The expansion in the printing industry has been keyed by the gains made in the export sector as well as the domestic market. China and India are the region’s strongest economies (China’ s ink market will be covered in-depth in the September/October issue of Ink World).
As a result of this growth, the Asia-Pacific region has become the world’s largest producer of printing inks. DIC Corporation, Toyo Ink, Sakata INX and Tokyo Printing Ink, four of the seven largest ink manufacturers, are headquartered in Japan, and have extensive operations throughout the region.
Meanwhile, Flint Group, Siegwerk and Huber Group, the other three of the seven largest ink companies, have major facilities in Asia-Pacific as well, with Huber Group being particularly successful in India as a result of its 2004 acquisition of Micro Inks.
As the global economy has recovered, ink industry executives reported that the past year has seen more growth in the region, particularly on the packaging side.
“Business in the region was generally good except Japan and Oceania,” said Hiroshi Nagai, general manager, corporate communications department, DIC Corporation. “In the area except Japan and Oceania, demand for packaging ink increased above all. Demand for news inks and inks for publishing also increased in that area, but the degrees of increase were not so high as that of packaging inks.”
“In Japan and Oceania, demand for packaging inks was moderate, but demand of inks for publishing and news inks were sluggish as a consequence of shrinking print runs for books, magazines and newspapers,” Mr. Nagai added.
“Demand for offset inks rebounded in China and Southeast Asia,” said Yu Adachi, corporate communications for Toyo Ink SC Holdings Co., Ltd. “In particular, in China, there was a surge in demand brought on by the World Expo 2010 in Shanghai, and Toyo’s sales operations further spread to areas inland. Sales for gravure inks for packaging materials applications rose in China and the Asia-Pacific region, as did the demand for environmentally friendly inks. As for inkjet materials, demand in the second half slowed, but sales grew in markets such as South Korea.”
“In 2010, the demand was mostly for flexible packaging gravure inks that are applicable to food packaging,” said Kotaro Morita, director of Sakata INX Corp.
Vimal Mehra, managing director, Organic Coatings Ltd., reported that the major ink companies in India showed growth in top line turnover but had lower profitability due to rising raw material costs.
“The impact of huge price increase in rosins, resins, pigments, oils, titanium etc. affected the cost adversely,” Mr. Mehra said. “The ink industry in turn took two price increases in the year 2010. In June it was a 5% increase, and in December by 10%.
“The situation on the printers’ end was more or less the same as ink companies,” Mr. Mehra added. “Packaging, publication and commercial printing all saw a growth of 10%+. Increase in prices in paper and board twice in 2010 adversely impacted their profitability and the increase in inks and coatings could not even be passed on by them to the print buyers. The major printing associations in India have circulated information on cost increases to their member printers and have requested them to insist on price increases and not to fear the loss of business.”
The recession clearly had a global impact. However, many Asia-Pacific nations enjoyed solid to excellent economic growth in the past year. Mr. Nagai noted that India and China saw the most growth. China, for example, had 10.46 percent growth in its gross domestic product (GDP); India was more than 8 percent. By contrast, the GDP for the U.S. was 2.8 percent in 2010.
Mr. Nagai noted that the economy in the region kept improving generally.
“The economy of Japan and Oceania also improved as well but it was not reflected in the demand of printing inks, especially news inks and inks for publishing,” Mr. Nagai added.
“The world economy has improved moderately and has been particularly strong in Asian countries,” Mr. Morita said. “The difficult part was the rising unemployment rates in the U.S. and Europe.”
In particular, packaging has been a solid area for converters and ink manufacturers alike.
“INX International found the strongest growth in India and Vietnam,” Mr. Morita said. “India continues to be important as it is a growing country and a key exporter to the Middle East and Africa. The packaging printing industry is the key market.”
“In terms of type of inks, our key market is that of packaging inks because it is supposed to grow in line with population growth and rise of living standards,” Mr. Nagai said. “Also thanks to our superb skills in manufacturing synthetic resins, we expect to play very favorably in the market. In terms of region, our key countries are those of China and India. India has a large population and is supposed to grow economically at a good pace.”
“Toyo Ink considers China, Southeast Asia and India as strategic growth markets, and continues to expand our customer base in these regions,” Mr. Adachi said. “In particular in India, where, up until now, our primary focus had been on offset ink sales, we’ve been making a greater push in gravure ink sales.”
Because of the economic strength in the region, ink manufacturers said they are considering further expansion.
