Category: News and Updates

Date:     May 7, 2021

To:         To Whom It May Concern              

From:      Ken Klug, Director of Purchasing

Subject:  Raw Material Update (Customer Update)

The delivery of energy-cure raw materials continues to be very challenging. The end of Force Majeure for our many suppliers was anticipated to occur in May.  Lack of raw materials has forced suppliers to remain on Force Majeure. The limited suppliers that have come out of Force Majeure remain on tight sales allocation, making it very difficult to get materials on time or at all.  The importing of materials from overseas was anticipated to stabilize but instead remains very difficult.  Freight costs have skyrocketed due to container availability, ongoing port congestion, lack of chassis, drivers, and increased demand for air freight.  Lead-time for containers has nearly doubled due to the continued congestion.  Some suppliers have utilized air freight deliveries due to multiple containers being delayed in transit. 

Multiple chemical manufacturers are still impacted by the results of February’s winter storms in Texas. Energy cure feedstocks were the primary concern but as the weeks have progressed the remaining chemistries have also been impacted.  Material shortages continue to plague the entire graphic arts industry.  Demand remains high while supply chains try to stay “above water,” as they struggle to secure all the materials necessary to make their products. The Texas plants that are operating continue working through a backlog of orders. Suppliers are doing everything they can to fulfill orders as fast as possible, but we are likely looking at late Q2 or early Q3 until most come out of Force Majeure.

Costs also continue to increase due to the lack of supply, packaging, and the increased demand; especially for Acrylic and Epoxy feedstocks. Agriculture oils have encountered record cost increases over the past month which has impacted the offset inks and coatings.  Wikoff Color was hoping to see our cost plateau but unfortunately, costs and lead-times continue to accelerate higher. The ink industry continues competing with other industries, such as construction, metal coatings, plastics, electrical components, and adhesives, which makes it hard to get the chemicals that we need to produce inks. 

We’ll continue keeping you informed as supply issues are brought to our attention.

Sincerely,

Ken Klug

Director of Purchasing

Letter provided by Wikoff Color Corporation

 

Hansol announces 12% price increase on thermal paper in USA, Canada effective May 7 as new import duties are imposed

TORONTO, ON, May 7, 2021 (Fastmarkets RISI) – Hansol on May 7 announced a 12% price increase on all their thermal paper products in the USA and Canada, including light and heavy weights, top and non-top coated, effective immediately.

Hansol said the price increase is a result of “the recent preliminary determination of the antidumping duty, unprecedented increases in transportation and raw material costs.”

Thermal paper prices increased in North America by 10% in March, following several specialty paper producers’ announcements earlier in the year, including Koehler of Germany, Hansol of South Korea and Oji Paper of Japan, and US domestic producer Domtar, according to Fastmarkets RISI‘s PPI Pulp & Paper Week price survey.

Industry contacts told Fastmarkets RISI last month that they expected one or more price increases in 2021 due to higher raw material costs, low inventories, and possibly higher import duties.

AD case. US producers Domtar and Appvion last year filed an anti-dumping duty (AD) case against imported thermal paper, including jumbo rolls and certain converted rolls, from Germany, Japan, South Korea, and Spain. On May 6, 2021, preliminary determinations on the trade case were released, imposing the following duties: 2.78% for German exporters; 6.19% for Korean exporters; 35.71% for Japanese exporters; and 41.45% for Spanish Lecta/Torraspapel, as well as 37.07% for all other Spanish exporters.

Domtar and Appvion had called in their initial petition filed in October of 2020 for anti-dumping duties of 38.99% to 56.75% on thermal paper imports from Germany; 104.66-113.91% on Japan imports; 48.42-49.98% on South Korea imports; and 30.76-39.41% on Spain’s imports.

This information was provided by RISI.

