Photo courtesy of Hoover Color.
For the pigment industry, 2011 saw some growth, and while no one is certain of what will happen next, pigment suppliers believe there is reason for optimism.
“Due to continued, although slow, growth in the global economy, we have seen an upswing of the pigments market in 2011, but still not to pre-recession levels,” said Mehran Yazdani, vice president, marketing, Performance Pigments, Sun Chemical. “That being said, we still face economic uncertainty due to the European financial crises and the slow U.S. economic recovery. As a leading global pigment manufacturer, we are optimistic that Sun Chemical Performance Pigments will overcome these global economic challenges and see continued growth for the pigments market in 2012.”
Don McBride, COO, Heucotech Ltd. a Heubach Company, said that Heucotech experienced an increase in sales of pigments and pigment preparations to the ink industry in 2011.
“This growth occurred mainly due to longer term projects that were started before 2011 as well as our customers’ success in gaining new business,” Mr. McBride said. “We have worked extensively on providing our customers with product that meets or exceeds their quality requirements through our supply chain and manufacturing processes.”
Joseph Perdue, marketing manager, North America (graphic arts) for Eckart America, said that 2011 was a challenging year for the ink and pigments industry, as well as for the printing industry in general.
“There were rising input costs early in the year and a delay in the ability to pass all of those increases on, whereby the net result, in general, was pressure on profitability,” Mr. Perdue said. “However, considering the circumstances we were satisfied with the way our business has developed. The economy is even more unpredictable as evidenced by the last two years, which have shown us that strong and weak economic phases now follow one another in ever shorter cycles.”
“The global recession has had a major impact on printing ink manufacturers, particularly on the publication and commercial ink side,” said Alexis Capik, marketing manager at Spectra Colors. “One of the side effects of the recession is the increased rise in merger and acquisition activity among printers. We have seen a demand for solvent-based pigments as opposed to water-based pigments.”
“The first half of 2011 showed strong growth, especially in the U.S. market,” said William Gray, business manager of Sincol USA. “The second half has proven more challenging due to ‘global issues’ and sliding demand. Global sales were down sharply beginning third quarter, especially in Europe. U.S. sales have slowed dramatically in the fourth quarter.”
“We have heard the pigment industry had a disappointing year,” said Li Wu, technical director and co-owner of Trust Chem. “Trust Chem worldwide saw growth in the first half, and sales flattened in the second half. Trust Chem USA hadsignificant sales growth in 2011.”
Frank Lavieri, general manager/executive vice president of Lansco Colors, said that Lansco Colors had a record year in 2011.
“In the first quarter of 2011, pigment shortages were an issue in the industry and Lansco was able to gain market share by stepping in to supply pigments when others could not,” Mr. Lavieri noted. “This issue aside, Lansco Colors continues to grow and gain market share.”
“Alex Color had a very good year in 2011, with a nearly 25% increase in sales over 2010,” said Joe Alex, president of Alex Color Company. “Based on the new business we've recently developed, we expect equal or greater growth in 2012. We've added additional milling equipment in order to handle this increased demand for our aqueous pigment dispersions.”
Badal Shah, president of Aakash Chemicals, said that Aakash Chemicals had a strong 2011.
“We saw 35% growth ink in the ink segment alone,” Mr. Shah said. “There were a lot of mixed messages, but I think overall, the pigment market fared well in 2011 in comparison to the speculation that accompanied it.”
Yash Chitnis, head, International business, Meghmani Organics Ltd., said that 2011 has been a very challenging year for the entire chemical Industry in India.
“The enhanced environmental norms compelled many manufacturing companies to cut down production by almost 30% to 50%,” Mr. Chitnis said. “This created a big gap in the demand – supply chain.Further, the continuous upwardfluctuation in copper prices, the recent anti-dumping imposed in India on phthalicanhyride and increase in the cost of waste water treatment has increased the prices of finished phthalocyanine pigments substantially.
At Meghmani, we have strived to keep our ETP norms within the permissible limits,” Mr. Chitnis added. “An investment of USD$3 million has been done in the last 18 months to meet the new environmental norms. We are working on lowest possible effluent discharge limits and should be able to achieve the same in the coming months. By the end of 2012, our new faciilty at Dahej - SEZ (Special Economic Zone) Gujarat will commence. This will enhance our CPC and pigment blues production by 40%. In the second phase we will manufacture classical azo pigments. We have invested close to $20 million in this CAPEX.”
