" Graphic Color in Chicago and merged it into the Kohl & Madden group. Similarly, it acquired Prism Ink in Milwaukee, closed the firm and now services customers from its Menomonee Falls branch. On the East Coast, Sun purchased another medium-size ink company, Graphic Fine Color, and is assimilating that facility into the Kohl & Madden division.
Flint Ink Co., not to be outdone, acquired North American Printing Ink Corp., a small ink firm but a major supplier to World Color Press. Flint also bought Lester Inks & Chemicals in Canada.
Another company, J.M. Huber Corp., plans to exit the ink business and is selling its $60 million ink division. The business sells primarily news and corrugated inks. As of this writing, there's no word on a confirmed purchaser, although Sun Chemical reportedly tendered a bid recently.
Yet another Japanese ink company is looking for a niche in the U.S. - Toyo Printing Ink. For some time, this firm had a joint venture with Du Pont, the latter supplying film and color expertise, and Toyo providing the ink for sheet-fed printing. Now Toyo plans to form a new subsidiary to market inks in North America and will expand into the web offset ink market.
Deluxe Corp., better known as a check printer, developed a unique ink midway through 1993. The firm claims its Printwise material resembles lithographic material in all ways, but can be cleaned with water containing a special solubilizing agent that contains no VOCs. Therefore, the washup liquid and loosened ink reportedly can be disposed of through normal wastewater treatment facilities.
So far, the material has been developed for sheet-fed and web offset forms (cold set), and plans are in the works for a heatset ink that reportedly will reduce VOCs by 50 percent. All this information was supplied by Deluxe Corp., so readers must determine the validity of the claims.
More than 50 sites reportedly use the new inks; Deluxe manufactures the material in Minneapolis and plans to open a Chicago facility in early 1995. The firm also announced that major European ink manufacturer Coates Lorilleux S.A. (a subsidiary of Paris-based TOTAL) will market Printwise inks worldwide.
In addition, Coates Lorilleux has had a liquid ink plant in the Carolinas for some time. Word is, the firm soon plans to open an operation in Carol Stream, a Chicago suburb.
U.K. ink manufacturer Mander Bros., which recently acquired Dutch ink company Premier, purchased Croda Inks in Europe. Croda U.S. remains under American management.
Reportedly, a range of Chinese inks is being brought into the U.S. on the West Coast at competitive prices by the King agency, a West Coast graphic arts supplier.
One mid-size ink company has gone out of business since my last review. Delta Color, an Atlanta-based business with branches in Chicago, Dallas and Lancaster, PA, overextended itself by purchasing a 300,000-sq.-ft. manufacturing facility in Monroe, LA.
We don't anticipate many new products on the horizon, but ink companies will be kept busy refining various existing lines. Here's a selection of ink trends and potential developments to watch for:
* High-speed web offset inks will be the focus of attention as installations of the Heidelberg Harris Sunday press, G25 Baker Perkins and MAN Roland presses are completed. Inks with less tendency to mist and better ink/water balance still are needed to optimize the performance of these high-speed machines.
* Waterless inks still generate a great deal of conversation, somewhat out of proportion to their actual use. Nevertheless, more printers are committing to the process. The industry needs inks with better thermal stability on press to overcome toning problems when temperatures increase during printing. Either that or more must be done to control press components near the printing plate and ink rollers regarding heat buildup.
* Ultraviolet-cured inks and coatings appear to be enjoying rapid growth. Their use is increasing by business forms printers as well as sheet-fed and screen printers, and now UV products are entering the market for waterless lithography. Demand for greater productivity is just now overcoming the higher cost involved.
* Another interesting innovation is using tower coaters on the end of some sheet-fed presses to apply a water-based gold ink via a photopolymer plate mounted on the coater. The effect is a brilliant gold akin to bronze dusting and may be of interest to greeting card printers and other specialty applications.
* Inkmakers must be more aware of VOCs emanating from their manufacturing operations. Under Title 5 of the Clean Air Act, they must control fugitive emissions during ink production. Compliance should not prove too difficult, since most major ink companies already have effective dust- and solvent-collecting devices in place.
* Of interest to printers from an inventory control viewpoint is the new bar code program for inks developed jointly by National Assn. of Printing Ink Manufacturers (NAPIM) and the Graphic Communications Assn., a division of PIA. A universal bar code system can identify ink usage patterns and help with timely reordering.
The printing ink industry continues to be a major contributor to the graphic arts through investment in research, technical service and innovative products. While profitability remains a problem, the forecast for 1995 is guardedly optimistic.
TERRY SCARLETT Contributing editor and president Burntwood Industries (Marco Island, FL), a consulting company specializing in inks and coatings.