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The Asian Ink Market



Continued economic growth and improved living standards in the Asia-Pacific region will drive printing demand.



By Kerry Pianoforte, Ink World Associate Editor



Published October 25, 2005
Related Searches: sheetfed offset heatset ink

Although the Asia-Pacific region has shown signs of recovery after a turbulent economic time, escalating raw material prices are expected to cut into profit margins.

“The industry recovered from market turbulence in 2003 caused by the war in Iraq and SARS,” said Hisato Tanemura, Asia-Pacific group marketing director, Dainippon Ink & Chemicals (DIC). “It generally fared well during the first half of 2004. However, after mid-summer, the profitability of the industry was seriously affected by skyrocketing solvent prices caused by a spike in the cost of crude oil. Appreciation of the euro and Japanese yen also hit the industry with higher raw material costs.”

The growth of the ink industry throughout the region was the highlight of the past year.

“Overall, the printing ink industry in the Asian region, excluding India, grew by about 5 percent to 6 percent in 2004,” said Henry Leong, president, Flint Ink Asia, Flint Ink. “The main countries of growth are China and Vietnam.”

“It seems that the growth of the ink industry surpassed the growth of GDP in 2004,” said Toshiyuki Sawada, general manager international operation division, Sakata INX Corp.

“Since the major countries, India and China, are an integral part of this region, the growth of the printing ink industry fared well compared to the European and American regions,” said Coumara Radja, general manager international business and corporate communication, Micro Inks Ltd. “The phenomenal GDP growth in India and China created an atmosphere of growth in the printing and printing ink industries. The growth of the printing ink industry was almost 7 percent to 9 percent in both the countries.

According to Mr. Radja, India and China experienced the most growth. “In fact, the growth of China’s GDP in the last quarter was 9.25 percent,” he said. “India’s ability to sustain and exceed the record GDP that hovers around 7 percent has been noticed by the world.”

“Economic growth in India in 2004 was approximately 6 percent, but its printing ink industry recorded double-digit growth,” said Mr. Tanemura. “Packaging and newspaper printing were the strongest sectors.”

Aside from China and India, other nations saw strong growth. According to Mr. Tanemura, China and India enjoyed the most growth, while Thailand and Vietnam also had strong results.

“GDP growth in Vietnam last year was about 10 percent and foreign investments have increased significantly,” Mr. Leong said. “These factors are driving the rapid growth of the printing industry in the country.”

The Japanese market was a mixed bag in terms of growth. “With the Japanese economy’s recovery, the web offset market, mainly for newspaper inserts and free papers, grew slightly in 2004,” said Mr. Tanemura. “The sheetfed market continued to shrink by 2 percent to 3 percent in 2004. The liquid ink market fared relatively well,” he added.

“In Japan, commercial printing showed the best results,” said Mr. Sawada. “Metal decorating printing has decreased and on the contrary, gravure printing such as flexible packaging has increased, because metal decorating printing such as drinking cans has been replaced with gravure printing such as PET bottles.”

Overall the Australian economy has been doing well over the past year, according to Mr. Radja.

“The print industry has also been fairly stable during the year,” said Mr. Radja. “However, in keeping with the trend over the past few years, we have seen a lot of print jobs being sent overseas to more economical markets such as Singapore, Thailand, Hong Kong etc. This in turn has affected some of the mid-size printers. We have also seen some consolidation taking place with several mergers and buyouts. At the top end, the large printers have been able to consolidate their position by acquiring market share through buying out smaller printers. The medium-size printers have been under intense pressure from the muscle power of the large printers on the one side and from the cost efficiencies of the smaller printers on the other.”

“Because of the appreciation of the Australian dollar during the year, the industry lost some printing jobs overseas,” said Mr. Tanemura. “For that reason, the printing industry was stagnant in 2004. The sheetfed market suffered the most, with more than 5 percent reduction in demand.”

According to Mr. Radja, there has been a lot of pressure on ink suppliers due to intense competition, especially in sheetfed.

“The sheetfed market is dominated by DIC, Toyo and SICPA, with several other players with reasonable market shares such as Hostmann Steinberg, Sakata, T&K Toka, Micro Inks, Inctec and Flint,” he said. “SICPA divested its web business to Flint Ink. This move gave Flint Ink an opportunity to have ready access to several large contracts which SICPA was handling. The web market is basically dominated by Toyo in heatset, Flint Ink in heatset and coldset, and Coates in coldset. The ink business provides a major challenge to those who want to participate. While there is significant opportunity in both sheetfed and web markets, it is essential for suppliers to meet the stringent quality requirements as well as ensure that they gain a significant market share to have a viable business.

“The last year has also seen some changes in distribution channels,” Mr. Radja said. “Hostmann Steinberg moved from CPI to Ferag. Ferag has invested heavily into building the infrastructure to support the ink business, including employing a large number of people from Toyo. CPI has struggled to find a replacement for Hostmann Steinberg and has been involved with Hartmann and other Japanese products without quite the same success. A large portion of the sheetfed inks are imported directly by distributors or by the ink companies themselves.

