Coated papers: Coping with rising raw material costs

Pulp & Paper, Aug 2005 by Cook, Harry

DURING THE LATTER HALF OF 2004 and the first part of 2005, the major suppliers of coating raw materials announced significant price increases for their products. For some companies there were multiple increases, a new one almost monthly. All three coating component groups (pigments, binders and additives) published price increases during this time period. Higher energy, chemical, and transportation costs made the increases necessary for the suppliers to stay in business.

Those materials with ties to the petrochemical industry were particularly susceptible to price increases. Other products were affected by high demands from outside the paper industry.

All of this has been happening at a time when paper mills are desperately pursuing cost reduction strategies in order to survive. The threat to survival is real.

Although this situation creates significant concern and anxiety for those trying to stay alive in this industry, it also provides a number of opportunities for creative solutions.

Possibilities abound

Let's look at some of the actions that can be taken:

1. Optimization: Many formulations contain materials that contribute little to the performance of the coating. Over time, the recipe can grow as new components are added for a certain property, but other components are not reviewed and eliminated if no longer needed.

At the first mill where I worked as a coating chemist, I encountered formulations with a long list of components and I was not familiar with some of the materials. When I asked what they were, and why they were being used, no one could tell me. By getting back to basics, selecting the proper pigment(s), binder system, and only the additives necessary for the application, we were able to improve functionality of the coating, lower costs, and make life much simpler for the coating prep operators.

Sometimes more of a product is used than is necessary. The concept of: "If a little bit is good, then more is better." is alive in the paper industry. So, for expensive raw materials such as latex, titanium dioxide, and some specially chemicals, work should be done to determine if there is an excess amount being used.

2. Improve efficiency: Again, looking at the materials that are more expensive, we should challenge the suppliers to provide products that allow us to use less. For years, I looked at European coating formulations and wondered how they could perform with lower amounts of binder than those used in North America. Eventually, I learned that the latexes used there were stronger than those used here, even though some of the same suppliers were selling to both markets. The problem was that the stronger latexes used in Europe were not approved for use in our applications by the governmental regulation agencies. Fortunately, there appears to be progress in this area with North American suppliers promoting more efficient latexes at the recent TAPPI Coating Conference in Toronto.

3. Alternative materials: Whenever possible and acceptable, evaluate and use lower cost alternatives. Often this involves more than a direct substitution. The coating will likely need to be re-formulated, changing one or more of the other components, to maintain functionality. Here, the risks must be weighed against the potential savings.

Don't be afraid to spend

4. Value-added materials: On the other hand, there are times when it makes sense to use more expensive materials. More expensive materials can be justified when they lower the total cost of production or allow increased production rates. For instance, there may be occasions in which a higher priced product allows total coat weight to be reduced, saving on all the components of the coating.

5. Unique properties: If you can build into your paper product a property that is highly desired by the customer and not available from your competitors, then you might be able to demand a premium price for that paper. I remember a situation where printers ordered a higher brightness sheet, even though they did not need the extra brightness. They paid more to get this high brightness grade, because it printed better than anything else in the market!

Considering all these possibilities, there can be optimism for the future of the coated paper industry. Opportunities are there if we are willing to invest time and effort to pursue them and accept some risk to implement them.

HARRY COOK is manager, paper research and applications lab, Thiele Kaolin Co., Sandersville, Ga.