Market Report Final 11-13-12

Raw Material Report Outlook 2013
FORWARD LOOKING STATEMENTS

This report contains a number of forward looking statements. Forward looking statements reflect our current views about future events and are based on currently available financial, economic and competitive data and therefore include a level of risk and uncertainty.
Content
General information Print Media Key Cost Drivers (incl. Pigment) Liquid Packaging and Narrow Web Key Cost Drivers (incl. Pigments)
Key messages Raw Materials

Raw material markets remain strong despite general economic outlook
Well managed intermediate markets
Demand is down supply (managed) even more down All large oil companies report increases (>25%) of refinery margins
Strong BST pricing (Benzene / Styrene / Toluene) Vegetable oils volatile (drought) Increasing Gum Rosin pricing
Crude mid / long term outlook remains bearish

But for Brent Crude todays reality shows the complete opposite Brent remains at a significant premium to WTI
Currency fluctuations make it hard to buy from the right source Market demand fluctuations (sudden high, then low) makes it hard to maintain a low cost inbound chain
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Key Messages Logistics / Packaging / Utilities

Logistics
Diesel surcharge went up over the last 2 quarters on the back of crude and higher refinery margins After a peak in July, container rates in the most important lanes are weakening and coming off a high point Although volumes are down, ocean carriers are aggressively pulling capacity to keep rates propped up. They are collectively committed to not allow price erosion in 2012-13 as they did in 2011.
Packaging
Despite weak demand in Europe and NA HDPE prices follow the gains in plastic feed stocks with double digit figures Hot galvanized steel remains stable and above Q4 2011 prices despite poor economic outlook Kraft paper is making moves upward for the first time in 2.5yrs affecting liner board pricing Supply base continues to consolidate in the area of packaging containers making it more difficult to leverage volume and spend with fewer suppliers
Utilities
EU 2020 as well as the drive for more green sources has increased and will continue to drive the costs of electricity and gas in Europe Markets continue to be volatile mainly due to economic uncertainty, speculation, as well as, geographical and political issues
Last 4 years Economic outlook From a Raw Material perspective

sale levels)
(1)
Q3 / Q4 2008 market collapsed high stocks in the chain (compared to new lower Q1 / Q2 2009 markets stabilised stocks were taken out of the markets suppliers
rationalised products and capacities
Q3 / Q4 2009 markets started to reverse and the normal supply chain amplification
Higher than real demand Rationalised supply base
effects occurred while each step in the chain ordered slightly more than real demand base markets became short:
Q1 / Q2 2010 growth continues while stocks have not been rebuilt, first signs of
major supply chain stress
Q3 / Q4 2010 many key materials are short, combined with critical supply capacity
unavailable (temporarily or taken out)
2011 Pricing power remains with the base chemical producers. Turmoil in the Middle
East caused crude prices to increase fast bringing further economic volatility. The tragic events in Japan caused further challenges in the security of supply
Last 4 years Economic outlook From a Raw Material perspective
(2)
2012 Volatility. Materials move up and down very hard. No long term contracts and
many challenges on demand and supply, partially driven by speculation. Currencies and base raw materials move fast. When prices drop, no trading in large quantities is possible. Pricing power is still with sellers, despite economic head-wind. Due to the negative outlook of the graphic arts industry, this market is more and more perceived as unattractive and the last resort for leftovers. Outlook 2013 It is expected that many suppliers in the ink supply chain will see further shrink of their demand. We expect a number of suppliers to really struggle to survive. The large Global Chemical companies will decide to reduce output rather than go into the normal chemical pricing cycle. Given their domination, due to the last 5 years of consolidation, they will succeed. While crude might hit lower prices, due to the change in refinery set-up and the use of more shell gas / oil, many crude related products will actually see price increases as their specific intermediates become short
Key Cost Indicators

Major concern is Benzene / Toluene / Styrene increases, as this drives many other materials. Vegetable oils down after peak, the rest are flat or up
Forex A 12 month roller coaster

USD versus Euro Euro versus GBP
USD versus CNY
USD versus INR (1000)
EUR versus CNY
USD versus BRL
Euro versus SEK
USD versus AUD
Forex 2012 Explanation note
With the global chemical world dependant on China, the strength of the Yuan versus the USD and more specifically against the Euro is driving significant additional inflation While the Euro has gained some strength, compared to the 2008 peak, it is still extremely weak, resulting in additional inflation in the Euro region Australia / Brazil benefitted from strong exchange rates versus the USD, hence some level of tempering the underlying inflation of RM costs, however lately (and outlook) is that this benefit will be less
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Crude Oil
Crude in quarter 3 increased significantly versus Q2 and only in the last month reversed the trend. The increase was not expected given the general economic outlook. European markets are even more a worry due to record low stocks. Any issue will result in a major price explosion The gap between WTI and Brent has increased in Q3 from $14 to $22. Except for the US, all others regions are Brent based and even some products in the US follow Brent rather than WTI Cost for crude related products will increase in Q4 due to current market conditions. In Europe the effect is slightly less than originally anticipated due to the partial recovery of the Euro
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Key Cost Drivers

Print Media Liquid Packaging and Narrow Web
Click on an application
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Print Media Key Cost Drivers

Heatset NA Coldset NA Publication Gravure NA Publication Gravure EU Heatset EU Coldset EU Sheetfed EU Sheetfed UV Transfer Media Press Room Chemicals Additional Key Cost Drivers
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Heatset NA Key Cost Drivers

Distillate
Distillate prices driven by crude and jet fuel / kerosene prices
Flushed Colour
Carbon Black
Driven by crude oil derivatives
Phenolic Resin
Main driver is Tall Oil Rosin which loosely follows Gum Rosin
Distillate
Flush/Carbon
Hydrocarbon Resin
DCPD & C9 feedstock pricing driven by gasoline and lighter ethylene cracking slates
Phenolic Resin
Additives
Hydrocarbon Resin Additives
Waxes - prices will continue to follow trend of crude oil
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Distillate NA
Cost Development Background
Product Driven
Distillate prices follow jet fuel / kerosene price trends
Financial Driven
Prices dip in summer months then rise to near 2012 highs
Expectation
Slowdown in natural gas fracking improves supply of distillates temporarily while rigs are transitioned from gas to oil Prices expected to remain elevated
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Heatset NA
Flush Colour
Carbon Black
Product Driven
Carbon costs are driven by the price movement of various crude oil derivatives. Prices for 2012 through Q3 increased / Q4 decreased slightly Prices for 2013 will reflect movements in these feedstocks. How much movement will depend on the unpredictable derivative costs as a percent of crude.
Market Driven
Overall market tightness continues Rubber, tire, and plastics industries dominate the carbon market and are willing to pay top prices. Four new tire production sites coming on line in the Americas by 2014 which will increase market tightness
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Carbon Black Material Key Cost Drivers
Heatset NA Heatset EU Coldset NA Coldset EU Pub G NA Pub G EU Sheetfed EU

