John Nelson, Smithers Rapra06.28.16
The Smithers Rapra report "The Future of High-Performance Pigments to 2021" anticipates a global volume market of 178,844 tons in 2016 – with an overall value of $4.76 billion (€4.33 billion). Across the next five years, this will accelerate steadily at a compound annual growth rate (CAGR) of 3%, reaching 206,921 tons in 2021 – at this time world market value will be $5.49 billion.
Market Splits
In 2016, high-performance pigments (HPPs) face a highly competitive global business environment characterized by increasingly demanding performance requirements. This is creating an impetus for producers of HPPs – like BASF, Clariant, DIC, Dominion Colour and Cappelle – to optimize excellent durability, color strength, dispersibility in a range of resin systems, chemical stability and lower solubility.
With a 54% market share, coatings remain the most significant end-use for HPPs, followed by plastics, inks and cosmetics, respectively. The fastest developing end-use segment is textiles, although it will remain at only around 2% of global consumption across the Smithers study period.
In terms of volume consumption, metallic pigments are 43% of the 2016 market – with consumption pronounced particularly in Europe – followed by pearlescent and organic HPPs, respectively.
The market is evolving against a backdrop of dynamics, some of which are common to pigment supply industry worldwide, and some that are unique to the high-performance segment. Smithers Rapra’s analysis identifies the following as the leading six across the next five years:
• Wider economic context: The HPP sector will need to negotiate the same economic mega-trends as the wider ink industry, low petroleum prices, prospects of a slowdown in growth in China, and – the as yet – undefined fallout from the UK’s decision to leave the European Union.
Market expansion will be fastest in Asia – already the world’s largest regional market. In contrast growth in second largest region, Europe will be significantly below the market average, with consumption in North America tracking the global CAGR.
• Legislative phase-outs: With the dangers of lead-based paints well known, steps to further phase-out this class of pigments will continue. This situation is well advanced in the developed world – for example, the REACH Regulation in Europe has helped close BASF’s lead chromate business.
Through the years 2016-2021 there will be a shift towards greater restriction in developing economies. This will be spearheaded by initiates like the World Health Organization’s International Lead Poisoning Prevention Week, and will lead to further market penetration of organic high-performance yellows and oranges and bismuth vanadate.
More sustainable HPPs are a future growth area, tracking wider trends in the chemicals sector. In particular this will see the evolution of more performance pigments whose production involve low or very low emissions of volatile organic compounds (VOCs) – a step supported by new regulatory programs.
The reduction of VOC emissions is being achieved by moving to waterborne coatings and powder coatings. This requires different pigment formulations – especially dispersion technologies – from those appropriate for solvent-borne applications, and requires new investment in many cases.
• Environmental interest: Pigment end users and consumers are also increasingly keen on less environmentally damaging pigment technologies that do not sacrifice color quality. This is manifesting in new product launches like Axalta Coating Systems’ new automotive tint line engineered for the Chinese market. Flexo ink users are also responding positively to the arrival of heavy metal-free ink sets and Smithers predicts further penetration across the next five years.
• Chinese policy to push ingredient prices: Raw material prices for HPPs stabilised somewhat during 2015, although in 2016 these remain high. Supply of pigment intermediates – particularly those used to produce reds and yellows – is a continued concern. Many of these materials are produced in China, and the Chinese government’s continued efforts to clean up its environment have resulted in factory closures, which has restricted output.
As supply of these pigment intermediates constricts, upward pressure on pigment prices is a possibility. Simultaneously pigment and end users are working on raw material cost reduction programs, which provides a business opportunity for HPP manufacturers if they can be competitive on the pricing of their products. Use of aluminium-based pigment will also feel the effect of a price increase, as China moves to end its policy of subsidizing smelting of this metal.
• Consumer preferences: As demand from developing world states booms, global pigment supply is having to align with consumer inclinations in these markets. In the important automotive segment, for example, there is a need to respond to the widespread preference for white vehicles, with red pigment products also forecast to increase their relative share. At the same time there will be a move away from what are regarded as harsh synthetic products to pigments that deliver softer, more natural colour effects.
• Technical innovation: The forces acting on pigment producers is leading to investment in new technologies, including:
• Organic nano-pigments, with platforms like PPG’s patented Andaro Tint Dispersion Technology, helping deliver extended portfolios of colors with the dramatic face and flop effects called for by designers and consumers. Dispersion and milling platforms that can operate with these ultra-fine pigments are also a necessary technical development that is now receiving R&D funds from the likes of Buhler.
• Cooling pigments that add the capacity to reflect near infrared (IR) radiation – as well as add color – are another fast developing segment. These HPPs are principally mixed-metal oxides. They are aligning with broader trends like environmentally sustainable construction where their reflection of IR lessens heat transfer into the interior and saves on air conditioning costs.
• Pure color pigments are in greater demand, especially those that can balance transparency and high chromatic performance.
• Interest in high-performance bio-based pigments is accelerating, driven by corporate and consumer interest in minimizing environmental impacts. This is a longer-term strategic goal and is seeing pigment firms collaborating with public and private organisations that already have experience of bio-derived chemicals.
