The Resin Report
Resin manufacturers have been facing the same pressures as the ink industry in the past few years, including higher raw material prices and tight competition.
By David Savastano
(Photo courtesy of Sartomer.)
Like their customers in the ink industry, they have become more efficient and also have raised prices. There has also been movement in terms of consolidation, as Hexion Specialty Chemicals and BASF have made moves to acquire Akzo Nobel Ink and Adhesive Resins and Johnson Polymer, respectively.
Yet, for the most part, resin manufacturers had a good year in 2005, as the general economy showed improvement.
“In general, Noveon did well in 2005,” said Carol Durgan, tactical marketing manager, resins and polymers for Noveon, Inc. “The small- and medium-sized ink companies are gaining business and getting stronger in the marketplace. We have several new products and look forward to another successful year in 2006.”
“The continued business expansion had a positive impact on Sartomer in 2005,” said Paul Elias, business director of specialty products, Sartomer Company. “The industry in general continued to grow as the economy has been healthy – both domestically and internationally. The continued improvement in the economy covers all sectors that we service. So far, this trend has continued into 2006 and will likely continue through the year.”
“While 2005 was indeed a difficult year for the resin industry, Rohm and Haas was successful in meeting the challenges we faced and had moderate growth in our business,” said Holly Anderson, marketing manager graphic arts, North America for Rohm and Haas Company. She added that this year has started out strong, and Rohm & Haas is optimistic that the trend will continue throughout 2006.
“In 2005, we saw a transition in the marketplace from raw materials being unavailable to a state of leveling out or normalization,” said Michael Kucharski, market manager – graphics, Americas at Cytec. “Business-wise, we were able to grow as did the graphics industry. In 2006, we are focused on developing new and innovative technologies for our customers, and improving our processes and efficiencies.”
Raw material prices did have an impact on the margins of resin manufacturers.
“Last year, Hexion experienced modest organic growth but struggled with margin compression due to raw material volatility,” said Phil Runge, product manager, resins, publication offset, additives for Hexion Specialty Chemicals. “The single largest issue currently facing the resin industry is inconsistent availability of key materials and their corresponding cost increases.
Mr. Runge noted that while crude oil is having a major impact on the petrochemical industry, tall oil rosin and gum rosin are of greater concern.
“More critical issues from our perspective are the cost increases and shortages of tall oil rosin and gum rosin that are partially driven by increased energy costs,” Mr. Runge said. “These factors, as well as the impact of the 2005 hurricane season, have led to a challenging and volatile business environment for the resin industry.”
Rick Krause, director of marketing for Johnson Polymer, said his company is seeing similar results.
“Johnson Polymer’s experience has mirrored much of the industry: volumes are growing, sales dollars are growing, but due to raw material increases there is ongoing pressure on profitability,” said Mr. Krause. “The ramifications continue throughout our industry with company consolidations, restructurings and manufacturing and service center closures. So far in 2006, volumes have been growing steadily with ongoing steadiness in package printing and surprising resiliency in commercial printing. While printing and converting activity has been very solid, continually increasing raw material costs across all commodity groups have affected everyone’s profitability.”
Resin makers are seeing a wide variety of trends in the industry, particularly in the area of cost effectiveness and developing products that help in this area.
“Most of the major industry organizations predict mild growth for the printing industry,” Mr. Runge said. “Reduced material cost and press performance issues leading to reduced printing costs continue to be our single biggest challenge from ink makers. Our product offerings have been more to the value-added vehicle market than the resin market,” such as Hexion’s Mono-Lith sheetfed vehicle.
Mr. Krause noted that cost effectiveness with value-in-use performance is a particularly high priority in today’s business environment.
“Consolidation and cost containment initiatives are highly apparent,” Ms. Anderson said. “We also see a drive to demonstrate the value in performance achievable with new technologies,” such as Rohm and Haas’’ neutral pH resin chemistry.
Resin manufacturers are facing a wide range of challenges in the coming year, beginning with pricing.
