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Vehicles and varnishes.

The importance of vehicles and varnishes in inks is difficult to overstate. They play a key role in determining the physical and chemical properties of the final ink, and make up a sizable portion of the ink.

"Typically 70 percent of an offset ink is varnish," said Chris Halvorsen, global market manager--commercial for Hexion Specialty Chemicals. "The vehicle is used to disperse or flush pigment and used in the letdown phase in the ink making phase. Vehicles are designed to provide the desired film forming properties, drying and setting properties of the printing ink. They provide the rheological and physical properties required for sharp printing properties required for high speed offset printing."

"Ink companies look for gloss, heat-resistance, water-resistance, product-resistance, rub-resistance and other end use properties to enhance and protect packaging," said Carol Durgan, graphic arts marketing manager for Lubrizol Advanced Materials, Inc. "Vehicles and varnishes impact the resistance properties, transfer, drying speed, rub and other on- and off-press characteristics."

"Polymers enhance the color, stability, gloss, drying speed, resolubility and resistance properties of an ink or coating," said Rick Krause, printing and packaging business manager for BASF Resins. "They are the 'guts' of what holds an ink or coating together. Ink and coating companies capitalize upon their formulating expertise to achieve the right balance of properties and applied cost based upon the portfolio of polymer products we offer."

The role of vehicles and varnishes is a critical one, and suppliers are listening closely to what ink manufacturers are seeking. Meanwhile, higher prices for raw materials are a fact of life, adding to the challenges for vehicle and varnish manufacturers.

Raw Materials

It should be no surprise that price increases are impacting vehicle and varnish suppliers. It's not just crude oil, which is hovering near $100 per barrel; even the vegetable oils such as linseed and soybean are on the rise.

"Polymer products continued to increase in 2007," said Ms. Durgan. "All raw materials were impacted by the increase of shipping and transportation costs, resulting from increasing oil prices."

"Many of the building block raw materials have experienced price increases," Mr. Halvorsen reported. "Vegetable oils have increased dramatically over the past several months. Petroleum distillates continue to follow the path of crude oil and are expected to remain at a high level. Key specialty chemicals used to make performance offset resins have increased as a result of increasing cost of crude and methanol, including DCPD, paraformaldehyde, nonyl phenol and maleic anhydride."

"Pricing concerns in 2008 will revolve around drying oils; linseed oil prices have nearly doubled, and soybean oil is following suit, and that impacts virtually every vehicle in one fashion or another," said Dan Delegge, vice president at Inksolutions.

"Raw material increases are eroding the bottom line," said David Allison, vice president of W-R Industries. "Increases are coming from all raw material suppliers. We expect raw materials to continue to escalate. Some are warranted; many are not."

"In the past, this was done by using vegetable-based products at times where petroleum products were high in price and/or using rosin-based resins when petroleum prices were high or visa versa," said B. David Aynessazian, vice president, sales and marketing, Kustom Group and director, technical service and marketing, Resinall Europe bvba. "Unfortunately, in the last 18 months there has been the 'perfect storm' for raw material prices where all raw materials have risen, leaving no alternative raw materials to be used to lower costs. In this environment there is no choice but to raise prices."

Mr. Aynessazian doesn't see much relief in sight, either.

"If projections for the future are to be believed, we are only at the beginning of this cycle, with costs continuing to rise for the foreseeable future," he noted. "We believe that the vehicle manufacturers and ink manufacturers have done an excellent job in being responsible to the industry and passing along only a very small part of the increases that have been felt so far. Although the commodity producers are raising prices almost constantly, we have also witnessed industry responsibility in timing of price increases to the market so that to make the inevitable increases be as orderly as possible, helping the customer be able to plan their futures with some degree of certainty. Lastly, this has caused us to be much more cognizant of what base chemicals are used by our suppliers and have a better understanding of what influences their costs. Today it is not good enough to know your raw materials but you must know the full supply chain leading to your products."

Ultimately, profitability is suffering, as no one has been able to pass along the total cost increases.

"Pressures on profitability remain significant throughout the ink industry and with their raw material suppliers," Mr. Krause said. "No company has been able to pass on the entire amount of cost increases--everyone is sharing the pain. Transportation and energy costs also continue to increase; 2008 has started with crude oil ranging from $90 to $100 per barrel, compared to $55 to $65 per barrel at the beginning of 2007--roughly a 58 percent increase. Natural gas is also elevated from a year ago. Many of these rising feedstock costs are still working through the supply and value chains. If economic conditions remain healthy in 2008, basic feedstock costs are unlikely to ease. Profitability will continue to be a challenge for the industry in 2008 and beyond."

Expectations for 2008

With all of this in mind, 2008 looks to be a challenging year.

"Economic forecasts continue to point to an easing of growth for the U.S. economy," Mr. Krause noted. "We're expecting our business to continue to grow steadily throughout 2008. For BASF Resins, 2007 has been an exciting year, and we look forward to the opportunities of 2008."

"We see the need for greater efficiencies throughout the ink development and manufacturing process," Mr. Halvorsen said. "During 2008, we will need to deal with record high raw materials and continued regulatory requirements, including REACH objectives."

"Lubrizol expects 2008 to be a good year for our vehicle and varnish areas," Ms. Durgan said. "However, this will most definitely be a result of the continuation of hard work from both our commercial and technical teams, who keep our customers' needs as a top priority."

By David Savastano Editor
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Author:Savastano, David
Publication:Ink World
Date:Feb 1, 2008
Words:1051
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