The sharp economic downturn in the latter part of 2008 added greater uncertainty to the market, as customers worked their way through inventory and overall demand declined.
Meanwhile, heightened interest in “green” products drove interest in environmentally friendly products. Meanwhile, ink manufacturers are looking for new ingredients to drive innovation and differentiation.
As a result, resin manufacturers are navigating their way through a series of unique challenges.
“Our industry faced significant challenges in 2008 and 2009,” said Rick Krause, BASF business manager – printing & packaging in North America. “The dramatic raw material cost increases of 2008 significantly eroded profitability and accelerated some of the company restructuring and supplier consolidations that were already underway. The subsequent economic downturn further hastened the contraction of industry and feedstock capacity.
“Fewer suppliers are able to devote dedicated resources and business units to the graphic arts industry,” Mr. Krause added. “Yet it has been encouraging to see those companies dedicated to the future continue with their commitment to a healthier industry regardless of some of the short-term pain we are experiencing.
“The dynamics of the industry have brought about change for our business,” Mr. Krause said. “As in the past, BASF continues to provide Joncryl resin products for printing and packaging applications for our customers’ new product developments. Today, product introductions and developments at BASF have accelerated to help alleviate some of the gaps that have emerged with the departure of more suppliers that were previously dedicated to the graphic arts industry.”
“Between Q4 2008 and Q2 2009, we experienced a rapid decline in demand as a result of the global recession,” said Chris Halvorsen, global marketing manager for Hexion Specialty Chemicals. “The industry is going through very challenging times trying to adjust to the current market conditions and to understand where the market will go post recovery, whenever that happens.”
Bob LieBerman, product group manager, dimers & resins for Cognis Corporation, noted that even the packaging ink side of the business was not immune from the recession.
“In previous economic downturns, the packaging segment has typically fared well, seeing little impact to overall sales,” said Mr. LieBerman. “However, in this slowdown, we are seeing a significant slowdown in packaging resin demand.This is a result of consumers buying less, but also by the impact of packaging getting smaller and the use of less packaging. All of these items contributed to less overall resin demand in 2008 and continuing in 2009.”
Ivo Lansbergen, business director adhesives & graphic arts for DSM NeoResins+, said that until the end of Q3, the economic downturn was hardly noticeable and business was growing steadily. “Early in Q4, the first signs of slowdown were becoming noticeable in our regular business; demand went down in Q4 and rebounded in the first quarter,” Mr. Lansbergen added. “The primary reason for the lesser demand was de-stocking. Due to DSM NeoResins+’ innovation capabilities, the successful launch of a couple of new products in the recent past and the extra growth this created, DSM NeoResins+ has been able to dampen the effects of the economic downturn.”
For ink manufacturers, consistency is critical when they look for resins.
“Resins and polymers are the binding force of what holds an ink or coating together,” Mr. Krause said. “They are critical ingredients that enhance the color, stability, gloss, drying speed, resolubility and resistance properties of an ink or coating. Ink and coating companies capitalize upon their formulating expertise to achieve the right balance of properties and applied cost based upon the portfolio of polymer and resin products we offer.
“Resin chemistry provides many of the ink performance characteristics,” Mr. Halvorsen said. “For high speed web offset and sheetfed inks, it’s all about water balance, and in the case of heatset, better solvent release for more energy efficient ink formulations. Once the properties and specifications of a resin system are confirmed, it is critically important to produce resin with a high degree of consistency for overall reliability.”
“Everyone is looking for cost reductions to help offset the competitive environment we are in today,” Mr. LieBerman said. “But cost isn’t everything. We continue to work with key industry leaders to develop value add/high performance resins particularly for the packaging lamination segment, where the expansion of flexible packaging is putting higher demands for performance on the inks and ultimately on the resins.”
Due to increased environmental awareness, water-based technologies are receiving more attention from ink manufacturers.
“The key properties have not changed substantially other than that we have noticed an increased interest in water-based polymers, a key technology of DSM NeoResins+,” Mr. Lansbergen reported. “The number of inquiries regarding food contact has increased as well, an area in which DSM NeoResins+ – part of Royal DSM with its unique competences across health, nutrition and materials – can provide added value to its customers.”