“Feedstock costs and ongoing pressure on profitability continue to challenge the polymer and resin industry,” Mr. Krause said. “Everyone within the graphic arts marketplace is faced with similar challenges. Cost effectiveness and delivering end-user value in partnership with our customers will continue to be critical to our mutual success. All companies need to seek adequate reinvestment levels to ensure ongoing sustainability in the ink industry.”
“Continued pressure on raw material prices will be a difficult challenge for the industry,” Ms. Durgan said. “We are trying to keep our raw material costs in-line.”
“Everyone in the industry is experiencing major step changes in the cost of raw materials,” Mr. Kucharski said. “We see this trend continuing. The challenges, then, will be managing raw material costs while running operations safely and more efficiently, and managing profitability while investing in R&D, manufacturing, and new growth opportunities.”
“Our greatest challenge is to provide a sustainable return on investment for our stakeholders,” Mr. Runge said. “If the resin industry cannot access capital for improvements or pay for new technologies, the industry as a whole will degrade until domestic production is less competitive.”
“We have dealt with the current economic pressures through both internal efficiencies, cost reductions and optimizing value in use for our products and services,” Mr. Runge added.
Ms. Anderson said that managing raw material costs and maintaining uninterrupted supply caused by geopolitical events is a challenge.
“Our MRP II Class A certified supply chain is unsurpassed in excellence and the planning, preparation and training that occurs enables coordinated responses to changing events,” Ms. Anderson said. “For the graphic arts market, we continue to look to areas where our current technology and developing technologies in other businesses can support performance improvements and provide cost-in-use value savings for our customers.”
Creating new products is also of tremendous importance.
“Developing new products that give better performance properties is an ongoing challenge not only for us but also for the entire industry,” Mr. Elias said. “Sartomer has been a leader in developing new products. At the RadTech conference last month, Sartomer introduced 26 new products to the UV/EB world. These products were well received and are expected to be commercially successful. In addition, protecting the propriety of new products is an even greater challenge, particularly with all the Asian producers trying to copy American technology.”
“In the face of overcapacity and pricing pressures in the ink market, it is always a challenge to continue to provide innovative products that bring value to both parties,” Ms. Anderson added.
“We are working with our customers to develop the new technologies and fresh solutions they need for their next-gen applications,” Mr. Kucharski said. “At the same time, we are enhancing our global manufacturing capabilities, R&D and technical support. And, we are working with our suppliers to optimize and ensure safety, supply, transportation and on-time delivery.”
The recent announcement that BASF intends to purchase Johnson Polymer will undoubtedly impact the global resin industry.
“We’re excited by the prospect to be part of a world-class organization that understands the chemical industry and is willing to invest in the growth of our business,” Mr. Krause said. “We intend to access the depth of BASF’s breadth and new technology for our graphic arts customers, and build upon the Joncryl product line. BASF is committed to continued manufacturing in Racine for the next three years and is planning for a smooth and seamless transition. They will also provide additional access to raw material sourcing and supply chain integration. Our two organizations expect to learn much from each other and perform together to better serve our customers in the future.”
Ultimately, how resin manufacturers adapt to the challenges facing them while continuing to create new technologies will be critical to their future viability.
Concerns Continue Over Raw Material Costs, Pricing Pressure
The latter part of 2005 was a difficult time for resin manufacturers. Petrochemical prices were continuing upward, and hurricanes had disrupted supplies. While supply concerns have stabilized this year, petrochemicals remain a serious concern.
“After a rocky start last year and the impact of two violent hurricanes, raw material availability and costs have finally settled – somewhat,” said Paul Elias, business director of specialty products, Sartomer Company. “I say somewhat because we are still experiencing some spot tightness in a few products and continued upward pressure on costs. But overall, the situation is much better now than during the past two years when we experienced tremendous volatility in the market for raw materials. Having said that, we still believe the impact of $75/barrel oil will put more upward pressure on costs.”
“Raw material availability continues to look healthy,” said Rick Krause, director of marketing for Johnson Polymer. “Absent another natural disaster or oil supply shock, we’ve seen some stability return in pricing levels, albeit at a much higher level than the last 18 to 24 months. How long this stability will last depends upon oil and natural gas pricing; sustained levels of about $70/barrel will definitely add to transportation costs, energy costs and petrochemical feedstock costs. Pigment costs, solvent costs, monomer costs, surfactant costs and general energy and transportation costs will continue to face higher feedstock cost pressures.”
