Add to that volatility of the cost and supply of essential raw materials such as Chinese tung oil and rosin, and it is easy to see why the past year is one that vehicle and varnish suppliers would like to forget.
Still, there were some positive signsas the economy showed some improvement, but there remains much concern over raw materials and the possibility that the economy may not sustain its recent gains.
“The global economic conditions have affected everyone, including vehicle manufacturers,” said Dan De Legge, vice president smoke-n-mirrors, Inksolutions, LLC. “We have seen an inconsistent demand that has shown some signs of improvement but it is not sustained. Compared to the last few years, we have some signs of improvement, but not enough to say we are clearly moving forward.”
“DSM NeoResins has a strong position in the packaging market with waterborne, solventborne and radiation curing products,” Rijoy Putatunda, the new business director for adhesives and graphic arts at DSM NeoResins, said. “This market has clearly observed a strong impact from the recession, but in contradiction to the publication sector, the packaging segment has shown an upward trend since the summer of 2009. The market is still behind the pre-recession performance and DSM still considers the risk of a second dip to be realistic.”
“The entire graphic arts market was hurt by the recession,” said B. David Aynessazian, vice president sales and marketing, Kustom Group. “Although packaging printing fared better than the publication or commercial printing did, they all printed less. The bottom line for ink companies and suppliers to ink companies is that when there are less pieces printed, then there is less ink, ink vehicle, overprint and coating sold. 2009 showed the bottom of the slide and 2010 has begun an uptick, but we are certainly not back to where we started in 2006-2007. We wish we could have more positive news but the outlook still looks cloudy. With unemployment at close to 10 percent and working people nervous about their job status, spending on material goods is a luxury that many can not afford and limits printing volume increases.”
“The past recession has had a significant and ever-changing impact on the vehicle market as a result of publication and commercial printing segments taking the brunt,” said Chris Halvorsen, global marketing manager for Hexion Specialty Chemicals. “While we are experiencing some improvement, the long term trend of a declining offset printing industry will not change.”
Vehicles and varnishes impart essential properties to inks, and suppliers are being asked for improved performance by their ink customers.
“Performance is always high priority, and we continue to hear interest for faster setting and drying in sheetfed and lower temperature setting and drying in heatset,” Mr. Halvorsen reported. “In addition to these productivity expectations is the need for improved pigment wetting and dispersion properties both in terms of flushing and dry grinding.”
“The key properties ink makers are looking for have not changed much in the last few years,” Mr. De Legge said. “The main point is the best performance at the best value. Cost is still tops on everyone’s list but you can not give up performance. We have seen that more printed jobs are overprinted or coated and this means that the demand for gloss and rub in a let down vehicle has not been as important. The ability to run trouble-free and consistent are more important today than gloss and rub since those properties are provided by the overprint or coating. Fast setting and reliability are key areas ink makers are working on. Higher solids are also being discussed by most but since they are more costly there is some resistance to shift away from current formulas.”
Raw Material Costs and Supply
For manufacturers of vehicles and varnishes, there are a number of key raw materials that are critical to production, such as rosin and Chinese tung oil. However, prices for these ingredients are rising, if they are available at all.
“Costs are escalating quite a bit,” said Richard Ponx, president of Accu-Chem Industries, Inc. “With gum rosin in short supply and the rising price of Chinese tung oil, known for its performance attributes, followed by increasing costs of rosin ester resins, all of these increases make it very difficult for varnish manufacturers to hold their prices down. Everyone, it seems, is trying to put higher costs through.”
“While we see some modest improvement in overall vehicle demand, we are experiencing significant volatility with increasing cost of key components of the vehicle formulations,” Mr. Halvorsen said. “Tall oil rosin and gum rosin prices increased dramatically while DCPD, petroleum distillates, TOFA esters and fine chemicals have increased in price as well. We are currently dealing with historically high prices for many of these raw materials. There are signs indicating that gum rosin is falling slightly from peak levels, but still we need to manage through tight supplies and at least several more months of higher than ever total raw material costs.”
