Industry News, Coatings, Inks

Ink Raw Materials in 2022

Ink Raw Materials in 2022

Without a doubt, the situation with raw materials keeps purchasing executives at ink manufacturers, their suppliers and their customers up at night. There have been a host of issues in recent years. The COVID-19 pandemic exacerbated supply chain problems, but titanium dioxide, photoinitiators and pigment intermediates, to name but three, were concerns long before COVID-19. Trucking has been a serious problem for years.

What COVID-19 did to the supply chain was basically accelerate many of these trends. Lockdowns, deteriorating ports, a shortage of truck drivers – it hit industry on virtually every level. As a result, costs went up dramatically and supply became challenged.

Has the situation improved? Not necessarily. The war in the Ukraine has destabilized supply chains even more, as oil from Russia becomes uncertain. Speaking with leading ink industry purchasing executives, uncertainty is about the only thing that is sure.

“This depends on the material and region in question,” said Kevin Bergeson, senior procurement director for Flint Group. “Overall logistics remain a challenge due to a variety of factors such as driver shortages and congestion in harbors and terminals. In general, the availability of raw materials has improved, but global inflationary pressures continue to cause headwinds.”

Jeffrey Shaw, chief supply chain officer, Sun Chemical, reported that headwinds remain strong with tight supply and continued price pressure on several raw material categories, including carbon black, nitrocellulose, TiO2, rosin and polyamide resins.

“Ethanol will also be a concern for 2023,” Shaw noted. “Crude oil remains extremely volatile as well, as natural gas prices reach 14-year record levels, which offsets much of the benefit realized from lower feedstocks in other areas. In Europe, the energy prices continue to be hovering at record levels impacting many global raw materials.

“TiO2 is still very snug globally,” Shaw added. “China supply is ample and at a lower cost than a year ago, but logistics and erratic supply chains are still evident. Nitrocellulose remains a concern as supply is tight and elevated energy costs continue to apply pressure, especially in Europe. With no domestic supply, there are no alternative sources from other more favorable regions. With the supply chain still somewhat fragile, a variety of other products, including functional additives and specialty chemicals, are challenged.

Bio-renewable interest continues to grow which applies pressure on the supply and value chain of crude tall oil (CTO) derivatives, including downstream rosin and polyamide resins,” Shaw concluded. “There have been multiple double-digit increases in these areas with no apparent relief in sight. Also, ethanol and other more sustainable products will continue to be under pressure.”

“In the discussions I’ve participated in, most vendors have been reluctant to give a firm date for when we can expect pricing and supply to settle down,” said John Hrdlick, INX International Ink Co. president and CEO. “However, they seem to feel we should see improvement in the first half of 2023.”

“We are starting to see increased material availability and sales controls are starting to subside,” added Rick Westrom, SVP of strategic sourcing and R&D for INX. “But some materials remain tight.”

“The situation on the raw material market is still tense and we expect this situation to continue at least until the middle of next year,” said Abhijit Vichare, VP – procurement at hubergroup. “What happens after that will heavily depend on the geopolitical circumstances.”

As for materials that remain scarce, Bergeson said that specialties, blacks and nitrocellulose remain challenging.

“At the moment, we particularly observe shortages of titanium-based as well as silicon-based products and polyvinyl alcohols,” said Vichare.

“Most supplies from Europe,” said Westrom, “have been challenging, and some acrylic resins are in short supply.” “It appears we still have random materials that become unavailable at times,” added Hrdlick. “Most days these unexpected delays place a heavy burden on our purchasing, technical and operations teams who have now been managing through these challenges for two years.”

Has Pricing Stabilized?

The question is whether pricing has stabilized. The answer is that it depends on the product.

“The trajectory of price increases from last year and early 2022 have softened a bit in limited areas, albeit not to any acceptable level of recovery,” Shaw observed. “If the current cost trend continues, it could evolve into a more favorable economic environment. However, the volatile global energy markets will most likely overrule any favorable feed stock trends and keep inflation elevated. Global demand will also dictate how availability and prices are impacted. As previously highlighted, price pressure on nitrocellulose, products derived from the CTO value chain, and other bio renewables will continue into 2023.”

“Raw material prices are still volatile,” Vichare observed. “We saw some softness in August but then they picked up again.” “The business continues to weather unprecedented price increases due to a variety of macro-economic factors,” Bergeson reported.