“We think we will see more stability in raw materials this year,” said Carol Durgan, tactical marketing manager, resins and polymers for Noveon, Inc. “Our supply of raw materials is stable for 2006.”
Increasing demand for petrochemicals and its deriviatives is impacting supply.
“We see increased volatility in crude oil and its downstream derivatives, especially propylene, which can drive cost pressures on key raw materials,” said Michael Kucharski, market manager – graphics, Americas at Cytec. “Overall, the supply we purchase has improved since 2004. Through Cytec’s global procurement network, we are able to acquire the materials we need to continue growing our business.”
“There has been some stability in certain raw materials over the last several months, but surges in oil prices and large swings in supply and demand for specific petrochemicals remain issues that must be closely monitored,” said Holly Anderson, marketing manager graphic arts, North America for Rohm and Haas Company. “The growing demand from China and India has put strains on the supply of key feedstocks. New capacity is being developed in Asia and the Middle East which should help mitigate the ongoing growth in demand.”
“We have sustained significant increases in nearly all materials,” said Phil Runge, product manager, resins, publication offset, additives for Hexion Specialty Chemicals. “We are currently experiencing market tightness in a number of critical raw materials that may impact our ability to assure supply. The market has demonstrated an inability to accurately predict raw material movements for the past 18 months and as such Hexion’s current course of action is to focus our attention on flexibility rather than forecasting.”
Passing Along Costs
Despite the challenges from higher prices, resin manufacturers have had to take into account the state of the ink industry when factoring in their own price increases.
“Where possible and appropriate, we have asked our customers to share in the increased material costs,” Mr. Runge said. “Many of them have been responsive but the business challenges they face are extremely difficult as well.”
“Given the magnitude and suddenness of raw material, transportation and energy cost increases in 2004 and 2005, we have been able to recover only a portion of these cost increases,” Mr. Krause said. “We have shared this burden with our customers, yet there is little, if any, latitude for absorbing any additional increases.”
“Our goal has been to improve our internal cost factors first, and pass along any cost increases only if it’s necessary to help ensure long-term profitability and finance new capabilities,” Mr. Kucharski said.
Arez International Announces Phase II Expansion
The Phase II expansion of Arez International’s rosin resin plant is expected to be completed in October.
Groundbreaking for the expansion took place in March 2006, and is expected to be completed by October 2006. Upon completion, Arez International will have an annual capacity of 55 million pounds of rosin resins.
Phase III, the final phase leading to a total rosin/hydrocarbon resin capacity of 90 million pounds, is scheduled for groundbreaking in early 2007.
New Resin Products
The following listing includes resin products introduced to the printing ink industry in the past year.
Arizona Chemical Company
4600 Touchton Road East
Building 100, Suite 1500
Jacksonville, FL 32246
Phone: (904) 928-8700
• Sylvaprint 77-45
Comments: Sylvaprint 77-45 is an aliphatically tolerant, low viscosity rosin modified phenolic designed for dry grinding, pigment flushing or co-resin applications. The resin offers fast set times and oxidative dry rates in sheetfed systems.
• SI 447-59
Comments: SI 447-59 is an aliphatically tolerant, gel reactive, mid-viscosity rosin modified phenolic that can be used for either dry grinding, flushing or gel vehicle construction.
• Sylvaprint HSR
Comments: SI 321-151 and SI 407-6, along with Sylvaprint HSR 96-150, make up a family of aliphatically intolerant resins that all use Sylvaprint HSR (Heat Stable Rheology) chemistry. Their unique relationship between viscosity and elasticity allow them to readily be formulated into high solids systems with or without gelling agents offering fast set times, good oxidative dry rates and excellent film properties.
• Sylvaprint 85-155 and Sylvaprint 98-155
Comments: Sylvaprint 85-155 and Sylvaprint 98-155 are aliphatically intolerant rosin modified phenolics of very high viscosity offering formulation latitude in conjunction with economical co-resins or oils.