Click to view Carbon Black cost drivers
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Hydrocarbon Resin
Europe
2013 prices expected to rise due to continued cracking of lighter feed slates Number of European HC producers has been reduced over the last year The Euro/USD exchange rate negatively affected the overall cost Reduced demand has softened the currency impact slightly
North America
Limited number of suppliers for N. America Asian suppliers are not competitive or able to meet NA product requirements Prices stable in Q3 and Q4 2012 after significant Q2 increases 2013 prices expected to rise due to continued cracking of lighter feed slates
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Hydrocarbon Resin Material Key Cost Driver
Heatset NA Heatset EU Coldset NA Coldset EU Flush Colour
Click to view Hydrocarbon Resin cost drivers
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Phenolic Resin NA
Product Driven
Rosin resins used in the US are primarily Tall Oil Rosin based. TOR pricing trends with gum rosin
Financial Driven
Due to reduced gum prices and a softening TOR market, rosin resins prices declined slightly in Q4 2012
Expectation
Phenolic resin supply and demand is in balance Prices are expected to remain flat for Q1 2013 if gum remains stable
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Heatset NA
Flush Colour
Additives
Waxes
Microcrystalline - prices have been flat since their peak in mid 2011 due to higher crude oil prices. 2013 prices will be stable to slightly higher depending on the price of crude oil. Virgin PTFE has increased 50% since the end of 2009. Prices are expected to be stable through the first half of 2013.
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Coldset NA Key Cost Drivers

Base / Vegetable Oil
Base oils driven by crude prices and base oil inventories Vegetable oil volatility continues
Flushed Colour
Carbon Black
Resin
Oil
Flush/Carbon
Filler
Producers have idled capacity and rationalized production Primary suppliers implemented price increases in January 2012
Resin Filler
Additives
Additives
Organoclay trending slightly up (market driven)
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Base/Vegetable Oil Coldset NA

Base Oil
Base oil prices follow crude oil and base oil inventories Prices fell in Q3 with crude decline, but expected to rise slightly for Q4 Domestic producers slowed their exports to Europe due to reduced demand
Soybean Oil - Market price volatility continues

Sluggish 2013 economic outlook combined with Eurozone uncertainty and poor North America crop are limiting year end supplies
Linseed Oil - Stronger than expected 2012 North America flax crop
Q4 2012 small price reduction and expectations for flat pricing throughout first half of 2013
Castor Oil - Excellent crop size in 2012 - 25% market price decline
Prices are expected to rebound in 2013 due to lack of planted acres and increased exports of castor meal
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Coldset NA
Flush Colour
Filler Coldset NA
Kaolin
Idled capacity and rationalised production to address shrinking market for kaolin (paper market driven) Little rationalization occurred in 2011, signalling a levelling out between supply and demand No plant shutdowns occurred in 2012 and none are foreseen for 2013 Costs mainly driven by energy and process chemicals which are showing an upward trend Producer Price Index for kaolin mining has shown increase of 33% since 2008 Expect a small price increase in January 2013
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Additives Coldset NA
Organoclay - Product Driven
Major cost driver is beef fancy tallow (BFT) which was relatively flat in 2012 BFT is used to produce quaternary amine that coats the clay to give it the required properties Pricing in 2012 saw increases in Q1 while holding steady the rest of the year Pricing in 2013 is uncertain and will depend on both BFT movement and demand from other industries
Organoclay - Market Driven

Oil and natural gas companies dominate clay usage and are willing to pay top prices Hydraulic fracturing (fracking) for oil and natural gas extraction are at the heart of this increased demand It is expected that the increased demand from these industries will drive prices in the coming year
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Publication Gravure NA Key Cost Drivers

TOR Based Resinate
Trends with gum rosin pricing
Solvent
Trends with crude oil and gasoline pricing
Carbon Black
Resinate
Dry Pigment
No serious pigment shortages, potential for upward price pressure Enforcement of environmental protection laws continues to disrupt supply of pigments and intermediates from India and China
Solvent
Filler
Producers have idled capacity and rationalised production. Major Suppliers implemented price increases in January 2012.
Pigment/Carbon
Filler
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TOR Based Resinate

There are two resinate manufacturers in the US. Both have dedicated their capacities to specific gravure ink producers Resinates are approximately 50% solids, most of which is tall oil rosin (TOR) The same fundamentals that drive phenolic resin prices drive resinate prices but on a 50% basis Resinate prices declined slightly in Q4 2012 with falling gum rosin prices Resinate prices are expected to trend up in 2013 with the potential for higher gum rosin prices
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Filler Publication Gravure NA

Kaolin
Idled capacity and rationalised production to address overall shrinking market for kaolin (paper market driven) Little rationalization occurred in 2011, signalling a levelling out between supply and demand. No plant shut downs occurred in 2012 and none are foreseen for 2013. Costs mainly driven by energy and process chemicals which are showing an upward trend Producer Price Index for kaolin mining has shown increase of 33% since 2008 Expect a small price increase in January 2013
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Solvent Publication Gravure NA

Toluene
Used to supplement recovered solvent in publication gravure inks Price trending with crude oil and aromatic / gasoline prices Prices are expected to rise further in Q4 2012 and remain elevated
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Publication Gravure EU Key Cost Drivers

Gum Rosin Based Resinate
Having experienced major volatility during 2010/2011, the market in 2012 appears to have settled.
Solvent
Toluene price trends with crude oil price.
Carbon Black
Resinate
Dry Pigment
Solvent
Filler
Primary cost driver is energy costs
Pigment/Carbon
Filler
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Gum Rosin Based Resinate

Gum Rosin
Having experienced major volatility during 2010/2011, the market in 2012 has settled, but at a much higher level than the average in 2009. Sluggish demand around the world, together with substitutions of alternative raw materials has added downward pricing pressure but as a result, farmers are refusing to tap their trees Volatility still exists with the fear that any sudden pick-up in activity will lead to upward price movements. Outlook for 2013 is likely to trend up slightly
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Filler Publication Gravure EU

Kaolin
All major kaolin producers have idled capacity and rationalised production over the last 2-3 years to address an overall shrinking market, primarily driven by the paper market. Little rationalization in 2011 with no plant shut downs in 2012, signalling a levelling out between supply and demand. Increasing operational costs including that of fuel and chemicals used in the manufacturing process are pushing pricing upwards.
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Solvent Publication Gravure EU

Toluene
Virgin toluene is used to supplement recovered solvent in publication gravure inks. Toluene price generally trends with crude oil price. Reduction of available volume due to reducing capacities has added pressure to the higher price levels. Recent issues with unplanned shutdowns / technical problems led to a short term supply issue which has driven prices higher. 2013 Outlook - Prices expected to stabilise at the higher level due to supply / demand situation.
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Heatset EU Key Cost Drivers

