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Rising raw material costs may force label stock price increases

July 20, 2005

In common with other industries, rising raw material costs have become a serious factor for manufacturers of label laminates. Tough international competition may dampen the overall effect, but label converters can expect higher prices for self-adhesive label stocks. This expectation is based on two separate announcements: Ahlstrom’s LabelPack division says it will introduce a “very substantial” price increase for all its release paper grades. Rohm & Haas has already raised prices for its industrial adhesives and sealants. They include acrylic and vinyl acetate emulsions sold for many pressure sensitive applications, including tapes and labels.
The Finnish Ahlstrom group — one of the world’s largest suppliers of release base papers, along with specialty label and packaging papers — says the hike follows the consequence of raw materials inflation, with bigger increases on the way for US dollar denominated markets. It refers to 12 months of constant increases in the market prices of cellulose pulp, the main raw material for producing specialty papers.
The last two months has seen an especially large rise in pulp prices, with manufacturing costs affected by the rise in value of the Euro against the US dollar.
“This will become still more severe in the weeks to come, as all major pulp suppliers worldwide have already announced further price increases. At the same time, oil prices have risen considerably, making energy more expensive in all European countries where Ahlstrom operates and generating short-term expectations for a rise of transportation costs,” the statement concludes.
With a global presence and a turnover of nearly $6 billion, Rohm & Haas is another influential player in its sphere of interests. Price increases from 4 to 6 percent for industrial adhesives and sealants went into affect from mid-April, in addition to those implemented in February. The company says the increase is needed “to cover the continued increases in raw material and energy costs.”