The Asian Ink Market

By David Savastano, Ink World Editor | 09.09.05

China and India are the main drivers in this fast-growing region, which is drawing increased attention from ink companies

Traditionally, the Asia Pacific region has been a key center for printing ink manufacturing. Li-Hur Soon and Krithika Tyagarayan, Frost & Sullivan chemicals analysts, industrial technologies, estimate that the printing ink market for Southeast Asia and Australia is more than $500 million, with a volume of approximately 130,000 tons. In particular, Japan is the home for five of the 10 largest international ink companies.

However, it is essential to note that the region is far from homogenous. There are areas of tremendous growth such as China, India and Vietnam and major centers for printing such as Japan and Australia, while other countries barely register in terms of printing.

Even among the growing nations, leading printing processes vary, and radiation curing is growing at different rates in these nations.

In reality, the Asia Pacific region is the center of many different nations and cultures, and it is home to the fastest-growing economies in the world today. For printing ink companies, expanding operations into the region is an opportunity that deserves attention.

A Look Back at The Past Year
While the economies in most of the rest of the world struggled in 2002, the Asia Pacific region fared better, with China and India the primary drivers for growth.

“Flint Ink India/Pacific did well in 2002,” said Damian Johnson, president, Flint Ink India/Pacific. “Asia sales exceeded budget, but were adversely affected by the strong U.S. dollar. We have expanded our presence in the regions and are on target for 2003.”

“Generally, the Asia Pacific region made good progress compared to the previous year,” said Kazuo Sakuma, general manager, international operations director for Sakata Inx.

Still, the growth was not as large as years gone by.

“On the whole, the Asia Pacific region has fared relatively well, either growing or at least not falling behind,” said Helmut Unkel, director, H. J. Unkel (China) Limited.

“Due to the worldwide recession, the growth in printing in the Asia Pacific region in 2002 was lower than 2001,” said Hisato Tanemura, group marketing director, DIC Asia Pacific Pte. Ltd. “Growth could be lower than 3 percent in quantity, but the price drop was more, so the market was almost even. The presence between big players and small ones in the market has been increasing, and some companies have expanded their business with special capabilities such as additional value, while many printers and distributors have closed.”

Exports did decline a bit in 2002, which impacted the industry.

“The ink industry was affected by the slowdown of exports toward the end of the year, while production for domestic usage fared quite well, especially gravure inks for packaging,” said Alexander Sieber, head of business unit, printing industries for Clariant GmbH.

For the printing and ink industries, growth varied by country, although China remained the leader in terms of growth.

Among the leaders for the production of Flint Ink’s Chinese news ink plant in the Daxing area of Beijing are, from left, Mr. Shu from the Daxing Industrial Area Management Office; Laura Meng, translator for Kevin Cebulskie; Kevin Cebulskie, project director; Henry Leong, president, Flint Ink Asia; and Lawrence Tan, project manager from the engineering services company.

“For Asia, 2002 was mixed,” said Henry Leong, president, Flint Ink Asia. “Countries such as China, South Korea, Malaysia and Vietnam experienced reasonable to good GDP growth. Definitely the country with the most growth last year and also forecasted for the next five to eight years is China. Vietnam is an emerging economy and poised for strong growth in the next few years.

“On the other hand, other Asian countries such as Japan, Taiwan, Indonesia, Philippines, Thailand and Hong Kong are definitely showing signs of economic slowdown and a few of them are even entering into recession,” he said.

“Next to China, India, Indonesia and Vietnam showed the biggest growth while countries like Malaysia and Singapore, where export is more important, were lagging behind,” Mr. Sieber said.

“China had more than 10 percent growth, but other countries could not achieve the same level as before,” Mr. Tanemura said.

“I believe China has shown the most growth,” Mr. Unkel said. “Thailand has emerged strongly since 1997 and Malaysia continued to manage very well. Perhaps Indonesia and the Philippines did not register much upward movement, but we are hopeful this will happen in 2003.”

In the Australia and New Zealand area, Flint Ink’s acquisition of of SICPA’s coldset and heatset operations will provide Flint Ink with added sales and offers customers a new supplier.

“The acquisition has added to Flint Ink’s market share in Australia and New Zealand and provides customers with the alternative of dealing with the world’s leader in ink technology for newspaper printing,” Mr. Johnson said.

According to Mr. Sieber, the pigment industry’s results also varied by country.

“The pigment-producing companies in India fared differently from company to company,” Mr. Sieber said. “All in all, Clariant/Colour Chem, Heubach, Sudarshan and Mehgmani did very well, while the rest were more or less struggling. In Korea, the pigment industry is losing competitiveness due to increased environmental and labor cost and the stronger won. The Chinese pigment producers are also facing increasing environmental and labor costs.”