“The trend towards increased automation, on the press and pre-press side have been the norm,” said Mr. Radja. “Several fully automatic computerized 10/12 color sheetfed machines have been installed, and there has been a large number of cap systems installed. On the web offset market, there has been some very major investments made for heatset and coldset presses during and after Drupa.”

Improving Standard Of Living in the Region
Economic improvements and an improved standard of living have led to a higher demand for printing.

According to Mr. Tanemura, continued standard of living improvements in Asia countries, particularly heavily-populated China and India, have resulted in significant growth for printing. “Growing exports, mainly in China, also drive the demand for printing ink,” he added.

According to Mr. Radja, there are three main factors driving growth in the printing ink market: a strong demand for packaging, growth of print media and GDP and economic growth.

China and India, with populations of 1.3 billion and 1.1 billion respectively, have experienced an increase in literacy, and consequently print media. “The rate of growth in literacy levels has been astounding, though they have a long way to go,” said Mr. Radja. “Due to the sheer size of the population, more people are exposed to print media and the number of readers and number of print media have been growing.”

According to Mr. Radja, India has more than 5,600 dailies, 15,000 weeklies and 20,000 periodicals in 21 languages with a combined circulation of 142 million. “Almost 325 languages are spoken in India, and out of them 18 are official languages,” he added. “More than 1,600 dialects are spoken.

“The growth of GDP had created a conducive atmosphere for the growth of overall printing and the printing ink industry through the growth of packaged industries, FCMG (Fast Moving Consumer Goods) industries, increased AD spending and the need for catering to the profile of the demographics which increase the number of pages of a newspaper,” said Mr. Radja.

Growth Opportunities
For ink manufacturers, there are opportunities for packaging and publication, particularly in China.
According to recent data, China’s printing industry maintained an annual growth rate of 10 percent since 1999. The packaging industry is expecting sales of nearly $100 billion in 2005, continuing its 10 percent annual growth. Newspaper readership increased, needing nearly 2.5 million tons of newsprint in 2005. The mandated change to colored school textbooks will push up demand of inks.

“In China, growth of the printing ink industry is driven by a significant increase in the packaging as well as publication areas,” said Mr. Leong. “China’s admission into the WTO has continued to promote increased exports, which in turn, has a favorable impact on the packaging industry. Growth of publication is primarily due to the increased literacy rate of the general population coupled with the increased urbanization of the rural population. For packaging in China, growth was in the region of 11 percent to 12 percent last year.”

“The Chinese economy continued to grow in 2004, and its printing and printing ink markets also expanded around 11 percent,” said Mr. Tanemura. “However, due to higher oil prices and severe competition, profitability of the printing ink industry was greatly reduced in the second half of the year.”

According to Mr. Sawada, China is the fourth largest country producing printing ink, behind the U.S., Japan and Germany. “Printing ink production, especially web printing inks including newspaper inks, is increasing so much. Gravure inks, such as flexible packaging inks, are also on an upswing.” According to Mr. Sawada, packaging, including corrugated board printing and flexible packaging, have experienced the most growth.

Printing continues to grow in the Asia-Pacific region, and for ink manufacturers, there are tremendous opportunities ahead in the Asia-Pacific.

Environmental Regulations
Although not yet as strict as Europe and North America, the Asia-Pacific region is facing increasingly tightening environmental regulations.

“Environmental regulations for factory emissions became more and more stringent throughout the region, but the standard for printing ink, VOC control, is not yet so strict except in Japan and Australia,” said Mr. Tanemura. “However, global companies such as Nestle and P&G demand local printers to follow their own standards, and for that there is growing demand for toluene-free and MEK-free inks for packaging and tobacco printing.”

“They are requiring environmentally-friendly ink such as toluene-free or MEK free gravure inks in the printing industry,” agreed Mr. Sawada.

“The Asian region, particularly China in view of the forthcoming 2008 Olympic Games in Beijing, are focusing more on environmental issues during the past couple of years,” said Mr. Leong. “We expect this trend to continue. Increasing numbers of our customers are inquiring with us on more environmental-friendly ink both for the publication as well as the packaging market segments.”

“The trend towards increased automation, on the press and pre-press side have been the norm,” said Mr. Radja. “Several fully automatic computerized 10/12 color sheetfed machines have been installed, and there has been a large number of cap systems installed. On the web offset market, there has been some very major investments made for heatset and coldset presses during and after Drupa.”

“The last year has also seen some changes in distribution channels,”

Mr. Radja said. “Hostmann Steinberg moved from CPI to Ferag. Ferag has invested heavily into building the infrastructure to support the ink business, including employing a large number of people from Toyo. CPI has struggled to find a replacement for Hostmann Steinberg and has been involved with Hartmann and other Japanese products without quite the same success. A large portion of the sheetfed inks are imported directly by distributors or by the ink companies themselves. Rieger Inks of Canada, which had a small share of the web coldset market, decided to close shop and moved out completely.


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