Distillate
Gas oil follows the trend of crude oil Gas oil pricing is at an all time high
Dry Pigment
Carbon Black
Phenolic Resin
Tall oil rosin Gum rosin market
Distillate
Pigment/Carbon
Phenolic Resin
Hyrdocarbon Resin
Hydrocarbon Resin Additives
Additives
Virgin PTFE wax remains at high levels Paraffinic wax is following Base oils
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Distillate Heatset EU
Product Driven
Gas oil is a feedstock produced from crude oil. The European crude is Brent (North Sea sweet, light crude). Due to instability in the Middle East, crude bounced back after a dip at the end of Q2 and increased significantly in Q3
Financial Driven
The monetary quantitative easing program by the FED has strengthened the Euro a few cents but also increased speculation on commodities.
Expectation
Current stocks in ARA (Amsterdam, Rotterdam, Antwerp) area are at low levels and are a potential risk in the winter months which may lead to higher prices in Q1 2013 Brent crude is expected to stay between $105/bbl and $120/bbl in 2013. Exchange rate fluctuations will impact crude pricing in Europe
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Phenolic Resin EU
Relatively stable pricing in 2012 - Any mild decrease of gum rosin price has been limited by increased pricing of phenols and anhydrides Prices are expected to trend slightly upward in 2013 as sea freight costs increase and gum rosin production decreases due to reduced tapping by farmers
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Heatset EU
Sheetfed EU
Additives Heatset EU
PTFE Wax
PTFE prices have been very stable in 2012. Due to export restrictions in China, this high price level is expected to continue in 2013.
Paraffinic Wax
Microcrystalline wax is a by-product of the refining process. Fewer refineries are producing the oil that creates this by-product leading to an unbalanced supply and demand situation. In 2012, one supplier went bankrupt, which resulted in 3 refineries closing and 4 refineries reducing capacity or focusing only on fuel production
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Coldset EU Key Cost Drivers

Base / Vegetable Oil
Base oils do not follow crude oil Soybean Oil - Market volatility continues
Dry Pigment
Carbon Black
Filler
Primary cost driver is energy costs
Oil
Pigment/Carbon
Resin
Resin Filler
Additives
Additives
Organoclay trending slightly up in 2012 (market driven)
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Base/Vegetable Oil Coldset EU

Base Oil
Base Oil pricing has not followed crude oil in 2012 as it had its highest level when crude was lowest. As Base oil pricing moved to slightly lower levels, which was not favourable for producers, refineries started using the feedstock for production of diesel instead of base oils which reduced supply and caused an increase in price. The monetary quantitative easing program by the FED has strengthened the Euro a few cents but also increased speculation on commodities. Higher prices are expected by the end of 2012. Prices for 2013 are extremely uncertain, as it depends heavily on the demand from other markets like the automotive industry and, to a certain extent, crude oil prices.
Soybean Oil
Market volatility continues - however trading remains within certain upward and downward trends. Hedge funds still having an impact going forward as they seem to come in and out depending on general market activity. 2013 Outlook - Growing demand still expected to outweigh supply in 2013, keeping pressure on prices.
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Filler Coldset EU
Kaolin
All major kaolin producers have idled capacity and rationalised production over the last 2-3 years to address an overall shrinking market, primarily driven by the paper market. Little rationalization in 2011 with no plant shut downs in 2012, signalling a levelling out between supply and demand. Increasing operational costs including that of fuel and chemicals used in the manufacturing process are pushing pricing upwards.
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Additives Coldset EU
Organoclay
Major cost driver is beef fancy tallow (BFT) BFT is used to produce quaternary amine that coats the clay to give it the required properties BFT holding steady in price for 2012 thus far Oil and natural gas companies dominate clay usage and are willing to pay higher prices. New hydraulic fracturing for oil and natural gas extraction are at the heart of increased organoclay demand. It is expected that increased demand from this industry will drive prices up in the coming period
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Sheetfed EU Key Cost Drivers

Vegetable Oil / Distillate
Gas oil pricing is at an all time high Linseed supply / pricing to stabilise with a potential to weaken
Dry Pigment
Carbon Black
Phenolic Resin
Tall oil rosin Gum rosin market
Veg Oil/Distillate
Pigment/Carbon
Phenolic Resin
Alkyd Resin
Costing driven mainly by vegetable oil pricing Prices of chemicals moving up
Alkyd Resin Additives
Additives
Drier pricing volatile and influenced by cobalt metal PE waxes follow crude / kaolin clay - primary cost driver is energy
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Vegetable Oil/Distillate Sheetfed EU

Gas Oil
Gas oil is following crude very closely. Crude is expected to be between 105 USD/bbl and 120 USD/bbl for 2013, the exchange rate can play a significant role in 2013. The fundamental weaknesses and risks still remain (European crisis, Iran nuclear power program). The monetary quantitative easing program by the FED has strengthened the Euro a few cents but also increased speculation on commodities.
Vegetable Oils - Linseed Oil

Canadian and US crop yields were 50% higher than last year, Eastern European yields were far lower Reduced Chinese import demand due to higher Chinese yields made more North American based product available for export to Europe. Linseed cake price has stabilised at a high level, therefore upward risk is low. The negative economic outlook can lead to a bear market.
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Alkyd Resin Sheetfed EU

Linseed Oil
Canadian and US crop yields were 50% higher than last year, Eastern European yields were far lower Reduced Chinese import demand due to higher Chinese yields made more North American based product available for export to Europe. Linseed cake price has stabilised at a high level, therefore upward risk is low.
Soybean Oil
Market continue to be volatile. Influence on alkyd pricing is dependent on time of contracting
Chemicals/Secondary Raw Materials

TMP, Penta, PTA, IPA, etc. have moved up during Q4/2012. This trend is expected to continue into Q1/2013 and will counteract any cost advantage from linseed oil
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Additives Sheetfed EU
Driers
Cobalt metal price continues to be volatile although there has been more stability in the second half of 2012. Manganese pricing is expected to remain stable for Q4 and 2013 The future of cobalt driers is uncertain because of labelling issues
Waxes
After reaching an all time high, ethylene followed crude pricing downwards for a few weeks but is now back at high levels and is still volatile. The speed of reduction and the following increase was too fast to push it through the supply chain and affect PE wax prices. An increase back to PE prices of Q1 and Q2 is likely. PE waxes will stabilise at these high levels as long as crude stays at current levels, PTFE wax pricing has been very stable at high levels over the last few months and no reduction is expected as the market is still short, driven by Chinese export restrictions.
Kaolin Clay
Supply / demand in balance. Sufficient supply options available to ensure stable pricing. 45
Press Room Chemicals Key Cost Drivers
Fountain Solutions Washes Spray Powders Silicones
46
Fountain Solutions Key Drivers

Glycerin
Glycerin is a by product of bio-diesel production
Glycol Ether
Glycol ethers are derived from ethylene and propylene
Gum Arabic
Gum Arabic is agricultural and is dependent on the weather
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Glycerin
Europe
Approximately 70% of European glycerin is generated as a by-product of bio-diesel. Low bio-diesel production caused by heavy imports from Argentina and Indonesia has led to shortages and higher prices in the short term. 2013 Outlook - Restart of bio-diesel production will stabilise supply, demand and pricing. Pricing remains volatile as European bio-diesel producers are unsure of future bio-diesel quotas.
North America
U.S. is a net importer of glycerin. Bio-diesel production has begun its winter slowdown, and less crude glycerin is being generated, as antifreeze and de-icer production increases. Crude glycerin has found its way into more animal feed applications as the price of corn has climbed. Price is trending upward.
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Gum Arabic
Good rain levels in main producing countries of Sudan / Chad suggest a good harvest in January. No supply issues expected. Prices expected to be stable / minimal increase for the foreseeable future. Political situation quiet.
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Glycol Ether
Europe
Pricing is anticipated to increase in Q4, mainly driven by concerns around availability, following issues in the Middle East and Asia. A number of major global sources are in or will enter turnarounds in the next few months.
North America
One major producer of ethylene oxide experienced production problems. Supply of ethylene and propylene are beginning to tighten. Pricing appears to be stable to slightly upwards.
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Washes Key Drivers

