The printed media industry continues to decline, especially with the ongoing shift to digital news consumption. Not only is this a concern for major news outlets, it also has an impact on ink manufacturers.

“In publication inks, there are no growth segments of note,” said Joern Bartelheimer, Siegwerk’s VP of publication gravure, EMEA – a sentiment echoed by Chris Parrilli, VP, publication heatset, Sun Chemical.

“Activity over the past year in the heatset market would show some ‘winners’ and some ‘losers’, but we are not seeing segment growth overall,” Parrilli said.

Nielsen Scarborough collected data noting the ever-declining percentage of people who read daily newspapers – with younger generations less inclined to pick up a copy.  In its Newspaper Fact Sheet, Pew Research Center calculated the total 2016 US daily print and digital newspaper circulation at 35 million weekday and 38 million on Sunday, both down 8% from 2015.

“The newspaper segment continues to decline as digital media undermines printed products as a source for news and advertising,” said Norm Harbin, business director – newspaper ink for Flint Group.  “Specialty products such as UV cured for coated or semi-coated papers, however, have shown some stability as newspapers diversify their portfolio with new commercial advertising products.”

Pew Research Center’s Michael Barthel wrote, “The printed media industry’s financial fortunes and subscriber base have been in decline since the early 2000s, even as website audience traffic has grown for many.”

With that, “the overall demand for publication inks has further weakened,” Bartelheimer said.

“Newsprint tonnage has settled into high single-digit decline,” said Mike Dodd, president, US Ink (A Division of Sun Chemical), adding that he’s once again witnessed the consolidation of newspapers.

“[In 2016 and 2017 there have been] major acquisitions of medium, small and large publications,” Dodd said. “Consolidation results in planned regional print centers, which ends up being a win-win situation for both the acquired and the acquirer.”

In two acquisitions earlier this year, LSC Communications acquired Publishers Press and CREEL.

“Consolidation activity has been significant, and given that the economy is somewhat robust, I would guess that consolidation to drive synergies will continue,” Parrilli said. “If the market variables stay similar, we will continue to see big, publicly traded companies look for acquisitions that allow them to drive up their company’s market value.”

The consolidation among printers has “increased competitive activity” in the market, according to Dodd.

“This has a direct effect on prices, which has therefore compressed margins at the converting and the ink level. This increase in competition puts more emphasis on technology and product differentiation,” he said. “Product differentiation is becoming increasingly difficult as the supply chain also consolidates since the selection of options in raw materials decreases.

“The effect of consolidation in the newspaper market has forced ink manufacturers to also streamline,” he added. “The major ink suppliers have had to consolidate facilities to stay price competitive.

The high single-digit newsprint decline being down from the mid-20 percent decline of 2009 is somewhat of a good sign. Consolidation creates less individual customers, which makes the marketplace more competitive for ink suppliers.”

When it comes to consolidation, Bartelheimer believes – with the crowded market of printer and ink manufacturers – only “the fittest companies…will survive.

“Or the ones which manage to have their added value funded by customers,” he said.

“Globally, newspaper printing in mature economies are experiencing similar trends as in North America,” Harbin said.  “Developing regions, such as India, still have moderate newspaper segment growth, which is expected to diminish over the next few years.”

Siegwerk remains focused on the publication gravure segment. Bartelheimer said the segment is also declining “but at a slightly slower pace than in the past.

“The market decline in Europe for publication gravure ink is around 7-8 percent,” he said. “Correlating to the decline in ink demand, a similar reduction can therefore be assumed for printers. With lower volumes of copies, print jobs are transferring from gravure to web offset.”

Bartelheimer said various large projects are “coming back” to publication gravure. “It can still be said print media remains an extremely important channel for various forms of advertising,” Bartelheimer added.

Parrilli spoke about the magazine/catalogs and newspaper segments in North America.“We saw 2017 return back to the normal decline we’ve been seeing for years in the magazine, catalog and newspaper segments,” he said.

Raw Materials

As a further challenge, there have been raw material supply disruptions and cost increases in key feedstocks this year.

“Average crude oil values in 2017 are higher than in 2016, which resulted in higher prices for oil-based raw materials, such as distillates, ink oils and carbon black,” said Jeffrey Shaw, chief supply chain, quality & business improvement officer, Sun Chemical. “As crude oil values stabilized mid-year, so did raw material prices. but at an elevated level. A number of pigment intermediates have also been affected by supply and price spikes due to environmental legislation periodically curtailing production in China.”

Added Bartelheimer: “The publication ink market has already been hit by shortages of pigments and unforeseen production failure at suppliers. 

“Health and safety programs in key raw material markets in Asia will likely lead to shortages and price increases,” he continued. “And still, increasing regulations in established European markets for raw material usage and ink production itself does not make operating easier. Furthermore, increasing pressure on logistics makes the situation more difficult.”

“The raw material sector for publication inks is most closely tied to the fate of organic and inorganic chemicals used to make pigments,” added Diane Parisi, Flint Group’s VP of procurement. “Those chemicals faced supply and demand challenges throughout 2017, exacerbated by Chinese government shutdowns and the domino effect of Hurricane Harvey.

“The situation in the pigment industry can only be summed up in one word – ‘uncertain,’” she continued. “The chemical company closures in China are not only affecting pigment producers but the whole chemical industry. This means that the impact is on the whole supply chain, including many raw materials used in pigment production.

“Logistics have been an industry challenge for a while as well, and that continued in 2017. Road carrier capacity continues to be tight, and sea freight supplier consolidations led to significant reductions in vessel orders in 2017. In fact, in the largest trade route – Asia-North Europe – the number of containership operators decreased from 15 in July 2016 to 11 in July 2017.

“Finally, we’ve watched crude oil costs increase recently, and that doesn’t bode well for the publication industry. We’ll continue to closely monitor this and all other trends in the months to come.”

The Possibilities of Digital Printing

Digital printing is making headway into the packaging arena now. Dodd said he sees opportunities for digital technologies to make a move into the publication printing space as well.

“We are starting to see commercial publication printers acquiring digital presses,” he said. “Due to digital press speeds, these printers are focusing on shorter strategic print jobs with digital presses.”

“Xeikon sees a few trends in the publishing space that opens up opportunities for digital printing: an increase and much more differentiation in magazines and catalogs and, along with that, more segmentation on advertising,” Danny Mertens, Xeikon communications manager, said. “These results are not necessarily personalized content but at least customized content, which brings down the volumes per title for publications. This makes digital production more advantageous than ever before.”