“The first half of 2011 was good for the pigment industry, the second half year of 2011, the pigment industry was much influenced by world economies,” said Sam Lui of Hangzhou Colorful Pigment Co., Ltd. “Now both ink and pigment industries are falling into low profit times, and all the profits depend on the quantity.”
“After several years of low demand, the carbon black industry rebounded in 2011 to a level where demand was at or near production capacity,” said Greg King, vice president of sales and marketing for Sid Richardson Carbon Co. “This trend should continue, being fueled by new tire production capacity, which is estimated to increase carbon black demand as much as 84,000 metric tons per year.”
“Solution Dispersions’ sales to the graphic arts market were flat overall,” said Jeff Randolph, SBU manager for Solution Dispersions. “We saw growth in the flexible packaging inks, and while corrugated inks were stable, there was a significant decline in publication inks (news print).”
“The biggest challenge we faced was escalating prices on dry carbon black as the domestic suppliers have reduced capacity and supply is now very tight on several key grades,” Mr. Randolph added. “Also, the feedstock is petroleum-based material and is extremely volatile. It was difficult to pass on all the price increases in 2011. Like most suppliers we incurred margin erosion.”
Signs of Improvement in the Market
Pigment manufacturers said they saw the printing ink market make gains throughout the year.
Mr. McBride said that 2011 showed more promise and consistency than in recent years with respect to activity level. “Heubach’s recent technology advancements in pigments and preparations have opened more avenues as we compete in a very tough business climate,” Mr. McBride added.
“We are seeing increases in select market segments and declines in others,” Mr. Randolph said. “However, there has been some overall improvement as the economy has begun to show some signs of life.”
Photo courtesy of Sid Richardson Carbon Co.
“We are seeing growth in the packaging market where, fortunately, we have a strong position based upon our variety of pigments, additives and resins for packaging formulations,” Mr. Shah reported. “The overall pigment market in 2012 will not see much growth as North American economic forecasts are bleak.”
“We see the ink industry, particularly the packaging ink industry, performing well,” Mr. Lavieri noted.
“We expect 2012 to be down worldwide from 2011,” Mr. Wu noted. “However, in the U.S., Trust Chem expects strong growth, especially in the ink industry.”
“Without question, the Chinese domestic market will offer the greatest growth potential for organic pigments sales,” Mr. Gray said.
“Regarding the recession, we haven’t been affected at all,” Mr. Alex said. “In fact, the vast majority of our customers had a very good year last year, as indicated by their significantly increased purchases from us.”
“Union Colours continues to grow across all of our markets,” said Phillip Myles, Union Colours’ operations director. “However, we noticed some client demand fell in 2011, in particular there were signs of another round of destocking in Q4. Worst affected was the publication sector, while the packaging sector remained strong.”
“Overall, Cappelle had a rather good year, but 2011 was a year with two faces,” said Philippe Verhelle, product and marketing manager, Cappelle Pigments_NV. “Cappelle saw a very strong first quarter with exceptional growth, but that growth slowed in the second half of the year due to the Euro zone crisis and the uncertainty it brought to the market. 2011 is also a year with increasing competiveness after 2010, where everybody was struggling to catch up on availability after the former economic crisis of 2008-2009.”
Digital ink technologies are proving to be an excellent opportunity for ink manufacturers.
“From what we hear from our ink customers, the inkjet industry has seen some very interesting developments in late 2010 and in 2011,” Ms. Capik said. “Inkjet made strong surges into the screen printing industry in the last decade and specifically saw dramatic market share in the graphic arts markets. This was especially so in both outdoor and indoor graphics for wide format and super wide format printing.”
“While Emerald has an extensive line of Black Shield dispersions and Foam Blast foam control products for printing applications, including offset and water-based inks, Emerald is focused on developing new pigment dispersions/dye products in the energy curable and digital area,” John Erbeck, product line manager, Emerald Performance Materials, said, adding that the company is working on its new Lucida Colors line of energy curable dispersions for inks and coatings. “In the digital printing ink jet area, Emerald currently supplies Hilton Davis ink jet dyes. We are looking at this segment further to expand the range of products we supply.”