Monopropylene Glycol Solvent
Hydrocarbon solvents following crude closely The main driver behind monopropylene glycol is propylene
2 EthylhexylCocoate
Coconut oil is the main driver behind 2-ethylhexyl cocoate
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Solvent
Hydrocarbon Solvents
Prices follow crude closely. After a drop mid-year, crude has come back to old price levels. Hydrocarbon solvents are expected to stay at current high levels in 2013.
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2-Ethyhexyl Cocoate
Europe
The key material drivers in Europe have continued on a downward trend, due to good availability of feed stock. Market feedback is that the level of reductions has reach its low point and price is expected to stabilise in first half of 2013
North America
Availability and inventory of coconut oil continues to improve. Supply and demand are well balanced. Pricing is trending downward.
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Monopropylene Glycol
Europe
Availability is very good at present. Outlook is stable with propylene pricing currently on a slight downward trend. (Q4 - 2012) Product is seasonal with high demand during the winter months, which could result in possible shortages leading to an upward price trend.
North America
Aircraft de-icing is a large end user and is seasonal. Weather will impact demand. Prices declined in Q3 following cost reductions of propylene. Prices are expected to rebound as propylene continues to rise after the Q3 decline.
54
Spray Powder Key Drivers

Starch
The 2012 North American drought has reduced supply
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Starch
Europe
Maize and wheat starches are becoming tighter in the market. August crops were delayed due to the floods in Europe. Starch pricing, having fallen at the start of the year, is now heading in the opposite direction with double digit increases. Current increases and product availability will not change until the new crops are harvested in April/May 2013.
North America
U.S. is now an active importer of corn from South America. U.S. corn production is at its lowest level since 2006. Poor yield resulting from the 2012 drought is forcing pricing upwards.
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Silicones Key Drivers

Silicone
The demand for silicon metal (used in solar cells and computer chips) is down
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Silicone
Europe
Pricing has been stable since the start of 2012, outlook is for this to continue into Q1 - 2013. Demand has reduced during Q4 as plants around Europe start to de-stock for year end. As a result, current availability/lead-times have reduced significantly.
North America
A new plant has been built in the U.S. Exporting to Asia is down as a result of two new plants in China. Supply and demand are well balanced. Pricing is trending steady to slightly downward. A major producer is in deep financial difficulty and may exit the business resulting in a price spike.
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Transfer Media Key Cost Drivers
Sleeves
Blankets
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Tensioned Blanket Key Drivers

Mixed Compounds
2012 Weakness in butadiene 2013 Expect mild recovery in polymers
Aromatic Solvents
Toluene is impacted by the aromatics / gasoline market
Interleaving & Cure Paper Fabric

Reduction in cotton prices Stabilisation in polyester Reduced pulp pricing Paper not demonstrating reductions
60
Fabrics
Product Driven
Global demand for short staple cotton generally drives the total market, especially from the Far East with China and India in particular Long staple cotton (used for blankets) is limited in its acreage availability, this is being replaced with alternate cash crops as prices fall With increased pricing in 2010 and 2011, many spinning mills moved to synthetic yarns reducing availability Falling base price has destabilised some markets with traders trying to sell inventories at last year's prices
Financial Driven
The strength of the US$ versus euro has had an impact on market strength, US$ economies have difficulty competing against euro based manufacturers
Expectation
Base raw material price for 2013 would indicate that pricing should be lower than 2012 prices, however higher priced 2012 yarn inventories will impact pricing during the early part of 2013 With stabilisation of synthetic prices in relation to the volume of cotton used, 2013 price stability is expected. 61
Mixed Compounds
Product Driven
In the first half of 2012, butadiene prices spiked to the record high prices of 2011. In the second half of 2012 prices dropped but are still higher than in 2010 Acrylonitrile prices have also declined throughout most of 2012 with a slight increase in Sept/Oct Additive and filler costs remain high and stable
Financial Driven
Weakened Euro versus the US dollar has impacted pricing
Expectation
Polymer pricing will continue at current levels through end of 2012, but expected minor economic recoveries in NA and China during 2013 would lead to incremental increases Additives may see increases as raw materials and availability become tight Pricing pressure expected from increasing environmental requirements globally
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Aromatic Solvent
Europe
Toluene price generally trends with crude oil price. Reduction of available volume due to reducing capacities has added pressure to the higher price levels. Recent issues with unplanned shutdowns / technical problems led to a short term supply issue which has driven prices even higher.
North America
One major refinery is planning a total shutdown, leaving no toluene refineries in the Northeast. Aromatics market is strong, which is pushing toluene prices upward.
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Interleaving and Cure Paper

Product Driven
Reduced number of paper manufacturing mills available globally Increased manufacturing cost of paper, including environmental costs of waste management Additives and chemicals related to the coatings required are continuing to increase Reduced demand in high specification coated paper has reduced the number of coaters capable of providing wide width paper
Financial Driven
The continued weakening of the Euro during 2012 has impacted cost for Europe
Expectation
The reduction in base pulp pricing combined with increases in materials and manufacturing cost should balance the end user pricing
64
Nickel Sleeve Key Drivers

Polymer
Butadiene increases Acrylonitrile stability
Stainless Steel
Market stable at lower levels
Polyester Yarn
Stability of North American polyester cord
Nickel
Stability in nickel prices
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Nickel
Product Driven
Raw nickel prices driven by demand in steel production Global Inventories, demand and replenishment Conversion costs, especially electricity
Financial Driven
The weaker Euro versus the US Dollar has impacted costs
Expectation
Global recovery will influence the demand for nickel
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Polymer
Product Driven
Global market volatility especially from the Far East which drives the price market Acrylonitrile cost that has shown reasonable stability The global NBR polymer demand has been greater than capacity for several years Continued margin retention by the producers
Financial Driven
The continued weakened Euro has impacted cost
Expectation
End of 2012 polymer pricing is expected to be similar to December 2011 prices, with an increase in 2013 during Q1 and Q2 which will be negated during Q3 and Q4. New capacity is not expected in NBR during 2013 with global demand influencing and putting pressure on availability
67
Polyester Yarn
Product Driven
Polyester Conversion and electricity Smaller number of North American thread mills have limited pricing leverage
Expectation
Declines in the polyester market are due to a decrease in global demand compared to 2011 Expect some increases in the polyester market due to demand recovery in 2013 Pricing of polyester cord is expected to be stable
68
Stainless Steel
Product Driven
Steel Nickel Specialized conversion requirements and electricity Low purchase volumes for the steel market Chinese and Asian demand are largest and impact the global markets
Expectation
NA Market declined Jan-June and has been stable since July North American market expected to be stable for balance of 2012 and into 2013 Expect producers to balance production and match reduced demand to stabilize pricing
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Liquid Packaging and Narrow Web Key Cost Drivers
Solvent Based Colour Solvent Based Clear Solvent Based White Water Based Colour Water Based Clear UV Coating
Additional Key Cost Drivers

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Solvent Based Colour Key Cost Drivers