Raw Material Costs
Raw material prices have been a major concern throughout the ink industry supply chain, and the resin business has been no exception. The dramatic price increases in key feedstocks due to massive increases in crude oil prices impacted pricing and availability, and while crude oil prices have slumped until recently, so has demand for products.
“After a period of very volatile movements, we are experiencing relative stability but with an upward trend: raw materials have slowly but surely been increasing again on the back of increasing oil prices,” Mr. Lansbergen said.
Mr. Halvorsen noted that volatility in raw material pricing and demand is achallenge for the resin industry.
“Over the past several years, we have experienced big swings in the cost of critical raw materials,” Mr. Halvorsen said. “Most recently, commodity prices have declined somewhat as a result of the economic downturn. The only constant seems to be volatility as a result of demand changes.”
“Key raw material shortages in 2008 as well as petroleum costs did impact the industry in 2008, which resulted in significant price increases in the past but are less of an issue in 2009 as a result of the economy slowing down,” Mr. LieBerman noted. “There are still some products where costs are a concern and we are working to minimize these.”
Mr. Krause said that feedstock costs continue to be a critical cost driver for the resin industry.
“A dramatic decline in demand coupled with already thin operating margins has forced some feedstock suppliers to shutter operations,” Mr. Krause said. “Further, many companies are struggling to provide dedicated resources to the printing industry. The supply and demand of materials are also critical elements. Permanent shutdowns may affect available capacity in the future when economic conditions improve. Ironically, the economic improvement we all seek may generate increased demand beyond available capacity and add to future raw material cost pressure.”
The Resin Industry
On top of the economy, resin manufacturers are facing a host of other challenges. Mr. Halvorsen noted that sustainability and environmental concerns are areas where resin manufacturers are focusing R&D efforts.
“Providing improved and more sustainable product chemistry is our responsibility to support the needs of the printing industry,” Mr. Halvorsen said. “The printing industry needs to demonstrate progress towards more sustainable and greener processes and chemistries. As an important global resin supplier, we will be offering some very interesting new products to support this trend.”
Mr. LieBerman pointed to overcapacity and differentiation as being two important challenges for resin manufacturers.
“With demand being down, there is too much capacity in the market to service what remains, so one key area will be cost control,” said Mr. LieBerman. “Differentiation versus competition and bringing value to our customers will be another key to future success and survival.Key to this is continued product innovation with a clear focus on performance to meet the demands of the future.”
Mr. Lansbergen emphasized the importance of differentiation and innovation.
“As costs are becoming increasingly important in the packaging market and price pressure is increasing, ink manufacturers are looking for ways to differentiate,” Mr. Lansbergen noted. “DSM NeoResins+ has noticed an increased interest in our innovative product lines. As a committed and dedicated player in the graphic arts market, DSM NeoResins+ has increased its innovation power over the last few years to generate the new products for tomorrow. Examples are NeoCryl A-1125, a water-based acrylic resin suitable for film printing, and NeoRez U-430, our latest chlorine-free alternative for vinyl copolymer for lamination printing. Environmentally friendly and food safe productswill be the primary focus for future product development.”
The Coming Year
Even as the global economy continues to remain sluggish, resin manufacturers are optimistic that better days lay ahead, particularly when the economy picks up.
“Over the next 12 months, we will see new products and new processes which will benefit the printing industry,” Mr. Halvorsen said. “The challenges will be significant given the uncertainty of the markets, but the focus on improved and more efficient products will provide some excitement.”
“The remainder of 2009 will be challenging and we do not foresee any significant improvement,” said Mr.LieBerman. “However, based on recent feedback from our customer base, 2010 may be a little brighter.”
Mr. Lansbergen said that DSM NeoResins+ expects market conditions to improve further, although some resin and ink companies may be in danger.
