The Asian Ink Market
Despite the impact of higher raw material prices, declining exports and the global recession, the Asia-Pacific ink market still enjoyed growth during the past year.
By David Savastano
The region’s expansion has been fueled largely by the growth of many of the leading nations in the region, most notably China and India.
However, while there was some growth in 2008, not all the news for the ink industry in the Asia-Pacific region was good. Higher raw material costs had a significant impact on margins for ink manufacturers worldwide, and the Asia-Pacific region was no exception. Exports from the region were also adversely impacted, and the worldwide recession still affected printers in the region.
“The Asia-Pacific region was strongly impacted by the global recession, and the collapse of the print and graphic arts industries in 2008 was dramatic,” said Take. Watanabe, corporate communication, Toyo Ink Mfg. Co., Ltd. “The China market was affected by the economic downturn in advanced countries and a drop in demand for print products for export brought about by the sudden jump in the value of the yuan. In addition, a spike in feedstock costs in the latter half of 2007 greatly exacerbated the situation. India’s high economic growth rate has slowed somewhat, but the market for print products is taking shape to a certain degree, raising demand expectations.”
“With the growth in GDP, printing demands and ink sales for domestic generally increased except for Japan and Australia, but the demands for export decreased drastically,” said Hiroyuki Kurosu, graphic arts overseas administration for DIC Corporation. “Because of the sharp increase in oil prices, the profit margin was severely squeezed.”
On the positive side, Mr. Kurosu said that India and Pakistan have shown the best growth, but Japan and Australia have suffered from the recession.
“With the economic recession, the print industry in Japan and Australia have been suffering serious downturns in business,” Mr. Kurosu added. “And due to the serious recession of developed countries, printing demand for export items has been decreased drastically, especially in China.”
“Regarding the Asian region, the printing market kept going well during the first half of the year, but since the fourth quarter of 2008, the situation got worse due to the economic crisis,” said Yuichiro Nishikawa, international operations division assistant manager for Sakata INX. “As a result, it has been slightly increased in total.” Mr. Nishikawa added that Indonesia has enjoyed particularly strong growth, but that overall, sales have remained stagnant so far in 2009.
The global recession also impacted Toyo Ink.“I’d be hard-pressed to find a country within the Toyo Ink Group that has fared moderately well through the recession,” Mr. Watanabe said. “China, relatively speaking, has managed to come away better than most due in part to the effects of the Beijing Olympics and a growing economy.As a high percentage of the Toyo Ink Group’s business operations are in Japan, the effects of the domestic recession have taken a toll on the group’s bottom line.”
Mr. Watanabe said that in Asia, print products for export account for a relatively large percentage of the printing industry’s production value.
“Thus, the rapid meltdown of economies in advanced nations resulted in an ongoing string of bankruptcies of small- and medium-sized printing companies,” he said. “Even with large enterprises, there were protracted periods where production lines were not operating to full capacity.”
India is a key area of opportunity for ink manufacturers. Sakata INX is building a new factory in Panoli, India to produce both offset inks and gravure inks, while DIC is planning on building a large-scale factory for offset ink and a plant for adhesives in India.
Growth Markets and Trends
Even in the down economy, there are plenty of key growth areas for printing ink manufacturers. As is the case worldwide, packaging remains a stronger market, according to Mr. Nishikawa.
“The liquid printing ink market is showing slightly better results than the offset ink market in Asia,” Mr. Nishikawa noted. “In Japan, both offset and liquid ink markets have tended to decrease.”
Mr. Kurosu pointed to liquid inks and adhesives for packaging in India as areas of strong growth.
The environment remains a major area of interest as well as opportunity in the Asia-Pacific region.
“Toyo Ink will further intensify its initiatives in eco-friendly product/process development as a key growth driver and is promoting business activities in this area,” Mr. Watanabe noted. “This strategic focus is not limited to the Asia-Pacific region, but we are focusing our group efforts in developing green solutions primarily those centered on offset systems such as UV-curable and vegetable oil-based inks as well as water-based offerings for packaging applications.”
“Environmental regulations have begun to tighten in the Asia/Pacific region, and because of that, demand for environmentally-friendly inks, such as non-toluene/non-MEK liquid ink, water-based gravure ink and VOC-free offset ink have gradually increased in recent years, especially in China,” Mr. Kurosu said.
Food packaging is also coming under scrutiny.
“Recently, due to heightened awareness in food packaging safety, there is a growing need for the development of safe packaging materials that address food health and safety issues, such as the elimination of residual and specific solvents,” Mr. Watanabe noted.
Even prior to the recession, the Asia-Pacific ink market had become the fastest-growing region worldwide, and it is likely that its growth will continue in the coming year.
“We expect Indian and southeast Asia market will grow much more,” Mr. Nishikawa said.
Mr. Watanabe said that Toyo Ink Group is increasing its focus on logistics in order to best serve its customers.
“The Toyo Ink Group is expanding our operations under the strategy of ‘local procurement, local employment, local production and local sales,’” Mr. Watanabe noted. “This initiative is not restricted to our operations in the Asia-Pacific, but is part of a comprehensive plan to control logistics-related costs while meeting the local needs of our customers.”
Mr. Kurosu said that DIC Corporation anticipates that the recession will continue at least through this year, but when the economy does improve, China and India are poised for even stronger growth.
“The economic recession will continue until the end of 2009 at least,” Mr. Kurosu said. “If the economy climbs out of recession, with the economic growth in China and India, two of the most populated countries in the world, demand for printing ink in Asia-Pacific region will continue to grow. But high raw material prices, especially for solvents, and consolidation in printing industry will affect income margin for the industry. Because of that, consolidation in printing ink industry, especially in China, will be active.”