“Despite our consistent efforts to improve productivity, the aggressive action by the Chinese government to address environmental non-compliance in the chemical industry has resulted in supply shortages — driving the need for price increases in North America,” says Richard B. Pettifor, president of North American packaging at Sun Chemical. “Additionally, the efforts by the Chinese to curb environmental impact, coupled with their policy that eliminates export VAT tax refunds, have led to sharp pigment and resin cost increases.”
Pettifor also cited the rapid rise in global prices for chemicals and metals used in the production of inks, coatings and pigments, and the significant rise in oil prices combined with the current weakness of the US dollar, as market drivers for the need to increase packaging ink prices. Furthermore, a shortage of key raw materials for pigments, a shrinking supplier base and solvent pricing impacted by alternative uses for ethanol, along with increases in other costs such as energy, freight, and labor, are all contributors.
“Though we continue to improve our efficiencies and reduce internal costs through the Six Sigma and Lean processes, these measures cannot totally compensate for current rising raw material and energy costs,” Pettifor says. “We will maintain our commitment to technology leadership by developing new value-added products that can help our customers reduce their operating costs and grow their businesses.”