DOC has made a preliminary determination of the antidumping duty margins in the four thermal paper investigations.  The preliminary rates are as follows:

Korea:

Hansol: 6.19 percent

All other exporters:  6.19 percent

Germany:

Koehler: 2.78 percent

All other exporters:  2.78 percent

Japan:

NPI: 35.71 percent

All other exporters:  35.71

Spain:

Torraspapel: 41.45 percent

All others exporters:  37.07 percent

It is expected that we will be notified by all the mills of increases and plans of action the first of next week.

For questions, please contact bkent@telemarkcorp.com

As we all know 2020 was a tough year to be in business.  It seems like 2021 is shaping up to provide another set of challenges.  These challenges do not just revolve around double digit increases in materials, but even worse, very long extended deliveries, if any delivery at all.  Yes, you heard it correctly, any delivery at all!

With all the markets rebounding in the US, we are placed in a position of excess demand and limited supply.  Look at the lumber industry.  3 years ago, a 2 x 4 was $2.95 each.  Today, if you can get your hands on them, the same 2 x 4 is $9.50 each.  The trucking industry is the same.  There is a HUGE demand for delivery, but very limited drivers to haul the freight.  This is providing pricing opportunities for the trucking companies to dramatically increase freight haul costs and impose new “fuel surcharges”.  Regardless of the title, the net result is a much larger burden that the consumers must pay.

So how does this relate to the Print industry?  Let us start at the bottom, the skids.  Skid suppliers are closing their doors at record rates due to lack of wood materials.  If the printer is fortunate enough to have skid suppliers still up and running, the costs have risen 20%-40% depending on the skid. 

Now let us talk cartons/corrugated.  There is an estimated 40% shortage of corrugated in the US.  Fingers are pointed at the “Amazon” type shopping that most consumers are utilizing.  Every time you order, a new carton is needed.  Unfortunately, most of these cartons are single use only, and this too places increase pressure on new corrugated production.  Carton materials have already increased double digit, with extended delivery from the suppliers. 

What is printing, without ink?  Well, ink is not hiding from the economic impacts of increase demand.  In addition, some of the chemicals used in producing inks are in very short supply.  This means pricing is reflecting as single sided negotiation with the chemical producers.  The result is rapid increases of all inks.

Now for the largest impact, Paper.  We have already discussed the shortage in the timber industry.  This has trickled down to the raw paper market.  In our world, we must have the thermal coatings applied to the base paper, so this adds additional delays and costs, just like ink.  In addition, companies like DOMTAR are migrating capacity into Brown Kraft, which is used for making Corrugated.  They are following the market demand, but by not supplying other markets the same capacities that are needed, they are driving deliveries out as much as 8 weeks, when 2-3 weeks was the industry norm, just 10 weeks ago.  Most of the thermal paper markets are seeing an immediate 5-14% increase from the mills with many more increases coming soon.

Other facts that are impacting thermal paper:  First, thermal paper is a global commodity that is produced and distributed all around the world.  As the world starts to resume its economic momentum, increase in global demand occurs.  The US is considered the largest in terms of thermal consumption, so it makes sense the foreign mills, with excess capacity, would supply paper into the US.  The is nothing new.  However, some of the foreign suppliers have sold paper for “below market” prices.  Due to this fact, Domtar filed an Anti-Dumping Case with the Federal Trade Commission (FTC).  The FTC is expected to rule on the case in the coming months.  In advance of this, Nippon has pulled out of the US all together.  The move has already started to cause paper supply shortages on the west coast.  Our concerns are that depending on the direction of the FTC, more mills could pull out of the US, causing major shortages of supply.  This is on top of expected price increases that will for forced into the marketplace to even the playing fields.  The Thermal Paper Market went through this not too long ago and both issues above were felt almost immediately.  The difference this time, which makes the timing very scary, is that there is already a supply shortfall, and the current business climate is proving that Domtar is focusing capacity on other paper sectors.  Can you say, “Train Crash?”

I know that the paper market is not in everyone’s area of interest, but everyone can feel the effects of these factors at the grocery store every day.

For more information, Contact Brandon Kent 800-289-8383 x 240 or bkent@telemarkcorp.com