Additives
Silicones have not seen the feedstock decrease so far Waxes follow crude oil
Resin
Nitrocellulose Reduction of planted cotton acreage will keep the NC market short
Additives Resin
Pigment
Pigment
Solvent
Solvent
Crude pricing fluctuations recently related to geo-political news, the economy, and oil and product inventories
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Additives - Liquid Packaging & Narrow Web

Defoamers, Rheology Modifiers, Dispersing & Wetting Agents

Silicone based additives have yet to see the decreases in the silicone feedstocks. Pricing is expected to come down in 2013. All other additives have stabilized for the remainder of 2012. Another small increase is expected for 2013..
Waxes
PE Waxes follow crude closely. After a dip, ethylene prices remain at high levels, consequently PE waxes will stabilise at high levels going into 2013. FT-Waxes are still short. The capacity increase has been absorbed by high demand in other markets. The additional capacity expansion has been delayed to 2014. PTFE prices have been very stable in 2012. Due to export restrictions in China, this high level is expected to continue in 2013.
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Additives - Liquid Packaging & Narrow Web Key Cost Drivers
s/b Colour s/b Clear s/b White w/b Colour w/b Clear UV Coating UV Sheetfed
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Resin - Solvent Based Liquid Packaging

Product Driven
Pulp suitable for nitration is 0.4% of the global pulp market. The reduction of planted cotton acreage will keep the NC market short until 2014. Unbalanced NC market despite the global economic crisis.
Financial Driven
Currency volatility, political uncertainties, economic weakness and financial speculations, all have an immediate impact on NC pricing.
Expectation
Pricing will be driven upward over the next two years due to the expected shortage in cotton.
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s/b Colour
s/b Clear
s/b White
Solvent - Solvent Based Liquid Packaging

Product Drivers - Ethylene, Propylene and Energy

After a slight decline at the beginning of Q3, propylene and ethylene are now on the rise. IPA and ester pricing have been affected by supply / demand and feedstock costs. Annual planned refinery shutdowns associated with required preventive maintenance keeps the market short. Three refineries are up for sale. Global demand for solvents remains high. Raw material cost have increased exponentially The industry continues to operate its assets at high rates
Financial Drivers - Currency Volatility

Political uncertainties, economic weakness and financial speculation have an immediate impact on solvent prices.
Expectation
Solvent prices will remain high due to emerging countries, which today are the major markets, driving higher margins for the solvent producers. 75
s/b Colour
s/b Clear
s/b White
Solvent Based Clear Key Cost Drivers

Additives
Resin
Additives
Resin
Solvent
Solvent
76
Solvent Based White Key Cost Drivers

Additives
Resin
Additives Resin
Solvent
TiO2
TIO2
Higher prices are expected in 2013.
Solvent
77
TIO2 - Liquid Packaging

Product Driven
No new world scale investments in ilmenite and ore mines. Limited availability of slag and ilmenite has been the major reason for the price explosion over the last years. Reduced demand caused be economic downturns and substitutions brought this price erosion to a standstill. In addition to limited mining possibilities, TiO2 production capacity reduced by 7%. Rising feedstock costs and RM price margin pressure resulted in price increases of 20-30% over two months.
Financial Driven
Currency volatility. Political uncertainty, economic weakness, and financial speculation have had an immediate impact on TiO2 prices.
Expectations
It is expected that TiO2 prices will decline until first quarter 2013, but due to the improved housing market in the U.S., prices are expected to rise in the spring. 78
Water Based Colour Key Cost Drivers

Additives
Hard (Dry) Resin

Hard acrylic resin water based Styrene feed stocks very volatile causing increases
Additives Hard (Dry) Resin
Polymer (Emulsion)
Polymer (Emulsion)
Polyurethane and acrylic Polyols, ethylene, propylene, acetone, isocyanate and MDI are all key base feedstocks
Pigment
Pigment
Water
Water
79
Polymer (Emulsion) - Water Based Liquid Packaging

Product Driven
Isocyanate production has stabilized slightly. Isocyanates are driven by the benzene and petroleum markets. TDI supply remains tight due to plant turnarounds, strong exports and high demand. IPDI market has loosened up since the Evonik plant in Mobile, Alabama is up and running.
Financial Driven
Polyols, ethylene, acetone will continue to be volatile in pricing and critical in supply due to unscheduled shutdowns and planned plant maintenance supporting higher prices. Propylene continues to be short due to most ethylene crackers running light feed stocks as well as suppliers controlling global propylene production. Propylene demand is expected to remain strong keeping prices evaluated.
Expectation
Escalated prices continue to be supported by supply/demand. Supplies of IPD are short and are expected to remain short through 2013 due to Chinese demand, particularly for windmill blades. In addition, higher acetone prices are contributing to the support of IPD prices. 80
Hard (Dry) Resin - Water Based Liquid Packaging

Product Driven
Styrene is produced from ethyl-benzene, formed by alkylation of benzene with ethylene. Methyl methacrylate, styrene, ethyl-benzene, benzene and ethylene are solid acrylic resin feed stocks.
Financial Driven
All feed stocks for styrene have been very volatile and drove prices upward through 2012. GAA remains tight due to an explosion at a major Japanese producer resulting in market shortages and higher prices. Methyl methacrylate is also tight due to growth in emerging markets which are yielding higher margins for producers. Volumes are moving rapidly to markets that will pay higher prices than graphic arts.
Expectation
Feed stock for styrene will remain tight and prices volatile through 2013. Japanese plant explosion will keep acrylic acid tight for 2013.
81
w/b Colour
w/b Clear
Water Based Clear Key Cost Drivers

Additives
Resin (Emulsion)
Acrylic emulsion MMA, GAA remains in tight global supply
Additives
Resin - Emulsion
Hard (Dry) Resin

Resin (Dry)
Hard acrylic resin water based Styrene feed stocks very volatile causing increases
Water
Water
82
Resin Emulsion - Water Based Liquid Packaging

Product Driven
Methyl methacrylate (MMA,) styrene, and glacial acetic acid (GAA) are the key feed stocks in the production of acrylic emulsions. More than 80% of MMA worldwide is produced by the esterification of methacrylamide obtained from acetone cyanohydrine.
Financial Driven
MMA is tight in spite of the partial restart of Lucite Beaumont early this year. MMA is not being produced to full capacity, resulting in price increases. GAA remains tight due to an explosion at a major Japanese producer resulting in market shortages and higher prices. Methyl methacrylate is also tight due to growth in emerging markets which are yielding higher margins for producers. Feed stock for styrene is very volatile and driving prices upward.
Expectation
83 Japanese plant explosion will keep acrylic acid tight for 2013. Feed stock for styrene will remain tight and prices volatile through 2013. MMA will return to full capacity yielding some pricing relief on MMA globally.
Sheetfed UV Key Cost Drivers

