November 6, 2024
With 2024 nearing its end, it’s a great time to pause and take stock of what’s going on in the consumables space, including offset printing plates, paper and paperboard, printing inks, and everything else needed to actually produce printed packaging materials.
Although we have certainly rebounded a fair amount from the shortages and price hikes that defined the COVID-19 pandemic years, that doesn’t mean consumables in general aren’t still getting pressure from a number of sources. Depending on the types of consumables you use, you might feel like everything has more or less returned to pre-2020 situations, or you might still be feeling the squeeze.
With that in mind, let’s take a look at a few key material supply trends still impacting the print and packaging space today.
Paper and Paperboard Are Still Under Pressure
While it certainly isn’t nearly as bad as it was a few years ago, the paper and paperboard markets are still under considerable pressure. Demand is still shifting, with many paper mills either closing entirely or moving to other grades of paper and paperboard, particularly packaging grades or consumer products—think toilet paper or paper towels.
“Like all businesses, the challenges paper manufacturers face are input costs—energy, raw materials (pulp costs), and finding labor [like printing press operators]. It is an aging workforce that is challenged to attract younger workers,” says Jill Crossley, director of operations at industry association Two Sides North America. “An overall decline in demand plus the cost of inflation have led to consolidation, closure, and the transition of many North American paper mills to manufacture other more profitable and desirable marketplace grades.”
I recently saw some data pulled from RISI that showed printing and writing paper capacity has decreased from 65% to 85% since 2000 depending on the paper type. The numbers are similar in Europe, where a strong contraction of capacity has occurred in recent years, as well.
Overall demand for coated paper and paperboard was slightly up in the first half of 2024. The conversions by paper manufacturers and cost pressures have caused printers and end users to look at other paper options, often getting creative and downgrading to a lesser quality or lighter paperboard to help with increasing costs. I would think packaging printers will continue to do this for the foreseeable future because those cost pressures don’t seem to be going away in the second half of this year or through 2025, as well.
What’s next for the rest of this year and into next? There most likely will be some additional short-term shortages or shuffling of supply locations as mill closures and consolidations continue to occur.
The grades of paperboard availability will vary fairly significantly in terms of how much demand and cost increase are seen, so no one trend or prediction will apply to all package printers. Rather, you should continue to work closely with your preferred paperboard mills and merchants to ensure you have what you need, when you need it, and for a price that doesn’t cut into your cost structure.
Offset Plates Are Under Siege
Another area experiencing significant challenges right now is the aluminum lithographic printing plate market, with a battle going on over whether the United States will impose tariffs on imported plates. Right now, Kodak is the only manufacturer still producing aluminum offset plates in the United States at a facility in Columbus, Georgia, with the rest of the U.S. being supplied with products from Japan or China.
Kodak and the U.S. Department of Commerce have been pushing for tariffs that could soar into the triple digits, if passed. This will force manufacturers such as Fujifilm to raise prices significantly to offset those costs. Not surprisingly, they have been strong opponents of the proposed tariffs, with a statement from Fujifilm noting it will “explain and defend our position to the International Trade Commission.”
Further muddying those waters, Fujifilm has also filed a patent infringement suit against Kodak, saying the company’s Sonora processless plates are infringing on Fujifilm’s patents.
The basis for the tariffs revolves around claims that companies that manufacture aluminum litho plates in Japan and China have an unfair advantage, claiming they are “dumping” plates in the U.S. market for significantly less than they charge in those countries, creating anticompetitive markets. Kodak claims these companies are selling plates for significantly less than the cost of production to capture more market share.
However, Fujifilm noted in a statement, “The preliminary antidumping duties from the U.S. Department of Commerce are predicated in part on the higher market prices of our aluminum printing plates in Japan, which creates the misguided perception of Fujifilm unfairly lowering U.S. prices by comparison. The antidumping law allows Eastman Kodak to claim that the existence of higher prices in Japan somehow makes the lower prices offered to U.S. customers ‘unfair.’ But this is just not true. Fujifilm’s prices to its U.S. customers are not unfair to anyone.”
Recently, 12 regional trade association groups threw their own weight into the debate, with a formal joint statement against the proposed tariffs. It reads in part, “We are writing on behalf of the U.S. printing and graphic communications industries to urge the International Trade Commission (ITC) to reject antidumping and countervailing duties on imports of aluminum lithographic printing plates from Japan and China. Additional duties on printing plates will lead to increased costs for printers and the businesses they serve, reduce competition in the printing plate market, and threaten the availability of quality printed materials for businesses and consumers alike. … Although the entire printing, packaging, and graphic communications industries and the customers they serve will feel the burden of increased costs—from the largest-scale packaging printers to the smallest mom-and-pop printers—we are particularly concerned that small printers and the thousands of small businesses served by printers in this country will disproportionately shoulder the burden.”
The final hearing was to be held September 12, 2024, which is also when ITC was expected to issue its final ruling on the matter, so stay tuned.
Ink Supply and Demand
In contrast to paper and plates, inks in general aren’t seeing as much volatility right now. There have been hiccups in the past year such as the fight to prevent state legislatures from banning carbon black in inks, which would have significant impacts if passed, but for the products themselves, the market has stabilized into a fairly healthy supply and demand.
A few trends impacting the space include ever-increasing demands for more eco-friendly inks to match with growing sustainability concerns across all types of businesses and industries; a growing demand for more specialty inks, particularly in the digital space—think fluorescents or metallic inks—and the continuing trend for printers to demand inks that can dry faster and also produce higher-quality pieces, since consumer brands aren’t interested in compromising quality or marketing.
Packaging ink demand is rising rapidly as more commercial printers look to enter the space with short-run or prototype work to complement work they are doing with large and small brands. That trend will likely continue to drive innovation in that space.
On the flip side, the costs of the raw materials needed to produce these inks and the supply chains necessary to move those materials are seeing costs rise, which is impacting the price of the final product. To date—barring the COVID-19 pandemic years—the costs of ink have remained relatively stable, without any major spikes, but more of a steady increase over time. Expect that to continue for at least the short term, although a lot of factors could cause that to change rapidly.
All in all, the consumables market has stabilized in the past few years, but that doesn’t mean the challenges created by the COVID-19 pandemic have simply evaporated overnight. We are still seeing the impacts linger, even as newer challenges such as the imported offset plate tariff controversy come along.
In general, most package printers don’t need to be hoarding paper or supplies anymore for fear of running out and not being able to get more, but they should be paying close attention to what the market is doing and continue to work closely with their chosen vendors to make sure they are prepared for whatever might come down the line during the remainder of this year, in 2025, and beyond.
Tom Weber is president of WeberSource LLC and is AICC’s folding carton and rigid box technical advisor. Contact Tom directly at asktom@AICCbox.org.