Full mapping of these technologies and quantitative analysis of their impact on the HPP market across the next five years is given in the Smithers Rapra report – The Future of High-Performance Pigments to 2021.
Market Splits
In 2016, high-performance pigments (HPPs) face a highly competitive global business environment characterized by increasingly demanding performance requirements. This is creating an impetus for producers of HPPs – like BASF, Clariant, DIC, Dominion Colour and Cappelle – to optimize excellent durability, color strength, dispersibility in a range of resin systems, chemical stability and lower solubility.
With a 54% market share, coatings remain the most significant end-use for HPPs, followed by plastics, inks and cosmetics, respectively. The fastest developing end-use segment is textiles, although it will remain at only around 2% of global consumption across the Smithers study period.
In terms of volume consumption, metallic pigments are 43% of the 2016 market – with consumption pronounced particularly in Europe – followed by pearlescent and organic HPPs, respectively.
The market is evolving against a backdrop of dynamics, some of which are common to pigment supply industry worldwide, and some that are unique to the high-performance segment. Smithers Rapra’s analysis identifies the following as the leading six across the next five years:
• Wider economic context: The HPP sector will need to negotiate the same economic mega-trends as the wider ink industry, low petroleum prices, prospects of a slowdown in growth in China, and – the as yet – undefined fallout from the UK’s decision to leave the European Union.
Market expansion will be fastest in Asia – already the world’s largest regional market. In contrast growth in second largest region, Europe will be significantly below the market average, with consumption in North America tracking the global CAGR.
• Legislative phase-outs: With the dangers of lead-based paints well known, steps to further phase-out this class of pigments will continue. This situation is well advanced in the developed world – for example, the REACH Regulation in Europe has helped close BASF’s lead chromate business.
Through the years 2016-2021 there will be a shift towards greater restriction in developing economies. This will be spearheaded by initiates like the World Health Organization’s International Lead Poisoning Prevention Week, and will lead to further market penetration of organic high-performance yellows and oranges and bismuth vanadate.
More sustainable HPPs are a future growth area, tracking wider trends in the chemicals sector. In particular this will see the evolution of more performance pigments whose production involve low or very low emissions of volatile organic compounds (VOCs) – a step supported by new regulatory programs.
The reduction of VOC emissions is being achieved by moving to waterborne coatings and powder coatings. This requires different pigment formulations – especially dispersion technologies – from those appropriate for solvent-borne applications, and requires new investment in many cases.
• Environmental interest: Pigment end users and consumers are also increasingly keen on less environmentally damaging pigment technologies that do not sacrifice color quality. This is manifesting in new product launches like Axalta Coating Systems’ new automotive tint line engineered for the Chinese market. Flexo ink users are also responding positively to the arrival of heavy metal-free ink sets and Smithers predicts further penetration across the next five years.
• Chinese policy to push ingredient prices: Raw material prices for HPPs stabilised somewhat during 2015, although in 2016 these remain high. Supply of pigment intermediates – particularly those used to produce reds and yellows – is a continued concern. Many of these materials are produced in China, and the Chinese government’s continued efforts to clean up its environment have resulted in factory closures, which has restricted output.
As supply of these pigment intermediates constricts, upward pressure on pigment prices is a possibility. Simultaneously pigment and end users are working on raw material cost reduction programs, which provides a business opportunity for HPP manufacturers if they can be competitive on the pricing of their products. Use of aluminium-based pigment will also feel the effect of a price increase, as China moves to end its policy of subsidizing smelting of this metal.
• Consumer preferences: As demand from developing world states booms, global pigment supply is having to align with consumer inclinations in these markets. In the important automotive segment, for example, there is a need to respond to the widespread preference for white vehicles, with red pigment products also forecast to increase their relative share. At the same time there will be a move away from what are regarded as harsh synthetic products to pigments that deliver softer, more natural colour effects.
• Technical innovation: The forces acting on pigment producers is leading to investment in new technologies, including:
• Organic nano-pigments, with platforms like PPG’s patented Andaro Tint Dispersion Technology, helping deliver extended portfolios of colors with the dramatic face and flop effects called for by designers and consumers. Dispersion and milling platforms that can operate with these ultra-fine pigments are also a necessary technical development that is now receiving R&D funds from the likes of Buhler.
• Cooling pigments that add the capacity to reflect near infrared (IR) radiation – as well as add color – are another fast developing segment. These HPPs are principally mixed-metal oxides. They are aligning with broader trends like environmentally sustainable construction where their reflection of IR lessens heat transfer into the interior and saves on air conditioning costs.
• Pure color pigments are in greater demand, especially those that can balance transparency and high chromatic performance.
• Interest in high-performance bio-based pigments is accelerating, driven by corporate and consumer interest in minimizing environmental impacts. This is a longer-term strategic goal and is seeing pigment firms collaborating with public and private organisations that already have experience of bio-derived chemicals.
Full mapping of these technologies and quantitative analysis of their impact on the HPP market across the next five years is given in the Smithers Rapra report – The Future of High-Performance Pigments to 2021.