Dry Pigment
High Functional Material

Sheetfed UV material Increased epoxy and isocyanate prices, push the prices upwards
Monomer
High propylene prices pushes prices upwards
Photoinitiator
Photoinitiator- stable supply situation The weakening Euro increases prices for Europe
Additives
Oligomer
Propylene, BisA, liquid epoxy price continues upward
84
Monomer Sheetfed UV
Product Driven
Main drivers are acrylic acid and propylene. Current monomer supply situation is stable. Uncertain situation for acrylic acid due to Japanese production explosion.
Financial Driven
Contract price of acrylic acid will increase at a greater pace than spot prices as supply availability will be key. Propylene price continue upwards during Q4 2012.
Expectation
Contract prices of acrylic acid will continue to increase and spot prices will soar. Propylene demand expected to remain strong and will keep price elevated.
85
Sheetfed UV
UV Coating
High Functional Material Sheetfed UV

Product Driven
Acrylic acid is the base for all products. Propylene, BisA, liquid epoxy are all used to produce oligomers.
Financial Driven
Propylene price increases drive the base material up. BisA and liquid epoxy prices continues upward and prices for epoxy acrylate are increasing. Isocyanates are short in the market, driving the urethane acrylates upwards. Unstable global soy market push prices on acrylates based on soy.
Expectation
The Japanese plant explosion will plague supply and drive acrylic acid prices upward.
86
Photoinitiator Sheetfed UV
Product Driven
Base materials for photoinitiators are also used in the more profitable detergent and medical products market. Production of PI is mainly in China.
Financial Driven
Prices will depend on China's continued internal growth. Over the last months, the Chinese Yuan has strengthened against all other major currencies. Stable supply situation for the next half year. Specialty photoinitiators such as polymeric types are higher in cost and are facing additional costs due to new regulatory requirements.
Expectation
Required Polymeric types will continue driving finished good costs higher. China is expected to experience continued internal growth, driving pricing upward, mainly in the second half of 2013.
87
Sheetfed UV
UV Coating
Oligomer Sheetfed UV
Product Driven
Acrylic acid is the base for all products. Propylene, BisA, liquid epoxy are all used to produce oligomers.
Financial Driven
Propylene price increases drive the base material up. BisA and liquid epoxy prices continues upward and prices for epoxy acrylate are increasing.
Expectation
Acrylic acid will remain tight for all of 2013. Unsure situation for acrylic acid due to Japanese production explosion. Contract prices of acrylic acid will continue to increase and spot prices will soar.
88
Sheetfed UV
UV Coating
UV Coating Key Cost Drivers

Monomer
High propylene prices pushes prices upwards
Additives
Photoinitiator
Photoinitiator- stable supply situation The weakening Euro increases prices for Europe
Oligomer
Propylene, BisA, liquid epoxy price continues upward
89
Flush/Pigment Material Key Cost Drivers
Heatset NA Heatset EU Coldset NA Coldset EU PubG NA Pub G EU Sheetfed EU Sheetfed UV

Click to view Flush / Pigment cost drivers
s/b Colour w/b Colour
90
Dry Pigment
Pigment Intermediates
Asian governments enforce stricter compliance with environmental laws. As a consequence pigment intermediate producers need to invest in additional waste water treatment (WWT) capacity, increasing overhead costs. Overall capacities are reduced throughout China/India due to WWT limits and enforcement of environmental laws. Pigment intermediates for reds receive increased price pressure due to beta naphthol shortage and continued environmental challenges. Pigment intermediates for yellow remain high due to reduced global capacity, shortage of some feedstocks and high cost of benzene and toluene. Pigment intermediates for blue/green fluctuate at high levels due to copper and phthalic anhydride market volatility. Unfavourable currency movements and increased freight rates largely influence final cost.
91
Red Drivers
Blue Drivers
Yellow Drivers
Red Pigment Key Drivers (PR53 & PR57)

Strike Chemicals
Caustic soda, hydrochloric acid, sodium nitrite, calcium chloride Aside from regional supply issues, most markets are slightly declining or stable
BONA, Beta Naphthol

Bona pricing sees continuous upward trend due to beta naphthol
4B Acid/ 2B Acid, C Amine Acid

Toluene price generally trends with crude oil price.
Gum Rosin
92
4B Acid/ 2B Acid/ Amine Acid

China
4B Acid PT is in surplus in Chinese market due to the demand of its isomer OT. OT is being used in a new application as a gasoline additive. Local 4B acid price remains stable. 2B acid price has remained stable. No big price changes are expected in the near future as supply/demand is in balance.
North America
4B Acid price remains stable despite rising toluene, unfavourable changes in currency and freight rates. Currently supply is greater than demand. 2B acid price has remained stable due to declining demand. Future expectation is upward trend due to the rising cost of toluene and freight rates. C Amine Acid has upward trend due to price pressure of toluene, exchange rate changes and freight. Supply has become unpredictable due to tight supply of both toluene and chlorine in some regions. Due to the product's polluting nature, plant closures and relocation of factories have been experienced.
93
Strike Chemicals - Red

Caustic Soda
Overall the global demand for caustic has been flat. Some regions in US and Europe have experienced supply tightness, keeping prices elevated. Conversely, Asia's weakened downstream demand has resulted in lower prices.
Hydrochloric Acid
Due to the global economy, China's PVC demand in the construction industry has been very weak thus creating a chlorine excess. The abundance of chlorine contributes to flat HCl pricing. US HCl markets have experienced price increases in Q3/Q4 due to continued strong demand and a decline in the availability of by-product acid. The initial outlook for 2013 is positive.
Sodium Nitrite
US sodium nitrite has experienced a slight uptick in pricing due to rising ammonia costs. China's sodium nitrite price remains stable.
Calcium Chloride
Calcium chloride has remained stable. 94
BONA/ Beta Naphthol

Bona price has been on an upward trend throughout 2012. Direct feedstock beta naphthol remains unstable due to strict environmental regulations and tightness of feedstock - naphthalene. A recent explosion at the largest global beta naphthol producer caused extreme tightness in the market 2H 2012. Due to environmental regulations, other producers are being forced to reduce capacity or relocate. Naphthalene is used to cure cement. As Chinese government stimulus programs are put in place for construction, it reduces the amount of naphthalene available to other markets such as pigments.
95
Gum Rosin
Having experienced major volatility during 2010/2011, the market in 2012 has settled, but at a much higher level than the average in 2009. Sluggish demand around the world, together with substitutions of alternative raw materials has added downward pricing pressure but as a result, farmers are refusing to tap their trees Volatility still exists with the fear that any sudden pick-up in activity will lead to upward price movements. Outlook for 2013 is likely to trend up slightly
96
Pigment Red
Pigment Yellow
Blue Pigment Key Drivers

Cuprous Chloride Anhydrous
Copper stays 7500-8500 MT level
Phthalic Anhydride
Asia PA price follows feedstock orthoxylene trend
Urea
Urea prices have slowly declined
Strike Chemicals
Acetic acid, caustic soda, hydrochloric acid, sulphuric acid Aside from regional supply issues, most markets are slightly declining or stable.
97
Cuprous Chloride Anhydrous

Copper
Stimulated by QE3, LME copper price jumped in Q3, while weak downstream demand cannot provide support for this pricing. Copper price may see downward trend in latter part of Q4.
98
Urea
Prices peaked in Q2 during planting season and have slowly declined due to demand. Illegal use of agri-grade urea in India is still a major problem, which causes a higher degree of differentiation in market pricing and unannounced plant closures by authorities.
99
Phthalic Anhydride
Asia PA price follows feedstock orthoxylene trend. Prices declined in July but are back to early 2012 levels. PA price will remain soft in Q4 due to weak demand from downstream DOP market.
100
Strike Chemicals - Blue