“We feel that late in 2011, the industry began working through the disparity between rising input costs and appropriate pricing adjustments,” Mr. Perdue said. “Therefore, we are cautiously optimistic about an improved environment for 2012. We believe metallic inks and pigments still offer growth opportunities for companies that 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.
“Printed metallics remain a key differentiation factor for packaging and point of purchase displays,” Mr. Perdue added. “Our society continues to be overwhelmed with choice in everything we buy, and metallics are a great way to catch the eye and also to improve the appeal of any product. There is also increasing interest in printing metallic effects as an alternative to foils and metalized substrates, particularly given the economic and environmental advantages metallic inks offer today.”
“There was some optimism at the start of 2011 that moderate business growth would develop, but in general, demand stayed flat,” said Steve Clark, technical director graphic arts for Schlenk Metallic Pigments. “The demand for metallic pigments and inks in some areas of the printing industry such as packaging has stayed strong. Metallics for commercial printing are still significantly below previous years.”
The State of Raw Materials
Raw materials have been a major issue throughout the printing ink supply chain, and pigment manufacturers know all too well the pressures on both supply and cost.
Mr. Yazdani said that one key trend and challenge Sun Chemical Performance Pigments saw in 2011 was the sustained high costs of raw materials.
“After two years of rapid decline in demand, we saw a significant increase in demand in 2010 and 2011,” Mr. Yazdani noted. “Unfortunately, due to raw material shortages and increased environmental and regulatory compliance costs, we saw a significant amount of cost increases in raw materials.”
Mr. Yazdani believes that 2012 will see declining price increases for some ingredients as some new capacity comes on-stream.
“In 2012, we expect that the magnitude of supply issues that have led to these price increases will decline,” Mr. Yazdani added. “Capacities for some raw materials should increase as incremental new capacity is restarted. However, where there are still fundamental imbalances in supply and demand, we would expect to see continued tightness in 2012. At Sun Chemical Performance Pigments, we continue to work on controlling our own costs closely with our supply chain partners, to improve our internal operations and to develop new value oriented products that can help customers grow their business. We will continue to invest in those areas that provide our customers with innovative products and services allowing them to be more competitive and present the best value propositions in the market.”
“We are being impacted in that production times are longer, and of course, raw material costs are changing more frequently,” Mr. Shah noted. “For some particular pigments, we anticipate shortages if demand remains constant or increases. A key raw material to watch moving forward is CPC crude and how it will effect phthalocyanine pigment pricing.”
Pigment manufacturers have definitely felt the impact of higher raw material costs.
“We believe all companies have felt the impact of increased costs in almost every raw material,” Mr. McBride noted. “Margins are not such that tiers of supply chain can absorb all of the upward adjustments in cost.”
“With price increases on raw materials, we have tried to absorb as much as we can, but we are also forced to pass along part of our cost increases to our customers,” Ms. Capik said.
Because capacity in the pigment industry has been reduced in recent years, Mr. Lavieri noted that supply disruptions have a quicker impact on the market.
Photo courtesy of Sincol USA.
Mr. Alex said that Alex Color was able to acquire pigments ahead of major price increases, which helped them keep costs down for the most part.
“With regard to pigment prices, we were somewhat affected by higher prices, especially with carbazole violet and also titanium dioxide,” Mr. Alex said. “However, we purchased large quantities of these pigments before the price increases, and were therefore able to offer our customers only slightly higher prices. Now with carbazole violet prices coming down, the effect on the price spikes to our customers has been minimal.”
“Like everybody else, Cappelle has felt the impact on higher prices and more difficult supply for some raw materials,” Mr. Verhelle said. “This situation will not improve very fast as many raw materials are oil-based and due to the ever-rapidly changing market conditions in China. The question is how to counter these difficulties in the best way so that increases have as low as possible impact for the producer, and of course, the customer with regard to availability at the best possible price.”Mr. Wu noted that there have been some declines in cost recently, but pigment manufacturers still have to be concerned about potential increases.
“In recent months we have seen some decline in the price of a few key raw materials, partly because of reduced demand,” Mr. Wu reported. “However, selling price margins are tight and increases in demand or production problems could cause cost increases.”
Supply remains a concern, as stricter environmental laws in China are leading to companies being closed.
