Research Overview
Economic Pressures Force Ink Ingredients Industry Participants to Desist
from Hiking Prices
Despite rampant price hikes in the last two years across most raw materials
sectors, ink manufacturers avoided transferring the price rise to customers by
absorbing the margins themselves. This bid to retain market share, regardless of
increasing energy and manufacturing costs, has placed a great deal of strain on
most manufacturers, and is proving to be a major challenge for the industry.
Moreover, the U.S. economy, on a downswing, discouraged consumer spending
reducing demand for ink due to a decline in package printing, consequently
causing a dip in the demand for ink ingredients. The resulting overcapacity for
ingredients is suppressing prices. The competition from offshore manufacturers
also forces local producers to cut prices to stay afloat but participants
anticipate some respite by early 2005.
This Frost & Sullivan research service analyzes conventional and digital
ink technologies in the U.S. region and contains growth forecasts for various
ink systems such as aqueous-, solvent-, oil-, and radiation cure-based with
in-depth analysis of colorants, vehicles, and additives for each category. It
also includes comprehensive strategies to aid market penetration and to address
each challenge.
Demand for Quality Ink Sustains Growth in the U.S. Ink Ingredients Market
"Ink ingredients manufacturers in the highly competitive United States
market, offer several products that work in specific applications, and quality
is a key concern while purchasing them," says the analyst. With the
commoditization of certain basic colorants and other ingredients used for
conventional printing, there is a greater emphasis on the quality of product.
Ink ingredients from Far Eastern countries, are available at lower prices,
especially, on aqueous-based colorants. However, the quality of inks using some
of these materials is considered sub-standard and demand persists for indigenous
products.
Striking a Balance between Supply-Demand Critical for Market Success
"Meager consumer spending during the economic decline witnessed in 2001
and 2002 has gradually picked up and the print industry anticipates increase in
demand across the board," notes the analyst. A recovering U.S. economy
bodes well for the industry, and to leverage this opportunity, ink ingredients
manufacturers, apart from satisfying customer needs, have to identify the right
balance between supply and demand.
Retaining a minimum inventory and reducing overhead costs will assist most
ingredients manufacturersf to strike this critical balance. Since this might
lead to an inability to meet sudden demands for large consignments, maintaining
close working relationships with other smaller manufacturers, who may be able to
supply materials at short notice, can help tide over the crisis.
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