Mr. Sieber said that vast overcapacity is leading to difficulties, and he anticipates that consolidation will occur in the coming years. “It is expected that a consolidation of the industry will take place in the future,” he said.

China Continues Its Economic Growth
With China being the fastest-growing economy in the region, major ink manufacturers are investing heavily in the nation. Toyo, Sakata, DIC and Flint Ink all have significant operations within the country.

In particular, Mr. Soon and Ms. Tyagarayan noted that DIC reportedly hopes to increase its Asia Pacific printing ink market share to 35 percent in the next five years by boosting production efficiency and possibly building new plants. The company identifies China and India as its top growth markets to expand its current 23 percent market share in the region.

Flint Ink has begun a joint venture with four Beijing newspapers – the Beijing Youth Daily, Economic Daily, Workers Daily and Army Daily – to build a news ink plant in the capital city. The company has broken ground and construction is on schedule.

“The Beijing project is proceeding according to plan,” Mr. Leong said. “We are now entering the actual construction phase on a site in the Daxing area of Beijing. The original target of year-end 2003 completion of the facility remains unchanged.”

Mr. Soon and Mr. Tyagarayan believe that a wide variety of influences will further drive growth in China, including China’s entrance into the World Trade Organization (WTO), greater liberalization of the media and distribution and competition in the media industry. They also predict that package printing will continue to grow by 12 percent annually during the next 10 years.

“China continued to grow at a rapid rate of about 7 percent to 7.5 percent,” said Mr. Leong. “The printing industry in China is even exceeding GDP growth. Publication grew at about 8 percent to 10 percent while packaging experienced growth of about 12 percent. “The main fuel for this growth in China is the ascension of China into WTO, the urbanization of rural population and preparation for the 2008 Olympic Games in Beijing,” Mr. Leong added.

“In China, the capacity of ink production is 25 million tons per year,” said Mr. Unkel. “China is the sixth largest maker of ink in the world. It takes 6 percent capacity of production in the world. The market amount is 5 billion RMB per year in China.”

As for specific market segments, Mr. Unkel said offset remains the largest, with 40 percent to 45 percent of the market and growth of approximately 5 percent annually.

Total demand for relief printing ink is going down, but the demand of flexo printing ink is rising about 5 percent per year. The gravure printing ink market remains stable, while the demand for silk screen printing ink is trending to rising. Mr. Unkel added that demand for alcohol solubility ink and water solubility ink is rising fast.

“Perhaps the fastest growing areas in China are ink jet inks and the whole gamut of offset printing, from simple news inks to high-gloss sheetfed or coldset web offset inks,” Mr. Unkel added.

Mr. Soon and Mr. Tyagarayan noted that Chinese officials are emphasizing developing top grade and fine package printing products, increasing the additional value of products and meeting the needs of home market and export. To do so, Chinese officials stress that the printing industry must consolidate and develop existing offset printing ability, increase gravure printing, screen printing, ink jet printing and curve surface printing, develop flexo printing and improve post-press integration and technology.

The environment is becoming a concern in China, and Mr. Sakuma said that environmentally-friendly inks are of interest to Chinese printers. “Our export of Japanese sheetfed offset inks which are environmentally- friendly had significant increases,” Mr. Sakuma said.

Japan’s Ink Industry
According to Ink World’s 2002 International Top Companies Report, Japan is the home for five of the top 10 printing ink manufacturers, led by Dainippon Ink and Chemicals (DIC), the Tokyo-based parent of Sun Chemical and the world’s largest ink company with $3.8 billion in sales.

Toyo Ink Mfg. Co., Ltd. and Tokyo Printing Ink are also based in Tokyo; Sakata Inx Corporation is headquartered in Osaka, and Inctec is based in Yokohama.

As for the domestic market, it remains mired as the Japanese economy continues to suffer from recession.

Dainippon Ink & Chemical’s technical center in Qingdao, China.

“Our sales quantities in the Japanese market were slightly increased in spite of the recession-afflicted Japanese economy,” Mr. Sakuma said. “However, unit prices remained roughly flat.”

Mr. Soon and Mr. Tyagarayan noted that prices of printing inks have been declining over the years in Japan, and they added that smaller companies in Japan are under threat as margins wear thin and more sophisticated digital technology sees higher growth.

Outside of Japan, DIC, Toyo and Sakata Inx are all involved in a number of major markets in the region, particularly in China.

“As the Japanese economy is stagnant, most of the Japanese companies have ventured overseas and see greater growth from neighboring countries such as China,” the Frost & Sullivan analysts reported. “For example, Dainippon is targeting India and China.”