1950 Lake Park Drive
Smyrna, GA 30080
Phone: (678) 255-4685
• LEO resins
Comments: LEO resins address environmental requirements in Europe for indirect food contact. They have very low odor and extractables, and are also being brought into the North American market.
• Ebecryl 846 and 848
Comments: Ebecryl 846 and 848 are ideal for high-speed sheetfed presses, with 848 developed specifically to provide good carbon black pigment dispersions and for printing on plastics.
• Viaset 211 and 212
Comments: Viaset 211 and 212 are ideal in combination for sheetfed inks for credit card and smart card applications, with especially good adhesion.
• Viaset 240, 341, 325, 520 and 521
Comments: Viaset 240 is very good for laminating inks, another growing technology. Viaset 341 is a new silicone-free anti-slip additive, and Viaset 325 is an acrylated adhesion promoter. Viaset 520 and 521 are ideal for UV screen printing.
P.O. Box 123
5140 AC Waalwijk
Phone: +31 416 689631
Fax: +31 416 689922
• NeoCryl A-2061
Comments: NeoCryl A-2061 is an acrylic styrene emulsion for use in the overprint varnishes and liquid inks. This resin shows excellent printability and transparency offering high gloss, hard and block resistance films. NeoCryl A-2061 is free of glycol ethers and therefore suitable to formulate low odor and low VOC printing inks and OPVs.
• NeoCryl A-2082
Comments: NeoCryl A-2082 is a new acrylic styrene copolymer dispersion for matte overprint varnishes, flexo and gravure inks. This resin combines good printability with a strong matting effect, good transparency and block resistance.
The product can be used as the main resin in the overprint varnish formulation but can also be used as a gloss reducing additive.
• NeoCryl B-859
Comments: NeoCryl B-859 is a solid acrylic polymer that can be used in 2-component systems. This flexible resin has an excellent adhesion on aluminum and shows good retort resistances. NeoCryl B-859 is recommended for heat resistance primers on aluminum and gravure inks which requires high resistance properties.
• NeoRez U-321
Comments: NeoRez U-321 is a high solid non-reactive solvent-based urethane resin for use in flexo and gravure inks for packaging. The resin improves adhesion and flexibility in flexo printing inks based on nitro-cellulose. NeoRez U-321 is used to formulate solvent-based flexo and gravure inks for packaging films, especially on polyolefins and aluminum. Inks based on this resin are recommended for surface printing as well as laminating applications.
• NeoRez U-394
Comments: NeoRez U-394 is a non- reactive, flexible urethane resin. This resin shows excellent adhesion on polyolefins and other films and foils and heat, fat and grease resistances. Inks based on NeoRez U-394 can be used for both surface printing as well as laminating inks.
• NeoRez U-397
Comments: NeoRez U-397 is a non- reactive solvent-based urethane resin. The resin forms a flexible film with elastomeric properties without blocking tendency. NeoRez U-397 is recommended for use in flexo and gravure lamination inks and can be used for pigment grinding in combinations with a pigment wetting additive.
• NeoRez U-399
Comments: NeoRez U-399 is a high solid non-reactive solvent-based urethane resin. The product forms a film with elastomeric properties and is recommended in flexo and gravure printing ink formulations on a wide variety of substrates.
• NeoRez R-1010
Comments: NeoRez R-1010 is a waterborne aliphatic urethane dispersion offering a unique combination of “soft feel” and low gloss. This resin is highly suitable for effect coatings in luxury packaging applications. Through crosslinking good chemical resistances can be obtained.
• NeoPac E-200
NeoPac E-200 is a highly reversible aliphatic urethane/acrylic dispersion for use in waterborne laminating inks. This resin provides excellent printability, good adhesion properties and high bond strengths in a wide range of packaging film laminates.
• NeoCryl A-2090
• NeoCryl A-2091
• NeoCryl A-2092
• NeoCryl A-2095
• NeoCryl A-2099
Comments: DSM NeoResins introduced the NeoCryl A-2090 family, new generation waterborne resins for use in liquid inks and overprint varnishes. These resins were developed in close cooperation with leading specialists in the field of food contact regulations, with the result that the products have broad approvals according to the Food and Drug Administration (FDA) and European legislation for food packaging materials. They are food contact compliant, low residual free monomer and low odor.
