Aluminium surcharge to lift plate prices by 2 percent

Agfa Graphics innovative pricing structure links the cost of plates to international metal exchange prices.

The aim of the surcharge is to fix the cost of plates to the rise and fall of aluminium metal prices, which in recent times have become the target of market speculators. Printers will be able to see how much the speculation has impacted on the amount of aluminium in the printing plates. Since the end of last year aluminium prices on the London Metal Exchange (LME) have surged by as much as 30 per cent with an average price of US$2670 in the 1st quarter of this year compared to US$2494 during the last quarter of 2007.

According to Frederik Dehing, Agfa Oceania Regional President, (pictured) the surcharge is necessary to save the company’s value proposition of service and technology innovation for its customers. "The fact is Agfa Graphics is a well run efficient business but we have no control over key raw material costs such as aluminium. We see an aluminium surcharge as a fair and reasonable mechanism for our customers and ourselves to ride out the massive price hikes we have recently experienced with metal pricing."

The surcharge, which will apply to both printing plates and film (based on the LME price of silver), will appear as a discrete item on customers’ invoices with a link to a website where the calculation will be explained. Only 80 per cent of the aluminium increase will be passed on, which when weighed against the 80 to 85 per cent increase in scrap metal prices received by printers for their old plates, should make the transaction cost neutral. An Agfa scrap calculator on the website will enable printers to determine how much they should be recovering from their used plates.

“"Under this scheme we will only pass on the variable cost component of an aluminium plate and nothing more" said Dehing.
“Agfa is not in the business of hiding behind price increases to boost profits. As market leader we feel it is our duty to lead the way in In the past companies have handled the increase in raw material prices by reducing head count and tightening development. We don’t think this is a good long-term strategy for the industry.”

The surcharge will apply to plates and film from May 1st and based on the average pricing of aluminium and silver on the LME the increase will be in the region of 1-2 per cent for plates and 4-5 per cent for film. The surcharge will be recalculated up or down at the end of June for the following quarter. Being a surcharge it will only apply when aluminium pricing is higher than $US2500 @ tonne, the baseline price from 2005, and will not apply if aluminium falls below such a trigger point.

According to Dehing initial reaction from customers large and small on both sides of the Tasman is positive, with most recognising the inevitable impact of aluminium speculation on the price of plates.