Despite pricing pressures and a challenging economic environment, demand for high performance pigments continues to increase.
By Kerry Pianoforte
Rising fuel and raw material prices, coupled with a challenging economic climate, have recently
Photo courtesy of ec Pigments.
“The market for high performance pigments continues to increase due to growing global demand for cleaner, brighter colors with high resistance properties for a wide range of applications,” said Don McBride, COO, Heucotech. “Due to more competition in the HPP market, with the entrance of new players, the pricing remains under pressure and this allows HPPs to be used in venues not previously considered.”
“As we anticipated, the industry has remained relatively flat and growing slightly below gross domestic product (GDP) in North America, although we continue to see growth in the plastic packaging and specialty ink segments,” said Thierry Chevrier, director, BASF performance chemicals – coatings, plastics and specialties. “The building and construction and automotive industries continue to be relatively slow.”
“For us, the HPP market is doing very well – the demand for these products continues to grow steadily given that the market for this type of pigment continues to grow,” said David Woolven, NAFTA regional business line head–inks and printing Ciba Corp.
Heubach continues to focus on the development of high performance pigments. “Last year PR176, PY150, PR254 and PR122 were introduced to the market,” said Mr. McBride. “We will round out our portfolio with additional HPP reds and yellows. Organic high performance pigments such as PY139, PY151, PR264, PY180 and PY181 are currently under development or in the pilot plant process to strengthen our position as a solution supplier of environmentally friendly and innovative pigments, hybrids and preparations have gained tremendous recognition and acceptance in the marketplace.”
Sun Chemical has recently expanded its product line to include more effect pigments, including high performance synthetic mica-based pigments and reflective aluminum metallic pigments. The aluminum pigments, SunMetallics, recently launched and will enable special metallic effects in premium products such as cars, bicycles, laptop computers, cell phones, cosmetics, cans and coils, and other industrial and commercial products.
"The demand for high-performance pigments worldwide is growing,” said Mehran Yazdani, vice president, performance pigments, Sun Chemical. “The U.S. is currently the most challenging region of the world for the pigments market, primarily due to a weakened dollar, a struggling automotive market and a housing slump that led to a decline in home building and paint use.”
According to Mr. Yazdani, there are a number of issues affecting the pricing and supply issues in the market. “First, the price of raw materials continues to increase rapidly since it is driven by energy and the availability of raw materials,” he said. “Second, the cost of pigments from China has risen significantly due to the elimination of the refund of the value added tax for exported pigments. Third, environmental constraints on manufacturing in China are being exacerbated by the upcoming Summer Olympics in Beijing. As an example, there has been a 100 percent increase in export duty for phosphorus, the feedstock for manufacturing quinacridones.”
Sun Chemical has had to pass along some price increases on HPPs, and Mr. Yazdani believes more increases will be likely.
“Globally, the industry was impacted by the well publicized issues that occurred in 2007 regarding products made in China, leading to a concern about product safety,” said Mr. Yazdani. “The sudden and strict enforcement of environmental compliance by Chinese officials on local industry should address safety concerns, but has led to instability in the supply chain. In addition, the recent significant increase in raw material cost from China has impacted the overall pricing dynamic for high performance pigments.”
The HPP market is facing much the same issues as the printing ink market. Supply shortages, regulatory issues and pricing pressures remain major concerns.
“There is a tightening of supply of numerous intermediates and chemicals used in the production of organic pigments in Asia,” said Mr. McBride. “Regulatory and environmental concerns are applying the pressure and now backward integration seems to become one of the most important future challenges. The production of intermediates or the level of cooperation was not as critical for efforts in the past due to overcapacities, but will most likely attract much more attention from the pigment industry in the future.”
“As a result of increasing raw material and energy costs, BASF has been forced to increase the prices of its products, in some cases significantly,” said Mr. Chevrier. “We are seeking ways to solve this problem in dialogue with our customers. The VAT refund elimination, REACH and other regulatory issues will continue to have an effect on the pigment industry. However, BASF is well positioned to address the market with a broad range of manufacturing assets combined with a strong track record of innovation and a strong market presence. We are looking forward to the challenges as well we are the best prepared to address and benefit from them.”
“The fact that oil, metal and energy costs have risen steadily has had a major impact on prices in this market,” said Mr. Woolven. “But this is only one of the challenges facing this industry. Others include the fact that the Chinese reduced the VAT – or export rebates – given to Chinese manufacturers on the raw materials and finished goods they exported. The elimination of this incentive to export goods has had the effect of creating an incentive for Chinese manufacturers to sell their products domestically. And with the yuan separated against the dollar and allowed to float, this also has had the effect of incentivizing Chinese manufacturers to sell locally and export goods.
“Another fact that has impacted supply is for the Beijing Olympics the Chinese have been shutting down plants near Beijing to reduce pollution, as well as to divert labor to preparing for the Games,” Mr Woolven added. “The big question is what the long-term environmental control will be in China – will they revert to pre-Olympics lower standard or impose stricter environmental standards. If the latter, that could have a major impact on supply if plants are shut down for not meeting stricter environmental controls. On the other hand, stricter compliance, while beneficial to the environment, would likely result in higher prices coming out of China."
Higher raw material prices as well as the REACH legislation in Europe will have major impacts on the HPP market.
“The key number one challenge is the cost of oil and energy, which has had an impact on the entire graphic arts value chain,” said Mr. Woolven. “At Ciba we have taken a very proactive role in REACH implementation. REACH will have major impact on the entire chemicals sector since manufacturers and importers of chemical substances made in or imported into the EU in annual volumes of one ton or more must register them with the European Chemicals Agency (ECHA). REACH requires manufacturers and importers of chemical substances to obtain information on the physio-chemical, health and environmental properties of their substances and use it to determine how these substances can be used safely. Each manufacturer and importer must submit a registration dossier documenting data and assessments. If substances are not registered correctly in time, they cannot be manufactured, imported or sold.
“This could likely have an impact on prices since there is an added cost to go through the complicated process of registering chemicals as well as to ensure that all chemicals are within the guidelines of the REACH legislation,” Mr. Woolven added.
“Pre-registration for REACH is occurring now,” added Mr. McBride. “Companies using raw materials for export into the European Union must be pre-registering all raw materials that could possibly be used in the future by the European entity.”
In the face of these considerable challenges, HPPs have still managed to carve out a valuable niche for themselves. Valued for their improved performance and durability characteristics, these types of pigments can be used in a variety of applications in the ink market. According to Mr. McBride, HPP are ideal for commercial printing for exterior applications such as UV inkjet for decals and signs, or in flexo for bags containing agriculture products.
“The major graphic arts applications for HPP include outdoor applications like signs, decals for transportation, fertilizer bags and filling station forecourt items, and indoor applications where some extra degree of light permanence is necessary, such as wall and floor coverings,” said Mr. Woolven.
According to Mr. Chevrier, the most promising segments for HPP are specialty areas such as security inks for legal documents, currency, government paper and the gaming industry. “BASF is working with customers to develop innovative products for these applications,” he added.
“High performance pigments have a variety of end use graphic arts applications, especially for printing inks, digital printers and paper,” said Mr. Yazdani. “High performance pigments are used to manufacture printing inks for web offset, heatset, sheetfed, no heat news, packaging, corrugated, publication gravure and metal decorating presses. Pigments are also used in paper laminate, fine paper, specialty paper and industrial packaging.”