“The effect pigments segment of the graphics arts market was certainly not immune to the global economic crisis of late 2008 and 2009,” said Aaron Hollman, global product manager – effect pigments, Sun Chemical Performance Pigments. “However, we have certainly seen an upward trend in sales in the first half of 2010. Although we are off to a strong start, there is still a high degree of uncertainty regarding demand for the balance of the year. We are cautiously optimistic about the potential for sustained growth in the second half and will continue to invest in new product development.”
“In line with the whole industry, ECKART was affected by the global economic crisis with a slump in sales starting in Q4 2008 and lasting for the whole of 2009,” said Craig Reid, global head of marketing and business development (graphic arts). “Q1 2010 saw an increase in business; however, we remain cautious that any recovery could still be a long way off.”
“There is no doubt that the graphic arts market suffered during the recession. The economic conditions over the past 18 months have probably been the most dramatic since Silberline was established in 1945,” said Dr. Andrew Edwards, director of global marketing – inks for Silberline. “It is clear that some markets for metallic effect pigments were affected more than others; automotive coatings, plastics and industrial coatings were particularly hard struck. The demand from the graphic arts and printing ink market was impacted to a much lesser extent, and growth was even seen in some areas like high quality packaging.”
The global recession had a strong impact on the graphic art business of Schlenk Metallic Pigments GmbH in 2009. “During the first half of 2010 we are seeing business return to pre-recession levels,” said Dr. Daniela von Schlenk-Barnsdorf of Schlenk.
As a result of the recession, many metallic pigment customers were more careful in their spending habits.
“The impact of the recession on metallics was rather limited,” said Judith Goodwin of Newbrook International. “However, we have found that until recently, customers ordered with somewhat less frequency and new customers tended to test more extensively so that they were absolutely sure of the end result. Also, there was more ‘just in time’ ordering, indicating that customers were hesitant to keep inventory until they had firm commitments in hand.”
“The recession created a double-digit drop in metallic sales the last two years, but we have regained these sales,” said Bill Pofahl, vice president of sales and marketing at Benda-Lutz. “Benda-Lutz does not supply finished metallic ink systems, as we view this as being in competition with some of our customers. Therefore we were able to divert our metallic raw materials to less affected markets without any major issues.”
Raw Material and Pricing Issues
Raw material prices and supply concerns continue to be volatile, and have consequently made it difficult to predict pricing.
“Raw material prices such as metals, resins and additives continue to fluctuate, coupled with a high level of uncertainty related to currency exchanges,” said Mr. Hollman. “This has made it very challenging to accurately predict end user pricing.”
“Generally, raw materials prices continue to rise and supply for speciality products can also be erratic, many of which are used in the manufacture of ECKART products,” said Mr. Reid. “ECKART’s primary aim is continuity of supply, and we are confident that, through our global infrastructure, we can continue to meet our customer’s demands.”
“Prices have a tendency to fluctuate more than in the past, but this has not had an effect on the use of metallics,” Ms. Goodwin said. “We have not experienced any difficulty meeting our customers’ demands at this time.”
“Some raw material shortages have occurred because of manufacturer’s capacity reductions implemented during the financial crisis,” said Dr. von Schlenk-Barnsdorf. “This situation seems to be resolving itself lately. One area of concern on raw materials is getting complete regulatory information needed for today’s tightening environmental standards.”
According to Dr. Edwards, many raw material prices are increasing owing to significant growth in demand as the global economy recovers, and particularly the continued growth of the Chinese and Indian economies.
“During the downturn, many manufacturers slowed or stopped production and de-stocked to reduce costs and survive the economic situation. This has resulted in a lack of supply and, as the demand has surged, prices have been forced higher,” Dr. Edwards added.
Dr. Edwards also noted that another cause of supply issues are manufacturers attempting to become greener in their approach, aiming to reduce carbon dioxide emissions and VOC content. This can also put a strain on the supply of alternative raw materials.
“Critically, oil pricing is still significantly higher than it was in 2005, although still below the record highs seen a year or two ago. This has a huge impact across industries, not only the ink market,” said Dr. Edwards.
In addition, the volatility of key metals over the last few years is a major concern, “The LME has been like a roller coaster ride for aluminum pricing,” said Mr. Pofahl. “Same as for copper. Prices were ridiculously high before collapse.”
“Both of the key metals used by ECKART – copper for bronze colors and aluminum for silver colors – have increased in cost significantly over the last five years,” said Mr. Reid. “Eckart has concepts in place to provide our customers with a transparent indication of metal price fluctuations.”
Despite the challenges of the past few years, there are a number of areas that present growth opportunities.
“There are many growth opportunities for metallics in the graphic arts industry if companies are willing to look beyond the day-to-day and consider the wider picture of both the decorative and functional possibilities of metallic pigments and inks,” said Mr. Reid.
“ECKART invests heavily in the search for new markets and has many projects on-going as the leading supplier of effect pigments and inks to the global graphic arts market,” Mr. Reid added. “Projects such as our Jetfluid Digital Ink program are a good example of where ECKART is, once again, at the forefront in the development of effect inks for the global graphic arts industry.” The company also has launched its METALSTAR 06 7500 silver, as well as a new guide from Pantone, releasing 300 new metallic colors backed by ECKART’s METALSTAR conventional offset silver ink technology.
“We foresee a significant growth in the segments of waterborne, radcure and low migration systems,” said Dr. von Schlenk-Barnsdorf.
“The global downturn forced our customers to explore more cost effective solutions that still provide shelf appeal and brand differentiation,” said Mr. Hollman. “This has opened the door for metallic inks to provide a lower cost alternative to expensive printing techniques such as foil stamping or the use of metallic substrates. In addition, there is constant demand for finer brighter metallic effects. Our customers want the look and coverage of VMP combined with the processing benefits and reduced cost of more conventional metallic pigments. Emerging markets, such as digital and printed electronics, also present new opportunities for product innovation.” To that end, Sun Chemical’s R&D department has developed a number of new aluminum preparations and encapsulation technologies for the SunMetallics line, which offer brand owners a wide variety of cost-effective optical effects for fluid ink applications.
Metallic manufacturers are cautiously optimistic that the next year will see improvements.
“Schlenk considers 2011 as a chance to further expand business in general, and to possibly benefit from a steady growth in demand for metallic effects,” said Dr. von Schlenk-Barnsdorf.
“We expect continued single-digit growth specifically in UV and water applications, because of new products introduced the last two years,” said Mr. Pofahl.
“Completing 2009 and progressing into 2010, we are seeing much more optimism across our markets and graphic arts is looking increasingly more buoyant,” said Dr. Edwards. “It is also great to see recovery across all the other markets Silberline serves. It is perhaps too early to say that the recovery is sustainable, especially given the concern over the levels of government debt across Europe. However, what is certain is that Silberline has emerged from the economic turbulence of 2009 in a strong position.”
“ECKART Graphic Arts expects and is prepared for many challenges in 2010, and for many years to come,” said Mr. Reid. “We have a solid foundation as part of ALTANA, we are a global organization with a wide, market leading product portfolio. With strong business managers located throughout our business, we believe that we are ready to take on any challenges that faces us.”