Acetic Acid
Due to excess capacity and sufficient methanol feedstock, China's acetic market has been less volatile in 2012 than in 2011. Acetic pricing in the US has been elevated as a result of unplanned outages.
Caustic Soda
Overall the global demand for caustic has been flat. Some regions in US and Europe have experienced supply tightness, keeping prices elevated. Asia's weakened downstream demand has resulted in lower prices.
Hydrochloric Acid
Sulphuric Acid
Most regions have seen minimal decreases in the latter half of the year as a result of sulphur price stability.. 101
Yellow Pigment Key Drivers

Arylides
Benzene price generally trends with crude oil price
DCB
Prices escalate due to supply and demand
Gum Rosin
Strike Chemicals
Acetic acid, caustic soda, hydrochloric acid, sodium nitrite Aside from regional supply issues, most markets are slightly declining or stable
102
Arylides
China
China AAOT price on an upward trend influenced by OT. Aniline used as gasoline additive in China has been substituted by OT as a result of new environmental regulations, pushing OT price up. Chinese AAMX price has shown a downward trend over the past 12 months after jumping over 50% in 2011 due to the Japanese earthquake.
North America
NA AAA market price remains high due to continual high pricing of benzene and currency fluctuation. Strong upward price pressure will remain going into 2013. NA AAOT price struggles to remain stable due to rising toluene and global demand. Price pressure will remain going into 2013.
103
DCB
China
DCB price continued upward trend, influenced by benzene, ONCB, and limited availability due to capacity loss. Three ongoing capacity expansion projects in China are planned to be completed in 1H 2013, adding an extra +10K mt of DCB capacity.
North America
DCB supply concerns related to reduced global capacity. Two factories exit market while others are forced to reduce capacity due to environmental controls or shortage of hydrogen. Global supply of ONCB is also reduced due to unplanned incidents in China and Europe. Pricing trending upward due to elevated benzene costs, isomer imbalance issues, increased freight, fluctuation of currency and uncertain market conditions. Ongoing price pressure and limited availability are expected going into 2013.
104
Strike Chemicals - Yellow

Acetic Acid
Due to excess capacity and sufficient methanol feedstock, China's acetic market has been less volatile in 2012 than in 2011. Acetic pricing in the US has been elevated as a result of unplanned outages.
Caustic Soda
Overall the global demand for caustic has been flat. Some regions in US and Europe have experienced supply tightness, keeping prices elevated. Asia's weakened downstream demand has resulted in lower prices.
Hydrochloric Acid
Sodium Nitrite
US sodium nitrite has experienced a slight uptick in pricing due to rising ammonia costs. China's sodium nitrite price remains stable. 105
Flush Pigment
Pigment Intermediates
Asian governments enforce strict compliance with latest environmental laws. As a consequence pigment intermediate producers need to invest in additional waste water treatment capacity increasing overhead costs. Overall capacities reduced throughout China/India due to WWT limits & enforcement of environmental laws. Pigment intermediates for reds receive increased price pressure due to beta naphthol shortage and continued environmental challenges. Pigment intermediates for yellow remain high due to reduced global capacity, shortage of some feedstocks and high cost of benzene and toluene. Pigment intermediates for blue fluctuate at high levels due to copper and phthalic anhydride market volatility.
Oils & Distillates

Oils follow crude trends and distillate prices follow jet fuel / kerosene price trends. Both expected to increase slightly in 2013.
Resins
Phenolic resin pricing expected to be flat in 2013. Hydrocarbon resin pricing expected to rise in 2013. 106
Flush Drivers
Flush Colour Key Drivers

Mineral Oil/Vegetable Oil Heatset Flush - Resin
Main driver is Tall Oil Rosin which loosely follows Gum Rosin Base oils driven by crude prices and base oil inventories Vegetable oil volatility continues
Distillate
Distillate prices driven by crude and jet fuel / kerosene prices
Coloured Presscake
Coldset Flush - Resin

107
Additional Key Cost Drivers
Packaging
Logistics
Energy
108
Print Media
Liquid Packaging
Packaging Key Cost Drivers

Drums, Pails etc.
Intermediate Bulk Container (IBC)
109
IBC Key Cost Drivers
Steel
Cage for IBC / metal drums Slow down in the steel industry
HDPE
Inner bottle / plastic drums / plastic pails Demand from the market is moderate
110
Drums, Pails etc. Packaging Key Cost Drivers
Steel Drum
Plastic Drum
Jerry Can
Pail
111
Steel
Europe
Steel demand is decreasing slightly due to the slow down in the automotive industry. Large price decreases are not expected but small adjustments are possible.
North America
Steel prices are expected to decrease by the end of 2012, and stay low into 2013 (with the possibility of a small spike as usual at the new year, due to producers holding end of year inventories low). This is being caused by the global economic slowdown (China, in particular) which is resulting in a surplus of Chinese steel.
112
IBCs
Drums, Pails etc.
HDPE
Europe
HDPE price is unpredictable due to volatility in the oil and gas market, however, as current demand is moderate, short term prices will likely remain stable.
North America
HDPE prices are expected to hold steady for the remainder of 2012 and into 1Q 2013 due to decreased demand and recent ethane price stability. Outlook for 2013 is continued volatility in HDPE prices. It will be dependent on the outcome of the election and the resulting business climate, any lingering effects from super storm Sandy, as well as geo-political situation in places like Syria.
113
IBCs
Drums, Pails etc.
Logistics Key Cost Drivers
Logistics NA
Logistics Ocean
Logistics EU
114
North American Logistics

Rates
Road rates continue to trend upward Increased operating costs and tight capacity
Diesel Fuel
U.S. Diesel projected to fall slightly and stabilize through Q4
Market Capacity
Transport market capacity remains tight but stable
115
Rates NA
Carriers working to repair margins from economy and increased fuel costs. Current inflation period in the U.S. transport industry Q3 rate changes by mode
LTL rates continue to rise, trending up 1-2% each month Truckload, Bulk rates are relatively flat through the quarter
Intermodal rates stable with increases at less than 1%
116
Market Capacity NA
Capacity projected to slowly tighten through Q4 and be worse in 2013
Driver shortage expected because of tougher regulations Carriers holding back on capacity additions Projected demand increase with economic improvement
US Shippers Condition Index is at -6.8, scores below 0 are unfavourable to shippers.
117
Diesel Fuel NA
U.S. Diesel projected to average $3.96/gallon through Q4. 2012 Diesel fuel prices rose from a January low of $3.83 per gallon to an October high of $4.15. Tight market conditions and increasing crude oil prices drove on-highway diesel up in Q3.
118
European Logistics
Rates
Decrease in (new) capacity will probably push prices upwards
Diesel Fuel
2012 diesel prices stable & high
Market Capacity
More capacity available in market due to economic slow down
119
Rates EU
Economic slow down and decreasing capacity should result in balanced transport prices. A misalignment in the timing of these two elements (economic slow down, decreasing capacity) may result in more price volatility
120
Market Capacity EU
Recent reports on new truck sales show dramatic drops which will have negative impact on market capacity
121
Diesel Fuel EU
Possible excise duty increases by EU governments could even further increase diesel prices Crude oil price direction uncertain
122
Global Logistics Ocean

US to Asia
Exports continue to be strong and rates in the TBWB market are expected to slightly rise
Asia to Europe
Demand in Europe continues to be soft but carriers intend to keep rates up.
Asia to US
Transpacific carriers collectively committed to reverse 2011-2012 losses
Europe to US
Rates are trending downward in the next two quarters
US to Europe
Rates are trending downward
US to Latin America
Rates into WCSA continue to remain strong. Expect rates to hold steady for the next two quarters.
123
US to Asia TPWB
Increases primarily due to rising intermodal costs. Ongoing USEC labour issues will push up TPWB rates in late Q4 and early Q1 of 2013. Equipment shortages continue to be an issue in certain Midwestern locations.
124
Asia to US TPEB
December 1 GRI announced by carriers
$480/20, $600/40, and $675/40HC
TSA Carriers have proposed increases for all 2013 contracts.

