Ink unravelled: The best bet for 2022 is sustainability - The Noel D'Cunha Sunday Column
As the Covid-19 pandemic swept across the nation, several ink majors prepared for the worst. Just as sales started to rebound to pre-Covid levels even as Omicron infections waned, the threat of the Russia-Ukraine war looms large. The industry braces itself for newer challenges.
A PrintWeek report
20 Mar 2022 | By Noel D'Cunha
The supply chain challenge is the most commonly deployed phrase of 2021. And supply chain challenges have resulted in unprecedented price hikes. We are seeing prices rise by Rs 100-150 per kg depending on the product quality.
R Sridharan, the president of AIPIMA (the apex body of ink makers in India), says, “Subjects such as price increase of raw materials, cost of transportation and its effects, the shortage of materials and other burning issues have been discussed by our executive committee.” He added, “AIPIMA has a limited role in pricing or availability of raw materials and pricing of ink.” But Sridharan admits, the problem is a serious one.
AIPIMA is guiding the MSME ink makers to unite and help each other in order to reduce their unhealthy competition and convert their weaknesses to their strengths. AIPIMA has tried to forge unity among the MNC ink makers and MSMEs in the recent past. Sridharan says, “This approach will create a win-win situation for all, including our suppliers and the customers.”
Meanwhile, the price hikes continue.
End of January 2022, Flint Group’s Offset Packaging Solutions (OPS) and Commercial Publication Web (CPW) divisions announced further price increases. The price rises will be across the company’s heatset ink, news ink, sheetfed ink, transfer media, and press room chemical portfolios. When PrintWeek reached out for further information, there was no response about the price increases from the USD 2.1-bn company.
Tony Lord, president of Flint Group’s CPW and OPS divisions, said in a press release issued by Flint: “This once-in-a-generational event has created a structural scarcity of core raw materials as the upstream precursor and primary raw material providers within the supply chain are directing their reduced [capacities] to more lucrative industries than the printing consumables markets.”
At the end of 2021, Flint Group Packaging issued a statement that highlighted its concern about “the unprecedented supply chain volatility being experienced in its India, Middle East and Africa businesses”. In this context, Upal Roy, the managing director, Packaging India, Middle East, Africa at Flint Group Packaging, said, “It’s clear that the global economy is experiencing tremendous pressure with demand for products outstripping supply. Global raw material volumes and prices, along with freight availability, are being heavily impacted. Compounded by the Covid-19 pandemic, transportation and raw material shortages are causing a multitude of challenges for ink and coating producers in our region.
This was the fifth price increase or surcharge announced by Flint Group divisions and brands this year. Other groups are not far behind with three-fold price increases.
Sun Chemical, the world’s largest ink maker (together with DIC, Sun Chemical has annual sales of more than USD8.5-bn and employs over 22,000 staff), raised prices “due to ongoing raw material shortages” and “further significant inflationary pressures” affecting its costs. The US-headquartered manufacturer is increasing prices across its entire portfolio of packaging, commercial sheetfed, screen inks, coatings, consumables, and adhesives in the EMEA region, effective immediately or as contracts allow.
“Raw material shortages are an ongoing concern, and the competitive environment to secure these scarce resources has accelerated the cost increases within a majority of Sun Chemical’s raw material categories. In addition to raw material cost pressures, logistics and operational costs have soared, including packaging, freight and utilities, as the economic recovery drives demand for these services,” the group stated in a press note.
Similarly, Hubergroup (USD 780-mn) has announced a worldwide price increase on its products, citing a “massive rise” in raw material and transport costs in the second half of 2021. Hubergroup CEO Heiner Klokkers said on the company’s website, “To ensure that we can continue to offer them high-quality printing inks and raw materials in the future, it is unfortunately essential in the current situation that we reflect the significantly increased procurement costs in the prices of our products.”
When pressed further, most ink companies said they would communicate specific increases directly with their customers, while “local sales representatives can answer specific questions”.
Rising input costs
All the major ink companies are talking about supply challenges for “critical raw materials” used in the production of printing inks. This includes vegetable oils and their derivatives, petrochemicals, pigments and titanium dioxide (TiO2).
There are three worrisome trends: cyan pigment prices have moved up because of increased copper and urea prices. Likewise, Cabot and Birla have increased their black pigment price by 24% and 26% in 2021. And finally, the Indian government has increased customs duty from 5% to 7.5% in black pigments. This has increased the cost of black pigment.
