BMPA webinar deciphers price hikes in the industry

The webinar threw light on unstable raw material prices, but there’s no respite for the printers.

19 Oct 2021 | By Noel D'Cunha

(clock-wise) KS Murthy, CG Ramakrishnan, Faheem Agboatwala and SN Venkataraman

The Indian print industry is dealing with the most severe cost pressures of the decade, with prices for ink, plates, blankets, paper and logistics rising.

The prices of coated and uncoated papers have been increased by Rs 1,456 a metric tonne. The big three – Agfa, Fujifilm, Kodak – and TechNova have announced plate price surcharge amid concerns that aluminium supplies for next year will be squeezed.

The impact of raw materials such as metals and chemicals will affect the prices of metallic inks even as special additives manufacturers have implemented force majeure prices.

If the prices are raised four more times this year, how will the industry cope?

To unlock the confusion and concerns, BMPA, through its webinar on 18 October 2021, brought together key resources from ITC-PSPD, TechNova and Toyo Ink, to provide real answers to these uncertain and frequent price increases.

The BMPA webinar, titled Unstable price scenario: What’s happening?, was anchored by Faheem Agboatwala, a key BMPA member with SN Venkataraman of ITC PSPD, CG Ramakrishnan of TechNova Imaging Systems and KS Murthy of Toyo Ink India, presenting their point of views.

Agboatwala said, “The print and packaging sector has been resilient during the pandemic. However, there’s acute cost pressure and the sector can’t escape that, as prices are rising by a double-digit percentage.

“Also, there is a high risk of factory stoppages as a result of the costs of energy being too high to bear. This will impact manufacturing, consumer, retail and other print products,” he said, adding, “It’s a nightmarish scenario.”

Explaining the situation, Murthy said that these challenges are across all the industries. “There’s a strong global market demand that has led to shortages of many raw materials. The supply chain has been disrupted,” he said, citing the ban on palm oil, labour shortages post-Covid, which has led to less extraction of resins from plants, increased domestic demand in China, as well as the cost of metal as the reasons for the surge in raw material prices.

Murthy, however, suggested a step that can be taken to reduce the impact. “Place long booking orders, increase raw material optimisation, produce batch size and product rationalisation,” he suggested.

Ramakrishnan said that what’s happening in plates is both “structural and cyclical”, which in turn is spiralling the cost for plate manufacturing. “It’s a perfect storm,” he said.

All plate manufacturers have increased prices by 25-30%, however, Ramakrishnan said TechNova has factored only the changes in the base London Metal Exchange (LME) cost in its price increase. “An increase of USD 100 per tonne in the LME translates into an increase of Rs 7 per sqm in plate costs,” he added.

Venkataraman presented the scenario for the paperboard during the session. He said that demand across all major segments is back.

“Educational institutions and IT offices have opened and the demand for paper is expected to rebound in the second half of this financial year.” However, he said that shipping and its high prices are restricting imports even as the current stress on input raw materials – both domestic as well as imported – and coal are areas of concern.

“Coal has become the new diamond,” he said. Smaller recycled fibre-based mills are also facing stress on input raw materials.

Meanwhile, Ramakrishnan said that an increase in plate prices can be compensated by a corresponding increase in aluminium scrap prices, and therefore there will be only a marginal increase in the overall cost of the plates for its customers. The three panellists suggested that the print fraternity correspondingly revise prices of their print products.

Manufacturers use raw materials to produce products, which in turn become raw materials for printers. So, passing on the price rise to the printer’s clients – the brands or print buyers – is easier said than done.

Paper, inks and plates will continue to be used by the printers even at higher prices, because the brands will need to consume print or packaging for its products. However, when it comes to passing on the price hike from printers to the brands or print buyers, would the brands or print buyers accept it particularly when they have more than one choice to go to? And that’s where the question arises: Who will bell the cat?

The ‘price hike’ buck squarely stops at the printer’s door.