The Asian Ink Market
As the Asia-Pacific region continues to enjoy economic expansion, led by China and India, printing ink manufacturers are enjoying strong growth throughout the region.
By David Savastano
The Asia-Pacific economy is the fastest-growing worldwide, and with that expansion, its printing
With that growth in mind, the leading international ink companies all have positions in the region. Six of the world’s 11 largest ink companies – Dainippon Ink & Chemicals (DIC), Toyo Ink Manufacturing Co., Ltd., Sakata INX, Tokyo Printing Ink, Inktec Inc. and T&K Toka – are headquartered in Japan. These companies have branched out into China and throughout the region; Toyo Ink, DIC and T&K Toka each have a stake in one of the five largest Chinese ink manufacturers.
The industry leaders headquartered outside of the region also have a strong presence in Asia, as Flint Group, Siegwerk and Huber Group, the latter of which acquired Micro Inks, the largest ink company in India in 2005, all have major positions.
The reasons for having a sizable presence in Asia are fairly obvious, beginning with the strong economic growth.
“With the exception of Japan, demand for printing inks in Asia expanded together with growth in GDP,” said Kaoru Sakai, manager, public and investor relations department for DIC Corporation. “Growth was pronounced in the PRC and India.”
Athena Teng, regional sales and marketing manager, Flint Group Asia, said that China’s ink industry enjoyed growth of approximately 10 to 12 percent, while the rest of Asia is around 5 to 6 percent. India and Vietnam also showed excellent growth.
“In 2007, the Toyo Ink Group saw growth as sales in the region rose by 10 percent over the previous year,” said Aviv Haruta, general manager, corporate communications department, Toyo Ink Manufacturing Co., Ltd. Mr. Haruta added that China showed the most growth in 2007, while Japan’s printing industry was basically the same as the past year.
The Japanese printing industry remains challenged. Mr. Sakai noted that according to statistics released by the Ministry of Economy, Trade and Industry (METI), the value of production in Japan in 2007 edged up 0.2 percent from the previous year.
Other key countries are showing good growth, most notably India. Angelo Spano, segment manager – liquid inks, Flint Group Australia, reported that India achieved 20 percent growth in packaging and 12 percent in publication sectors.
“In India, the printing and ink industries are growing hand-in-hand with GDP,” Mr. Sakai added.
DIC is actively expanding its operations in India, with plans to add a new offset ink plant.
“We have begun production of a new offset inks plant in India, in Dahej, Gujarat province. Completion is scheduled for 2009,” Mr. Sakai said.
A rendering of the new Toyo Ink India Pvt. Ltd. in Delhi. (Photo courtesy of Toyo Ink Manufacturing Co., Ltd.)
“India is a relatively new and growing market with huge capacity,” Mr. Haruta said. “We expect growth in the nation to increase at a pace of 10 percent or more annually.”
In 2007, Siegwerk fully acquired PIBU Ink India, a former joint venture between Sicpa Packaging and Indian business partners. The company’s new name is Siegwerk India Private Limited.
“This is a huge success for our Asian strategy, as the acquisition significantly strengthens our position in one of the world’s biggest and most dynamically growing markets,” said Siegwerk CEO Herbert Forker. “With a market volume of 100,000 tons and expected annual growth rates of 12 to 15 percent, there is enormous growth potential for us here, especially in the labels, UV and flexible packaging business.”
Sakata INX was also active in India, investing $13 million to set up a new facility in India, which will be used for global sourcing and gravure packaging inks. The company said its fully-owned Indian subsidiary Sakata Inx (India) acquired 20 acres of land at Panoli in Gujarat for the new facility. The first phase will be completed by 2007, and the plant will be fully operational by 2009.
Mr. Sakai also reported strong expansion in Vietnam, which is similar to its growth in GDP. “In Vietnam, growth in the printing and ink industries is approximately 8 percent annually,” he said.
In Australia and New Zealand, Flint Group added to its leading position in March when it agreed to acquire Siegwerk’s packaging ink business in Australia and New Zealand. The product range embraces flexible packaging (film and foil), sheetfed, decorating inks and coatings. The acquired business in Australia and New Zealand has annual sales of approximately €25 million.