The NeoCryl A-2090 family offers high performing inks and OPVs which are compliant with the local food contact legislation.
NeoCryl A-2091 is a hard acrylic-styrene emulsion copolymer with high gloss, transparency, good block and heat resistance for pre- and post-print applications.
NeoCryl A-2092 is an acrylic-styrene emulsion with good toughness and flexibility for grease, fat and water resistant applications. It is a film-forming modifier for A-2091. NeoCryl A-2095 is an acrylic-styrene emulsion with excellent film formation, flexibility and adhesion to films and foil substrate.
NeoCryl A-2099 is an acrylic-styrene emulsion co-polymer of medium hardness, offering high gloss, transparency with excellent water and grease resistance.
8310 16th St.
Sturtevant WI 53177-0902
Phone: (800) 231-7868 Fax: (262) 437-3266
• Joncryl HR 1687
Comments: Joncryl HR 1687 is a high performance hot mar resistant emulsion for inks and overprint varnishes. Joncryl HR 1687 provides excellent hot mar and scuff resistance for pre-print corrugated applications with very good gloss, heat resistance, and high slide angle, all without metallic crosslinkers.
• Joncryl 2037
Comments: Joncryl 2037 is an improved alkaline resistant non-film forming acrylic emulsion. Joncryl 2037 combines improved chemical resistance with on-press resolubility; provides resistance to household cleaners and alkaline solutions; cleans up easily with very good press resolubility; and is compatible with a wide range of coalescing solvents.
• Joncryl 2664
Comments: Joncryl 2664 is a film forming acrylic emulsion for high quality, fine line anilox flexo printing. Joncryl 2664 enables the formulation of high color strength inks for high quality flexo printing; achieves low viscosity inks with up to 25% pigment loads for fine line anilox rolls exceeding 800 lines per inch and under 2.0 BCM volumes; and provides viscosity stability, transfer, adhesion, and gloss suitable for paper, film and foil substrates.
• Joncryl HPD 296
Comments: Joncryl HPD 296 is a high performance dispersion resin solution that enables stable, high solids, low viscosity pigment dispersions. Use of Joncryl HPD 296 allows for 40% or higher organic pigmented dispersions; improves shock and storage stability to reduce waste; enables high strength, low viscosity inks for fine line anilox printing; and improves milling efficiency and throughput.
• Joncryl FLX 5000
Comments: Joncryl FLX 5000 is a self-crosslinking emulsion with excellent press resolubility that rivals solvent-based ink performance on polyethylene film. Joncryl FLX 5000 develops excellent rub, wet crinkle, and deep freeze resistance; provides excellent adhesion to polyolefin films; and provides a cost-effective and environmentally-compliant alternative to solvent-based inks.
9911 Brecksville Road
Cleveland, OH 44141
Phone: (216) 447-5000
Fax: (216) 447-5238
• Carboset XPD-2781
Comments: Carboset XPD-2781 is a styrenated acrylic emulsion designed to impart inks with improved transfer properties and hiding power when used on paper substrates. Its use in packaging (corrugated, bags and cups) and news inks results in more intense and brighter colors.
• Carboset GA-2832
Comments: Carboset GA-2832 is an acrylic emulsion designed for use in printing inks and overprint varnishes. This product is a hard film-forming polymer emulsion with low-residual monomers and by-products, making it particularly suitable for applications requiring low-odor transmission to the packaged good.
• Carboset GA-2851
Comments: Carboset GA-2851 is a high-gloss styrene acrylic emulsion for use in inks and overprint varnish, which can be applied via flexo or gravure processes. It exhibits excellent gloss, flow and leveling, resolubility and very good holdout.
• Carboset GA-2866
Comments: Carboset GA-2866 is a high-gloss styrene acrylic emulsion used in inks and overprint varnishes, which can be applied by either flexo or gravure processes. It exhibits excellent gloss, fast dry and very good holdout. This polymer also exhibits improved compatibility with coalescents, plasticizers and other co-solvents as compared to other hard emulsions.