“Over the last three months, DSM observed a highly volatile situation in the raw material market, driven by an increased demand related to improved value chain dynamics. This was compounded by raw material shortages, driven by outages and force majeure of key raw materials on a global basis,” said Mr. Putatunda.
“Under the current economic conditions, cost is still king and raw materials for ink vehicles are under extreme pressure, namely resins,” Mr. De Legge said. “The global status of rosin has a great impact on ink vehicles since most are made up of about 50 percent resin. Although oil-based raw materials have settled down somewhat, there are still significant cost increases facing vehicle raw materials.”
“There has been quite a fluctuation in raw material costs in the last two to three years, with a peak in the summer of 2008 and a bottom in the spring of 2009,” Mr. Aynessazian said. “Since the spring of 2009, raw material costs have risen steadily. Ink vehicle manufactures historically have learned to balance raw materials to achieve a technically acceptable product while having them cost effective. In the past, this was done by using vegetable-based materials at times where petroleum materials were high in price and visa versa. While this balancing continues, there is a new factor that has unsettled the market.
“Unfortunately, there has been significant consolidation in many areas of raw material supply, leaving only two legitimate suppliers of certain material types,” Mr. Aynessazian added. “The result is that pricing from these suppliers of their products is no longer specifically tied to their underlying costs. They have increased their selling prices so as to increase their traditional margin and there is little we as vehicle companies and ink companies can do about it. This being the case, raw materials have risen steadily and where they will go is unknown. At the time of writing this (May 2010), the energy cure market is especially bad with shortages and extreme price increases. We believe that the vehicle manufacturers and ink manufacturers have done an excellent job in being responsible to the industry and passing along only a very small part of the increases that have been felt in the period from 2006 until today and should be commended for this. We have also witnessed industry responsibility in the timing of price changes to the market, with more on-going communications so price changes are less of a shock and can be as orderly as possible. This has been a help to the customer, making them able to plan their futures with some degree of certainty.”
There have been a number of recent developments of note from vehicle and varnish manufacturers.
Hexion is offering new environmentally friendly product lines.
“At Hexion, we have committed to the development of new resins and new vehicles in support of the printing industry,”_Mr. Halvorsen said. “Our new line of ECO-REZ phenol-free resins and the vehicle systems, ECO-SET and ECO-WEB have provided the industry with some very compelling new technology. This platform of products provides higher bio renewable content being sought as well as a greener chemistry which we feel improves sustainability meeting the initiatives being taken by our customers.”
On the ECO-SET side, 4500 ECO-SET 4500 is a sheetfed pigment dispersion vehicle, 100% non VOC with a 94% bio renewable content.This vehicle is formulated ECO-REZ phenol-free resin technology. ECO-SET 4600 is a sheetfed letdown free flowing varnish, 100% non-VOC with a 91% bio renewable content. ECO-SET 4800 is a fast-set sheetfed gel varnish, 100% non VOC with 80% bio renewable content. ECO-SET 4801 is a hard drying sheetfed gel varnish providing durability, high gloss and water fighting properties, providing a new level of performance benefits including phenol-free chemistry.
ECO-WEB products are focused on heatset and coldest applications. ECO-WEB 5800 is designed for coldset web offset inks, providing leading press performance built on ECO-REZ resin technology, and has a bio renewable content of 48%. ECO-WEB 5801 is a highly gelled heatset vehicle suitable for high performance on high-speed presses. This uniquely formulated vehicle will enhance the water balance properties within the system due to the increased polarity of ECO-REZ resins. ECO-WEB 5802 was recently developed to attain the level of 58% bio renewable content for low energy heatset print performance. ECO-WEB 5600 is a free flowing heatset vehicle using phenol free resins, and contains 41% BRC.
Mr. Aynessazian noted that Kustom Group released a wide variety of new products this year, including its KB-1012 and KB-1013 Greenmaster sheetfed gel and free flow, which are formulated to give a sheetfed ink system all the properties needed for today's highest speed presses including 0% VOCs with fast set speed and excellent press stability. These “Green Polymers” are derived from naturally occurring raw materials and can be considered sustainable and renewable. The amount of “Green Polymer” contained is approximately 80%. Two other advantages of this new vehicle system are easy clean up on press, and improved litho performance which allows the printer to reduce etch chemistry in the fountain solution.