“The Australian and New Zealand markets are faring well despite the strong local currencies impacting export and the resource demands drawn from China,” said Mr. Spano. “The resource boom in Australia continues to fuel strong growth, which drives consumer demand for consumer products. In particular, news and publications markets continue to grow as they explore new avenues and growth opportunities.”
China Continues to Grow
China’s economy, of course, continues to grow rapidly, and its printing industry continues to expand along with the economy.
“The PRC’s GDP grew 14 percent in 2007,” Mr. Sakai said. “Domestic printing-related demand in the PRC also expanded and total production volume for inks increased 12 percent. Growth is particularly noticeable in the area of gravure inks for packaging applications.”
“China continues to grow at a rate of more than 10 percent, and we expect the Chinese printing inks market to continue to do so in the next few years,” Mr. Haruta said. “In offset, UV ink continues to show the most growth in China. Offset printing remains the country’s most common method of producing printed material.”
“There is definitely top line growth, but in view of the increasing raw material costs, profitability is affected,” Ms. Teng said. She noted that the most growth has been seen in packaging, and that UV and sheetfed have enjoyed excellent growth.
This year, Siegwerk established a Center of Competence for Flexible Packaging in Shanghai. In addition, the production facility will be expanded to better accommodate future demand in the fast-growing Chinese market.
“This concentration of know-how is part of Siegwerk’s Asia strategy,” Mr. Forker said. “It enables us to significantly support all activities in this region with expertise, technology and human resources to provide optimum support for our customers.”
There had been a belief that the upcoming Olympics in Beijing would have an additional positive impact on the Chinese printing and ink industries. Ms. Teng said that the printing industries definitely have seen growth, especially in areas such as fast food packaging and the publication sector in advertisements and journals.
Mr. Sakai and Mr. Haruta said they have yet to see a major impact, although Mr. Sakai did note the impact of environmental regulations designed to cut back on pollution.
“So far, there has been no Olympics-related increase in printing-related demand that warrants particular mention,” Mr. Sakai said. “Environmental restrictions in the Beijing area have prompted fears of a shortage in raw materials for inks.”
“There has not been a dramatic impact on the industry from the Olympics, although sheetfed ink sales have been brisk relative to other ink products,” Mr. Haruta said.
As is the case throughout the world, the environment is a major concern in the Asia-Pacific region, and ink manufacturers are seeing more requests for environmentally friendly inks.
“Demand is rising sharply in the PRC for environmentally friendly inks (e.g., toluene-free inks, inks made with vegetable oil),” Mr. Sakai noted.
“We’ve seen strong demand in every region for environmentally friendly inks such as those that are aroma-free or vegetable oil-based,” Mr. Haruta said.
At Siegwerk’s new Shanghai Center of Competence for Flexible Packaging facility, senior technology experts from several Siegwerk sites have been added to support local teams. They will focus on high-end toluene-free products to reap the benefits of the shift to toluene-free inks across the region.
Mr. Spano said that the environment is a key issue in Australia and New Zealand.
“Both Australia and New Zealand are very environmentally conscious nations,” Mr. Spano said. “The drive for environmentally friendly inks and process improvements have become a daily way of doing business. Some of the new inks we will be introducing and, in fact growing, are UV applications across a number of printing processes and water-based inks across the packaging market. Also, we will see a return to protein-based inks replacing solvent-based.”
Consolidation throughout the supply chain remains a critical force.
“Market consolidation continues both among our customers and within our own industry,” Mr. Spano said. “Flint Group is in the final stages of finalizing its acquisition of Siegwerk’s packaging ink business in Australia and New Zealand. This will enable us to consolidate our technologies and build an even stronger focus on this market segment.
“Flint Group is always considering how best to serve our customers by being a global supplier, and acting locally. Often this requires that local facilities be established,” Mr. Spano added.
All in all, Asian ink manufacturers have high expectations for future expansion and growth.
“We will continue to grow in the Asia-Pacific region as we continue to fulfill our goal to be a major force in the graphics arts industry,” Ms. Teng said.
“We expect demand for inks to grow along with population and GDP growth in Asia,” Mr. Sakai said. “We also project that demand for inks will slightly outpace GDP.”