$800 FEU increase Asia to the USWC $1000 FEU increase from Asia to the USEC
Contingent USEC port strike congestion surcharge begins December 30.

$1000/container for all U.S. ports for both imports and export, includes USWC ports
125
US to Europe TAEB
Consolidation of vessel services continues in order to match capacity with softening demand. Contingent USEC port strike congestion surcharge begins December 30.
$1000/container for all U.S. ports for both imports and exports
126
Asia to Europe WB
Q4 spot rates historically trend down but carriers are responding by tightening capacity control resulting in a quick rate restoration. Carriers will continue to slow steam vessels and consolidate services to reduce capacity The major carriers have already announced price increases for 2013 due to capacity control and financial need.
127
Europe to US TAWB
Consolidation of vessel services continues in order to match capacity with softening demand. Contingent USEC port strike congestion surcharge begins December 30.
$1000/container for all U.S. ports for both imports and exports
128
US to Latin America
Rates into ECSA continue to trend downward.
Additional carrier capacity coming into this market will continue to hold down rates.
No GRIs are expected to hold in the next two quarters. Equipment shortages continue to be an issue in certain Midwestern locations.
129
Energy Key Cost Drivers
Crude
Relative stability in Q4 2012 expected to continue into 2013
Natural Gas
U.S. - cost expected to increase Europe - downward price trend
Electricity
U.S. power generation changing from coal to natural gas
130
Crude
Europe
Oil demand in continental Europe remains weak due to the poor economic environment with many nations experiencing mild recessionary conditions Austerity measures are further harming growth prospects in some regions, while high oil prices (particularly with a relatively weak Euro) are undoubtedly helping to weigh on demand and dent economic prospects. Brent and WTI prices remained elevated on the high side during the third quarter due to a combination of factors. A resurgence of geopolitical concerns, poor non-Opec supply growth, a large sanctions driven decline in Iranian output and the announcement of further monetary stimulus out of the US Federal Reserve.
North America
Demand, supply, inventory levels, exchange rates, speculation and geopolitical issues all play a role in cost. After dropping in mid-summer, crude oil prices have stabilized at roughly the same levels as Q4 2011. The gap between WTI and Brent continues to be around $20 per barrel and predictions that this would narrow significantly have not materialized. In 2013, the glut of inventory at Cushing, OK, is expected to decrease, causing WTI pricing to increase closer to that of Brent crude. 131
Natural Gas
Europe
There is a downward bias to prices this winter due to an expected increase in Norwegian output and a persistently weak demand outlook. While weather driven demand should increase in the final quarter of this year, the ongoing economic malaise and comparatively cheaper coal prices should further offset demand and associated costs. Oil prices are likely to ease which should weigh on deferred natural gas contracts as well. Although commodity prices are likely to fall further, increases in tax and other bundled and associated costs may offset any reductions seen in the markets.
North America
Total cost expected to increase by up to 9% NYMEX costs expected to climb beginning Q1 Volumes expected to increase year over year (2012 was a warmer than usual winter)
132
Electricity
Europe
With the continuation of weak economic fundamentals in the Eurozone and a depressed carbon market, power prices are expected to find little support in the fourth quarter. Should a more favourable resolution to the debt crisis be found, a return to optimism in growth prospects for the Eurozone and an increase in demand may return. If there is further deterioration in the European debt crisis, this will detrimentally impact carbon prices and push European power prices to the lower end of price expectations. Although commodity prices are likely to fall further, increases in tax and other bundled and associated costs may offset any reductions seen in the markets.
North America
Overall electricity increase 2.6% Clean Energy is main driver in price increase Change over from coal to natural gas fired power generation
133

Market Report Final 11-13-12

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Market Report Final 11-13-12

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Raw Material Report Outlook 2013

FORWARD LOOKING STATEMENTS

Key messages Raw Materials

Crude mid / long term outlook remains bearish

Key Messages Logistics / Packaging / Utilities

Last 4 years Economic outlook From a Raw Material perspective

Last 4 years Economic outlook From a Raw Material perspective

Key Cost Indicators

Forex A 12 month roller coaster

USD versus CNY

USD versus INR (1000)

EUR versus CNY

USD versus BRL

Euro versus SEK

USD versus AUD

Forex 2012 Explanation note

Key Cost Drivers

Print Media Key Cost Drivers

Heatset NA Key Cost Drivers

Carbon Black Material Key Cost Drivers

Heatset NA Heatset EU Coldset NA Coldset EU Pub G NA Pub G EU Sheetfed EU

Hydrocarbon Resin Material Key Cost Driver

Heatset NA Heatset EU Coldset NA Coldset EU Flush Colour

Click to view Hydrocarbon Resin cost drivers

Coldset NA Key Cost Drivers

Base/Vegetable Oil Coldset NA

Soybean Oil - Market price volatility continues

Organoclay - Market Driven

Publication Gravure NA Key Cost Drivers

TOR Based Resinate

Filler Publication Gravure NA

Solvent Publication Gravure NA

Publication Gravure EU Key Cost Drivers

Gum Rosin Based Resinate

Filler Publication Gravure EU

Solvent Publication Gravure EU

Heatset EU Key Cost Drivers

Hydrocarbon Resin Additives

Coldset EU Key Cost Drivers

Base/Vegetable Oil Coldset EU

Sheetfed EU Key Cost Drivers

Alkyd Resin Additives

Vegetable Oil/Distillate Sheetfed EU

Vegetable Oils - Linseed Oil

Alkyd Resin Sheetfed EU

Chemicals/Secondary Raw Materials

Press Room Chemicals Key Cost Drivers

Fountain Solutions Washes Spray Powders Silicones

Fountain Solutions Key Drivers

Washes Key Drivers

Spray Powder Key Drivers

Silicones Key Drivers

Transfer Media Key Cost Drivers

Tensioned Blanket Key Drivers

Interleaving & Cure Paper Fabric

Interleaving and Cure Paper

Nickel Sleeve Key Drivers

Liquid Packaging and Narrow Web Key Cost Drivers

Additional Key Cost Drivers

Solvent Based Colour Key Cost Drivers

Additives - Liquid Packaging & Narrow Web

Defoamers, Rheology Modifiers, Dispersing & Wetting Agents

Additives - Liquid Packaging & Narrow Web Key Cost Drivers