When PrintWeek spoke to an industry veteran, he said, “These inflationary trends have ensured that the prices of all materials have gone up in double digits. What is worrisome is prices for these specific items are likely to increase further.” The forecast for 2022 shows that it will affect the profitability of the ink makers who are already working with high raw material content in their products and “working on very low margins”.
Consider the manufacturing cost of offset inks. It is: 18-22% for pigments; 30-40% for resins; 20-30% for oil; and 5-10% for additives. As per KS Murthy, the director and deputy managing director of Toyo Inks, “Today there is a 25% rise in pigment prices for cyan and 35% for black, the two key categories.” Murthy added, “Plus, there is a 55% price rise in resin.”
He shared, “Yellow pigment prices may go up in the coming days because there are chances that the Government of India may impose import duty on the imports of arylides imported from China. The anti-dumping duty is expected to be in the range of 22% to 44%.”
The rising input costs are “destabilising the entire printing value chain”.
Manish Bhatia, MD and CEO of DIC India, said, “There is a lot of speculation going around. I am sure the government will understand the larger good of industry in India and take appropriate action.”
Fasten your seatbelts
Most of the ink majors that PrintWeek spoke to said there is “no reason to panic”.
Manish Bhatia says, “Quality holds the key. And as a group, we are committed to supporting our customers. Also, the DIC team in India worked with its global supply chain partners to offset as many negative effects as possible.”
DIC’s new mother plant is coming up in Bharuch. Bhatia says, “We see India as a country of opportunity for both its domestic market and exports. We are putting a state-of-the-art plant in Gujarat, strengthening our service levels in western and southern India. We also propose to bring new platforms to our packaging customers in India and abroad, which will be made in the new plant.”
Meanwhile, Murthy says, “In 2021, Toyo Ink India proved its impressive track record with sustainable growth in the packaging sector, and now we are fully geared up to meet the growing business needs.”
Toyo Ink India has opened a brand new gravure ink factory at its Gujarat site along the western coast of India. A part of the Tokyo-based global speciality chemicals conglomerate Toyo Ink Group, the new expansion will boost the company’s production capacity by more than 5,000 metric tonnes per annum.
The first Toyo Ink India gravure factory was established in 2021 in Greater Noida, Uttar Pradesh. Murthy explains, “As our operations grew over the years, we knew it was time to boost further our capacity to help meet high levels of gravure demand and reduce supply lead times to our customers in India and around the globe. Now, with a combined capacity of 20,000 tonnes per annum, we will work to expand our share and product offerings in the strategic, flexible packaging market where we are focusing our efforts to grow.”
The year of the circular economy
On 18 February, Ashish Pradhan, president of Siegwerk Asia, unveiled a new line of mineral-oil-free inks. This ink series consisted of Vega Prorich, Vega Impression, Vega Nature LT, Vega Sprint, Vega Vibrant+ and Vega Prime ink lines – which cater to their respective specialisations.
While announcing the launch of Vega, Ramakrishna Karanth, CEO, Siegwerk India sub-continent, shared, “In the past few years, scientific journals have published analyses on the hazardous effects of mineral oil MOHs and MOSH in food packaging. The manifold adverse effects make it an issue related to consumer safety and occupational safety.”
During the virtual launch, Karanth spoke about how Siegwerk nurtured “an inflexible safety culture with focused commitment to improving end-consumer and environmental safety. As a market leader for safe inks and as a strong proponent of safety, we have proactively stopped using toxic ingredients before any legislation on their prohibition is established. Siegwerk India will henceforth be supplying inks that do not contain mineral oils from its blending centres in India”.
The other ink majors are on the same page.
Bhatia of DIC tells PrintWeek that “DIC has probably the widest range – over six series of inks – which are toluene-free. Some of our inks require virtually no expense by a printer in new assets while driving the switch; this is one of our USPs.”
Speaking about the adoption of toluene-free inks in India, Bhatia says that the cross-over is currently slow, but picking up speed. Bhatia is hopeful, “This process will be accelerated in 2022.”
In an industry that is increasingly becoming sensitive to regulatory compliances and safety, the Toyo ink site is toluene-free and uses dedicated controls to adhere to regulatory norms. Murthy says, “While Toyo Ink India has been delivering toluene-free products in India for quite a long time, the new factory reinforces the company’s ability to provide a seamless supply of safe and compliant products of the highest quality to our customers while minimising health risks its employees and the environment at large.”
Presently, the industry is on a webinar drive, but we need more proactive initiatives. This could be a programme by government bodies, awareness campaigns for brand owners (even though inks are a tiny part of the overall cost), plus an outreach with younger children in schools. As R Sridharan, the president of AIPIMA, concludes, “The sustainable message is the best way to increase ink share in the future.”