“The first three quarters of 2022 saw dramatic price increases. However, it appears pricing has stabilized and some price relief is expected in the fourth quarter,” said Westrom.

“In order to do our best to maintain supply to customers, we dramatically increased our raw material inventory,” explained Hrdlick. “I’m happy to hear that the situation is stabilizing, but we do have to manage through the excess raw materials we had to purchase at higher prices. It will take time for us to experience the positive impacts of the stabilization and potential pricing relief.”

Logistics and Transportation

Then there are logistics and transportation issues, which aren’t really subsiding. Trucking was a problem before the pandemic, and ports remain congested.

Shaw reported that all types of global logistics and transportation processes remain a challenge, stemming from ocean to rail to over-the-road modes.

“Labor issues continue at many ports and railways around the world are still impacting port congestion overall,” added Shaw. “Ocean freight rates remain volatile; however, they have seen some improvements in spot rates relative to contractual rates due to space availability on carriers. We continue to monitor all logistics activities and engage with our partners daily to alleviate issues as they arise and, most importantly, prevent them from occurring in the first place.”

“I think higher freight costs and service concerns will continue for some time,” Hrdlick noted. “COVID-19 certainly had a negative impact, but we saw higher costs and service issues several months prior to the pandemic. Despite news that the port’s situation has improved, we are struggling to get the containers we need. Freight carriers still have a shortage of available drivers, especially those certified for hauling tankers and flammable goods. I’ve heard of tire shortages and maintenance issues, which are road safety and reliable service concerns.”

“In our opinion, logistics and transport will continue to be a major challenge in the future due to a shortage of truck drivers, containers and vessels,” Vichare said. “Thus, supply chain excellence will become increasingly important.”

“Overall logistics remain a challenge due to a variety of factors related to driver shortage and congestion in harbors and terminals,” Bergeson added.

Overcoming Supply Chain Issues

Ink manufacturers note that maintaining an open dialogue with customers and suppliers alike has been essential in order to overcome these challenges.

“At hubergroup, we pay particular importance to being closely connected to our customers and suppliers, regardless of the market situation,” Vichare said. “This close contact with our partners also helps us in difficult situations such as the turbulent market conditions we have been experiencing for the past 2.5 years.

“Fortunately, we managed well to continue supplying our customers in these times,” added Vichare. “Thereby, it was, of course, helpful that a large part of the raw materials for our product comes from our Chemicals Division. Nevertheless, the conditions on the world market have forced us to react by increasing prices to be able to continue delivering high-quality products and services to our customers. In this process, we continued our open and transparent communication with our customers.”

“The business has resolutely focused on ensuring the security of supply for its valued customers by building inventories, communicating closely with vendors and qualifying alternate sources of supply,” Bergeson said.

“Our global supply chain infrastructure continues to provide support to our business as we leverage our reach,” said Shaw. “We have also diversified our supply base to supplement our traditional supply strategies and in some cases shorten our supply chain by sourcing regionally where feasible. Formulating flexibility has been critical to meet customer demand as our product management teams work with customers to expand our portfolios. The collaborative internal and external interaction allows for enhanced delivery performance to our customers, so they do not experience any disruption in their supply chains.

“Communication throughout our entire supply chain continues to be strong and grow even closer as the dynamics of a constrained markets fosters a commitment for all stakeholders to collaborate more frequently than historical patterns,” Shaw added. “Demand planning has been enhanced and systematic management of resources has become more efficient from suppliers to the end users. Effective communication continues to be key in maintaining uninterrupted supply to our customers.

“While global supply chains continue to be impacted by new challenges, we remain diligent to make sure our supply chain is well-positioned to respond to all disruptions in a very fragile and unpredictable market, both structurally and geopolitically,” Shaw added. “Whether it is the relentless effect of the pandemic, weather driven conditions, or various geopolitical events, we are confident that our established processes will allow us to continue supporting our customers’ requirements.”

“We continue to strengthen our overall supply chain logistics team to help us keep moving forward,” said Hrdlick, noting that INX’s global network works with Sakata INX locations and vendors to address supply challenges. “This also impacts purchasing practices so our inventory management will be more effective. We are fortunate to have continued growth, but realize we need to adapt to the changes we’ve seen during this extended period of supply chain disruptions and significant materials increases.

“Our industry is accustomed to these market cycles,” Hrdlick concluded. “This current experience has been much longer and more severe than anything I can remember. We should all be proud of the resilience the ink industry has shown throughout the ongoing challenges.”

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