Recent Trends in the Asia Pacific Ink Industry
As is the case throughout the ink industry, competition remains fierce even as raw material prices rise.

Mr. Soon and Mr. Tyagarayan pointed to several trends in the region, including the rising price of raw materials which is forcing hikes in printing inks prices.

They also noted the increased competition in Southeast Asia due to the liberalization of regional market under AFTA in 2003, with more new market entrants and lower prices due to lowered tariffs and imports from China, Taiwan and South Korea. In addition, with the lack of environmental regulations restricting growth of certain product segments, conventional solvent-based inks remain more popular due to lower prices.

Mr. Tanemura also noted that stronger competition is causing ink prices to fall in the region.

“Prices are declining in Japan, China, South East Asia, South Asia and Oceania due to more players and less market growth,” Mr. Tanemura said.

One area of particular interest is the increased use of color in newspapers.

“There is a major push for color in news ink markets that is outstripping capabilities,” said Mr. Johnson. “Significant investment in press equipment is underway.”

“In Hong Kong, for every kilogram of black used, there is on an average two to three kilograms of color usage,” Mr. Leong said. “In China, black used to be 70 percent to 80 percent of usage; it is now 50/50 black/colors.”

Mr. Leong noted that heatset presses, once non-existent in China, are now prominent.

“The latest technology presses are emerging in the Chinese market in all printing sectors,” Mr. Leong said. “Heatset printing continues to grow very rapidly in preparation for the Beijing Olympics as well as the 2010 World Expo in Shanghai. Three to four years ago, there were zero heatset presses in China; today there are at least 50 to 60, with many more on order.”

As the equipment capabilities advance, other challenges arise. As is the case in the U.S., there is an immediate need for experienced printers to run the presses.

“Demands for technical service support is increasing in all segments,” Mr. Leong said. “Flexographic printing tops the list as there is definitely a limited pool of experienced flexo printers in the region, as gravure has been for many years the leader in packaging segment.”

Printers are also searching for inks that can handle more applications.

“Converters are requesting or working towards consolidation of ink systems that are capable of delivering a wider variety of applications,” said Angelo Spano, marketing manager, Flint Ink India/Pacific.

Mr. Soon and Mr. Tyagarayan noted that trends differ from nation to nation. For example, the offset ink market in Australia is moving toward premium quality and environmentally safe ink.

They also estimate that approximately 10 percent of all inks are UV cured inks and that is growing, due to advantages of lesser drying time and high quality of appearance. Alcohol-based inks are also growing in popularity, while Indonesia is still using mostly petroleum-based inks. At Sakata Inx, sheetfed offset has been a highlight.

“In the Oceania region, our Japanese sheetfed offset inks were big growth areas in 2002,” Mr. Sakuma said.

Environmental Issues
Formulating environmentally-friendly products remains a significant area of interest. Environmental regulations are tightening in many countries in the region, and some printers are having a hard time meeting those changes in the tough economic climate.

“There are some environmental issues on ink and printing, but the economic situation has not allowed printers to go in that direction,” Mr. Tanemura said.

Still, ink companies continue to work on products to help meet these new standards.

“Our Japanese offset inks are environmentally-friendly inks and the gravure inks for flexible packaging printing are toluene- and MEK-free and have already been launched in the Japanese market,” Mr. Sakuma said.

“There is increasing demand for packaging gravure inks which are still based on toluene,” Mr. Sieber said. “Toluol-free NC-inks are gaining market-share at bigger multinational packaging companies but from a very low level. Also UV-curing inks are gaining popularity, but so far the vast majority of these inks are being imported.”

Ultimately, these stronger regulations will be put into effect.

R&D is an important part of Dainippon Ink & Chemicals’ efforts in the Asia Pacific region. (Photo courtesy of Dainippon Ink & Chemicals/Sun Chemical Corporation.)

“The environment is an issue as soon as governmental regulations apply, be they from inside the country or indirectly through export demand, and while this has not yet impacted on China, we can see it coming down the road as it has in the paint field,” Mr. Unkel said. “Non-VOC and water-based inks are in every ink maker’s mind and labs are experimenting in their labs to be ready when the business comes.”

In Malaysia, water-based flexo is quickly growing and replacing gravure inks in the process, although gravure inks still hold the majority, according to Mr. Soon and Mr. Tyagarayan. They said that environmental and health concerns are also driving the replacement of petroleum-based inks by water-based inks in Philippines, and in China, there is a greater awareness toward environmental friendly processes.

Leading Printing Processes
Dominant printing processes vary by country, and ink companies work hard to identify opportunities.

