The Asian Ink Market
For ink manufacturers, the Asia-Pacific region brought the most opportunities for growth during the past year, as the area recovered more quickly from the recession.
By David Savastano, Editor
Prior to the onset of the global recession, Asia-Pacific was clearly the fastest-growing region for the printing ink industry, with China and India enjoying exceptional growth.
The Asia-Pacific region was the first to recover from the economic downturn, and is now arguably the largest ink manufacturing area. Four of the seven largest international ink manufacturers have their headquarters in Japan (DIC Corporation, Toyo Ink Mfg. Co., Ltd., Sakata INX Corp. and Tokyo Printing Ink Mfg. Co., Ltd.), and virtually every major international ink manufacturer has a stake in the region.
For ink manufacturers, aside from the economic growth in the Asia-Pacific nations, these countries are also seeing growth in their domestic printing industry, which picked up sales after a sluggish start due to the recession. For example, officials in Sakata INX’s International Operation Division said that the first quarter of 2009 was a trying time for the division, but ink manufacturers and printers have seen business improve since then. They reported that conditions for Sakata INX’s business improved in the second half of 2009, with INX International experiencing strong growth in China, and Sakata INX finding sales growth in Vietnam.
Yu Adachi, corporate communications, Toyo Ink Mfg. Co., Ltd., said that Toyo Ink saw growth in a wide range of areas.
“Sales of all mainstay products for Asia-Oceania remained weak in the first quarter,” Mr. Adachi said. “However, led by demand for offset inks and gravure inks in China and Southeast Asia, sales recovered rapidly from the second quarter. In China, given rising demand for eco-friendly products, sales of non-toluene gravure inks expanded. Also, demand for food packaging gravure inks recovered in China and Southeast Asia.”
As is the case throughout the printing industry, packaging fared better than the publication side in the region.
“Business in the region except Japan was relatively fair compared to America and Europe,” said Koji Akamatsu of DIC Corporation. “Packaging inks increased sharply, while news inks and inks for publishing slightly declined. In total of these three types of inks, the level of demand was more or less the same as the previous year. Japan saw a similar trend in the demand of each type of ink, but the total demand for ink is estimated to have been below the one in the previous year.”
Sakata INX officials noted that their company is planning to expand its existing offset ink factory in Maoming, China.
“The economy of Japan hit the bottom sometime in the period from January to March, then it started to recover gradually, and it has come up to the level of 80 percent compared to the level of 2007,” he said.
To meet increasing demand, international ink companies are looking at moves that will expand their reach into growth areas. One approach is through adding facilities; in line with its strength in the region, Sakata INX plans to expand an existing factory in Maoming, China and its gravure facility in Indonesia this year.
Another approach is through setting up joint ventures. In a key move that occurred in October 2009, DIC and Dai Nippon Printing formed a new joint venture called DIC Graphics, in which DIC merged its domestic printing ink business with the same business of Inctec Inc., the eighth-largest ink manufacturer globally. DIC Graphics carries commercial rights, employees and facilities of Inctec and DIC, which invested 66.6 percent to the joint venture, so it has become one of DIC’s subsidiaries. Through this transaction, DIC saw an increase of sales.
“The strength of Inctec was tailor-made adjustment for customers,” Mr. Akamatsu said. “This strength has become a part of DIC Graphics. This will help us to win more satisfaction from customers. Regarding reductions of cost, we will consolidate procurement as well as integration of plants, branches and business branches.”
The two key countries in the Asia-Pacific region are China (which will be the subject of a special report in anupcoming issue of Ink World) and India. Mr. Akamatsu said that India saw the best growth in the region, supported by the strength of its economy, which had 6.1 percent growth in 2009.
Mr. Akamatsu added that India is an important growth area for DIC.
“India has a large population and has been growing economically,” he said. “DIC has had numerous operations in India for a long time, and has established good business there.”
Toyo Ink has also emphasized its operations in India.
“The Toyo Ink Group continues to actively develop its printing ink business overseas, in Europe, the U.S. and rapidly growing countries and regions in Asia,” Mr. Adachi said. “We consider India as well as China and Southeast Asia as priority regions where we’ve taken active initiatives to step up cooperation with local companies and expand our network of manufacturing and sales bases. Through these efforts, in 2008, Toyo Ink opened an offset ink plant and established a sales company in a joint venture with a local firm in India. We also began marketing gravure inks in the country.”
Sakata INX officials added thatthey see India as an important country in terms of sales and as an exporter to the Middle East and Africa.
Key Markets and Trends
When it comes to important market segments, packaging printing is the leader, as Asia-Pacific printers enjoy a large export business. Officials at Sakata INX said the company has adjusted its strategies for the packaging printing industry, and added that this business decision has been instrumental in such countries as India, Indonesia and Vietnam.
“The key markets in the region are packaging inks, since the markets are resistant to economic fluctuations and also sustainable in growth,” Mr. Akamatsu noted. “We will also pursue high-end markets of publishing and news inks markets.”
Aside from the growth in packaging, Mr. Adachi said that Toyo Ink anticipates growth in UV and eco-friendly inks and coatings.
“In the emerging markets of Asia, Toyo Ink expects to see growth in printing and packaging, with high growth for UV inks,” Mr. Adachi said. “In addition, the need for eco-friendly products will only increase over time as regulations tighten and public awareness of environmental issues continues to grow. Through our R&D activities, Toyo Ink is committed to developing new and innovative products capable of delivering high performance while effectively reducing VOCs and employing renewable sources.”
Mr. Akamatsu noted that DIC Corporation also has placed great importance on the environment.
“Emphasis on the environment has been becoming preeminent gradually in the region,” Mr. Akamatsu said. “We are providing more vegetable oil-based inks and water-based gravure inks.”
Sakata INX officials noted that their company established a commitment to developing environmentally friendly products nearly 10 years ago. With the ISO 14000 series, the company is able to supply these kinds of products to customers in Asia.
Outlook for the Region
The headquarters of DIC Corporation.
Toyo Ink Mfg. Co., Ltd., right, are both located in Tokyo, Japan.
“Although the region except Japan will still see increases in demand, we will not pursue volume, but will pursue the profitable markets like packaging inks and high-end markets in publishing and news inks,” Mr. Akamatsu said. “In Japan, news inks and publishing inks will decline but the demand for packaging inks will remain firm. Therefore DIC will pursue packaging ink markets as well as cost reductions. Packaging inks need much expertise such as synthetic resins. Therefore we are very much at an advantage because we are a very skillful manufacturer of synthetic resins.”