“DSM NeoResins+ is convinced that 2009 will be a year of change in the industry,” Mr. Lansbergen said. “Due to financial problems, some resin suppliers and ink manufacturers will have a hard time surviving. DSM NeoResins+ is confident that due to its strong financial position, its broad technology portfolio and the dedication to the market, there will be increased interest in our portfolio, which is meeting current and future needs of the market. DSM NeoResins+ is therefore looking positively towards the future.”
Mr. Krause said that BASF Resins is very optimistic and excited about the industry’s prospects in the months and years ahead.
“Our new Joncryl manufacturing plant in Wyandotte MI begins production this summer, marking the culmination of a significant investment and effort by BASF to support the graphic arts and paint and coatings industry in North America,” Mr. Krause said. “While some segments of the printing ink industry will not fully recover from the changes in publication, newspaper and commercial printing that have taken place, we envision the industry returning to growth in the coming months. We also envision a renewal in new product innovation and development as the industry refocuses on its need to bring sustainable value to the printing industry.”
New Resin Products
The following listing includes resin products introduced to the printing ink industry in the past year.
1609 Biddle Ave.
Wyandotte, MI 48192
Phone: (734) 324-6303
• Joncryl LMV 7034
Comments: Joncryl LMV 7034 is a low-maintenance, pH stable, water-resistant, film-forming emulsion for flexible film applications. The new Joncryl LMV 7034 emulsion provides improved printability on poly cups and flexible substrates and good lamination bonds with standard water-based adhesives. LMV 7034 will help reduce waste and downtime that results from anilox plugging and ink buildup on plates.
• Joncryl 2350
Comments: Joncryl 2350 is a styrene-acrylic emulsion that exhibits excellent print properties and ink viscosity stability at an economical cost in use. The new Joncryl 2350 imparts high gloss, clarity and holdout in inks for high end corrugated, folding carton, gift-wrap and other paper packaging applications. Joncryl 2350 enables ink manufacturers to formulate clean printing, low HAPS, low VOC inks and overprint varnishes.
• Joncryl 1610
Comments: Joncryl 1610 is a styrene-acrylic emulsion that exhibits high gloss and holdout, and excellent optical clarity in overprint varnishes. Joncryl 1610 can be used to manufacture strong, HAP solvent-free, high gloss overprint varnishes for many paper and paperboard applications. The new Joncryl 1610 is an excellent alternative for other high gloss non-film forming emulsions. Also now available is the recently updated 2009 Joncryl Printing & Packaging Selection Guide and the 2009 Joncryl LMV Users’ Guide.
Cognis Corp., Coatings & Inks Division
5051 Estecreek Dr.
Cincinnati, OH 45240
Tel: (800) 922-0605
Fax: (513) 482-5536
• Versamid PUR 1232
Comments: Versamid PUR 1232 is a nitrocellulose-compatible PU lamination resins that offers improved hardness and heat resistance.
• Versamid PUR 2011
Comments: Versamid PUR 2011 is a retort/sterilization PU lamination resin that provides excellent heat resistance.
• Versamid 760
Comments: Versamid 760 is an outdoor durable polyamide.
Hexion Specialty Chemicals
341 Highway East
Baxley, GA 31513
• Alpha-Rez 3750
Comments: Alpha-Rez 3750 is a new product developed for offset inks providing high gloss and fast setting properties. This is an excellent resin for sheetfed varnish and ink formulations which use ester solvents and soy bean oil.
• Setaprint 1009S
Comments: Setaprint 1009S is a new resin solution formulated for high speed web offset performance. The solution provides excellent ink water balance and rheological stability and low energy capability.
• Erkazit 4902, 4905 and 4908 rosin-based resinate grinding resins for publication gravure inks
Comments:This series of rosin resinate provides a new level of performance including block resistance, pigment wetting for specialty pigments and fast solvent release.
• New Alkyd Resins: Terlon 603, Terlon 613, Terlon 607, Terlon 311, Terlon 303, Terlon 307
Comments: This new line of alkyd chemistry provides high performance properties and value.
• Trionol 33
Comments: Trionol 33 offers outstanding pigment wetting properties specifically for specialty pigments.