“The processes vary depending on the market segment,” Mr. Spano said. “In the India Pacific region, the dominant processes continue to be offset and flexo, with some gravure capability. The segment that has shown consistent growth is packaging, which is dominated by flexo, and it has made significant gains in quality and application of end product.”

“There are significant growth opportunities for news ink in the India/Pacific region,” Mr. Johnson added.

As is the case in the U.S. and most of the rest of the world, Asia Pacific publication printers primarily opt for offset inks.

“Offset definitely dominates the publication sector in Asia,” Mr. Leong said. “There’s virtually no publication gravure in the region, maybe just a couple of isolated presses in Japan, but I cannot confirm that.”

According to Mr. Soon and Mr. Tyagarayan, offset inks are generally used in the publication and commercial sector, and they added that the offset inks sector can further be segmented into sheetfed and webset inks. Sheetfed offset technology uses substrates that are fed one sheet at a time, rather than continuously fed using rolls of substrates, as with the webfed systems. Sheetfed offset inks support book and magazine publication while webset inks support the newsprint market.

Meanwhile, on the packaging side, liquid inks are more popular.

“In packaging, the market is still very much on gravure, although flexo is quickly catching up,” Mr. Leong said. “Demand for inks are rising rapidly, in particular for toluene-free systems, especially in packaging.”

According to Frost & Sullivan, liquid flexo and gravure inks sector is used more by the packaging industry, primarily for printing paper and board, flexible plastic and a variety of other specialist substrates. Packaging is the largest application area for printing inks in Southeast Asia and Australia on the whole.

Mr. Soon and Mr. Tyagarayan reported that in Southeast Asia, excluding Singapore and Australia, the leading processes are liquid flexo and gravure inks, which shows that the highest growth is driven by the packaging industry. In Singapore, offset is the leading process.

Gravure has shown strong growth in parts of the region. “The most dominant process in growing markets is gravure, with 5 percent growth,” Mr. Tanemura said. “News used to be a growth area, but due to the decline in advertisements, the number of pages has dropped.”

Mr. Unkel also acknowledged the varied processes used throughout the region. “We find it difficult to identify a dominant process: flexo is ‘big’ in volume but not so big in value. Given this area’s huge population and irresistible export performance, everything that has to do with packaging and printed papers finds a ready market,” he said.

Outlook for 2003 And Beyond
There are many opportunities for growth in the Asia Pacific region, and ink companies are investing in operations, particularly in China.

Mr. Soon and Mr. Tyagarayan believe that China will command the most attention, and point to the Flint Ink’s joint venture to manufacture printing ink in Beijing, China in 2001. They foresee a growth of more than 7 percent in line with the growth of China’s economy (7.3 percent GDP growth).

“We expect 2003 to continue the growth we have seen in previous years,” said Mr. Johnson. “Despite the wider global economy, the region continues to perform well in all market segments. Our most recent acquisition of SICPA’s coldset and heatset business will also add a further strength to our local market presence.”

“Japanese markets will still be slow, and environmental issues are required gradually by customers,” Mr. Sakuma said. “Our focused strategy is to start ink production at our Chinese plant.”

Still, there are potential pitfalls in China, especially with the recent outbreak of SARS.

“The ‘two wars’ in the world today – U.S.-Iraq and SARS – are really having a significant impact on the economic growth in all countries in Asia, including China,” Mr. Leong said. “For the first quarter 2003, we have seen publication holding its own and in some countries doing better, while packaging has suffered. Most countries have revised their GDP growth rate for the year downwards, and the printing industry will definitely be affected.”

“With the war and SARS it can only at this point be flat in most countries, and also the growth driver China will be struggling to achieve the expected growth rates of plus or minus 8 percent,” Mr. Sieber added.

Digital printing and quality are also on the rise in the region.

“In China, there is greater than 20 percent growth in ink jet inks – mainly solvent-based/pigment-based for outdoor use – which is another trend,” Mr. Sieber said.

“Due to the continuing expansion in packaging for export as well as for local demand and the fact that it did not in any way diminish the need for printed paper, the outlook in this high-population area appears to be excellent for inks and printing,” Mr. Unkel said. “Perhaps the main issues we see are digital printing growing rapidly. Quality concerns continue to be addressed seriously, with more and more factories applying for and obtaining ISO and TQM certification.”

Future Opportunities
There can be little doubt that the Asia Pacific region presents an incredible array of opportunities for the printing ink manufacturers, many of whom have already established operations in the region.

As printers install more state-of-the-art equipment and flexo and radiation curing make more gains, there will be greater potential for growth for the ink industry, and the companies that are aggressively moving into the region will be best positioned to share in those opportunities.