“We have not announced any plans, but we are considering expanding the production capacity for offset inks in India,” Mr. Morita said.
“Toyo is planning to invest more capital into the region, but have yet to make any official announcements,” Mr. Adachi said.
“ We have been considering such plans but neither decided nor announced yet,” Mr. Nagai noted.
India on the Rise
As mentioned before, India’s economy has been enjoying excellent growth, and Mr. Mehra noted that has translated into even greater gains in the printing sector.
“The GDP growth in India for the year 2010 was in excess of 8%,” Mr. Mehra said. “The printing industry grew by almost 12% plus. Within the printing industry, packaging was the front runner followed by publication. It is estimated that the growth in these two sectors will continue to be in double digits for the next three to four years and beyond. Major newspaper houses as well as packaging companies are seen to be investing huge amounts in plants and machinery as well as opening new facilities in semi urban/rural areas to cater to the local needs.
“India is poised to grow at 8 to 9% for the next few years,” Mr. Mehra said. “The reason for this optimism comes from the steps taken by government as well as large public organizations towards improving infrastructure, education, housing needs and agricultural growth. With the economy booming, job opportunities have improved and so also the income levels. The consumptions are going up and hence the demand. The average age of an Indian is around 28 years compared to 40-plus in Western world. Self-dependency in food as well as high internal consumption makes India less dependent on exports as well as global scenarios. It is therefore expected that the high GDP growth rate is sustainable.”
Mr. Mehra said that the strongest printing market in India is offset, followed by gravure.
“In offset, web offset and heatset are growing very rapidly because of the literacy rate of the country moving up and education becoming compulsory for kids,” Mr. Mehra noted. “India also has various languages, and hence regional newspapers published in vernacular languages are gaining ground. It is usually seen that a household gets two daily newspapers, one in English and the other one in the local language. It would be fair to say that newspaper and book publishing is going to grow for the next five to 10 years.”
Mr. Mehra added that packaging is another area which is growing due to better hygienic sense prevailing among the educated class.
“Governmental regulations as well as tremendous export potential for food products are leading towards this growth,” Mr. Mehra noted. “The other areas which are also showing growth potential are flexo machines for narrow web, flexo UV machines as well as digital printing. The major reasons for expected growth are:
• Population over one billion with a growth of 2.14% p.a. and literacy at (read and write) 52%.
• Changing reading habits towards two language system (English combined with vernacular /local /regional languages).
• Currently packaged commodity vis-à-vis overall goods produced is not more than 10%.
• Waste of food products estimated 30% of total goods, which shows potential to improve packaging.
“Printing ink and packaging have traditionally shown to grow by 3 to 4% higher than the GDP growth of the country,” Mr. Mehra concluded. “For the reasons stated above, it is expected to grow by 10 to 11% every year for the next few more years.”
Environmental issues are a worldwide concern, and the Asia-Pacific region is no exception.
“We continue to introduce environmentally friendly inks to meet market requirements,” Mr. Morita reported.
“We have been emphasizing on the environmental issues in the region, such as providing more vegetable oil-based inks and water-based gravure inks,” Mr. Nagai said.
“India as a country is coming out from an underdeveloped nation to a developing nation,” Mr. Mehra said. “The goal is to achieve the status of developed nation. The government bodies as well as large corporations are viewing environmental issues on a very serious note. Manufacturing units are to observe the necessary pollution control measures. Certain areas in India have already been declared as critically polluted areas and no further manufacturing facilities are allowed or no further expansions are allowed to existing companies there. Corporate are concerned about their roles towards society and benefits are passed on to employees to offer better education, improved living standards, medical help, etc.”
Outlook for the Region
Ink manufacturers are excited about the opportunities they see for growth in the region.
“We expect the demand for printing ink will keep increasing for a while based on the increased population and strong economic growth,” Mr. Morita said.
“The region, except Japan and Oceania, will see increase in demand and we will pursue the profitable markets like packaging inks and high end markets in publishing and news inks chiefly,” Mr. Nagai said. “The consumption of printing inks is still small in the area and is supposed to have more consumption in line with increase of population and rising of living standards. In the near-term, we expect to add profit gradually and at last, in the long term, we expect to have huge profit in the area.
“In Japan, news inks and publishing inks will decrease more but the demand of packaging inks will remain firm,” Mr. Nagai added. “Therefore, we will pursue the packaging inks market chiefly. For news inks and publishing inks, we will have more cost reductions.”