In addition, Kustom Group's KB-1016 high solids sheetfed vehicle for plastic is formulated to give the unique combination of excellent adhesion to all types of plastics and oxidative dry with surprisingly fast set speed. KS-369 UV gelled vehicle for plastic is recommended as a gelled letback vehicle for UV-curable lithographic inks where high performance, excellent ink/water balance and maximum adhesion to a wide variety of rigid plastics are desired. The KS-9805 aqueous “Soft Feel” matte coating is a special effect tactile aqueous coating for application to paper and paperboard with litho in-line coaters and flexo presses that are equipped with anilox systems.
Inksolutions is emphasizing its 'Back to Basics' vehicles, which combine performance and economics.
“Inksolutions has introduced a new line of 'Back to Basics' vehicles that concentrate on fast setting reliable trouble-free press runs with an eye on the best economics possible,”_said Mr. De Legge. “These vehicles are high solids and based on vegetable oils that provide the best BRC value and the best performance to value package. Available in a gel (SV-1335) and freeflow (SV-1336), you can achieve fast setting and the press reliability ink makers need today.”
DSM is maintaining its focus on the packaging market.
“DSM is currently launching a number of new products which are mainly targeted for the packaging market,” Mr. Putatunda said. “NeoCryl BT-106 is a new highly cost effective colloidal waterborne corrugated ink resin for post print applications. The product provides the option to formulate highly universal inks for corrugated ink applications with the option to reduce the total cost of ownership at the printer. DSM is also launching two products for radiation curing applications; the first product is NeoCryl B-300 which is a non reactive acrylic, tailored for UV ink applications. The resin can be easily solubilized in acrylic monomers at relatively high solids levels, and provides the ink with excellent adhesion performance through reduced film shrinkage. The second new product in the UV range is NeoRad U-6288. This product is mainly targeted for OPV applications which require a high degree of mattness. The product as delivered is not matt. However, this can be easily made matt, because of its excellent wetting properties of the matting agent. This implies that this resin has broad formulation latitude. The final varnish exhibits an improved stability and press behavior.”
Accu-Chem is active in the UV field.
“The UV special effect varnishes are of much interest, and Accu-Chem has formulated some for its customers. One of our new UV varnish developments is our Bull's Eye UV Dull 5303-45K, which provides a high level of contrast as a strike-thru varnish and cures in one pass on press through the UV lamps. The benefits of this new dull 'strike-thru' is creating a lot of interest among printers,” Mr. Ponx said.
Expectations for The Marketplace
In spite of all of the challenges they face, vehicle and varnish manufacturers are optimistic about the coming year.
“We hope the coming year will show more tangible improvements that are sustained throughout the remaining year,” Mr. De Legge said. “Our economy has shown some small improvement and we hope that increases.”
“We feel confident that raw materials will get back to some level of normalcy,” Mr. Halvorsen said. “While product development resources are limited, we are excited by our capability to provide ink makers new high performance vehicles and achieving the much talked about ‘sustainability’ factor.”
“DSM NeoResins is very confident for 2011,” Mr. Putatunda said. “Despite a relatively fluctuating market, DSM NeoResins has been and will be launching new products which provide new opportunities for growth also in relatively uncertain times. DSM NeoResins is convinced that not only cost but also other requirements – like sustainability and differentiation – will play an important role in decision processes and product development. As such, the market can expect new promising products from DSM NeoResins, in 2011 and beyond.”
“We believe that 2010 will be a pivotal year in our industry,” Mr. Aynessazian concluded. “There continues to be significant economic pressure on all the companies in our industry and further consolidation will likely continue to be the result. Finding your strengths as a company and sticking with those will be more important than ever. The survivors will likely enjoy a decent 2010, a good 2011 and a great 2012 as the general economy continues on its comeback. One of the keys is to be responsible with your finances so that you can be one of those companies that will be left to reap the benefits when 2012 comes.”