“Supply is a big problem due to the increasingly strict pollution policy,” Mr. Lui said. “We are worrying about some raw material supply, because China’s local government is paying more attention to the chemical industries, and many chemical plants are facing either having to move or being shut down.”
“Since Sincol USA is part of a major pigment producer in China, we are very aware of the challenges facing the pigment and chemical industry inside China,” Mr. Gray said. “Environmental issues to the whole chemical industry in China will cause raw materials shortages and cost increases throughout 2012. Coupled with concerns over high inflation and continuing increases in labor cost, without a doubt the cost of organic pigments will continue to increase in 2012. Spot shortages of select Color Index pigments will increase as the consolidation and downsizing of traditional pigment suppliers continues in 2012.”
Carbon black is a critical ingredient for black inks, and Mr. Randolph noted that supply is tight domestically.
“Carbon black is always our biggest concern,” Mr. Randolph said. “As the supply has become tight domestically, we have begun to approve and source it on a global basis. Also, it has become necessary to implement price increases to insure we are a sustainable supplier for the future.”
“New Brook International fared well in 2011,” said Judith Goodwin, national sales manager, New Brook International. “We continue to be affected by higher raw material costs, especially the fluctuation in the metals market, since we sell both bronze and aluminum pigments. The additives used to make our pastes also need to be watched carefully so that we can price our pigments appropriately. As well, the cost of fuel is a key part of the structure of our business and as this escalates, we need to make sure that we remain profitable. Lack of container space has increased lead times from overseas, increasing the need for strong communication between supplier and customer.”
Mr. Perdue noted that on the metallic side, raw material cost pressures and supply concerns were more prevalent in the first half of 2011.
“There has been a high degree of consolidation in the market, which has led to various challenges and changes in the supply of raw materials,” Mr. Perdue added. “Both suppliers and customers remain very active in trying to identify lower cost alternatives. Although demand and the economy, in general, are less predictable today, with a strong global infrastructure in place, Eckart is very committed to ensuring continuity of supply and is well positioned to meet customers’ ongoing requirements.”
Printing ink formulators are continually developing new products for their customers, and pigments are critical to that development. As a result, pigment manufacturers are introducing a wide variety of new products for the ink market.
Mr. McBride noted that Heucotech continues to add more products to its VOC-free Aquis Plus line during the past few years.
“This VOC-free line of dispersions based on surfactant technology has provided us with more opportunities to enter into more specialty markets,” Mr. McBride said. “The most recent product, RWP2381 – PR 269, has been successful with our customers. We will continue to add more products for higher performance applications.”
Mr. Wu said that Trust Chem is working on a number of new products, particularly azo pigments.
“Trust Chem is expanding our line of azo condensation pigments from our JV factory, where we have increased capacity,” Mr. Wu said. “We have also been successful in some cost reduction projects on a few key pigments.”
Mr. Wu also noted that Trust Chem has built and moved into its new expanded pigment lab.
“Trust Chem has more modern pigment testing equipment than any other pigment lab in China,” Mr. Wu said. “Most of our equipment has been selected in partnership with key customers to make sure the pigment we supply meets or exceeds customer expectations.”
Spectra Colors has introduced its Spectra IJ-HH Dispersions for the inkjet market.
“Spectra IJ-HH Dispersions are sub-micron particle size pigment dispersions designed for use in general purpose inkjet applications,” Ms. Capik said. “These dispersions deliver high-quality results for today’s demanding inkjet properties and stringent criteria, such as enhanced color, stability, durability, ink formulation flexibility and high print quality.”
Solution Dispersions launched Aquablak+ 9100, a high-solids, resinated dispersion series suitable for flexible packaging and tag/label ink systems.
“Solution Dispersions anticipates the new Aquablak+ 9100 line will allow us to become an industry leader in this ink market segment,” Mr. Randolph said.
Mr. Shah said that Aakash Chemicals is emphasizing new products for solvent-based applications, as well as its new dispersion plant.
“We are excited to announce new products we have developed, such as our polyamide resin and phthalocyanine green 7 for solvent-based applications,” Mr. Shah said. “Apart from that, we have opened a new water-based dispersion plant, Heritage Color, where we have proprietary technologies that allow us to produce superior quality products for the water-based flexo market.”
Lansco Colors introduced some new pigments. Lansco 2483 Diarylide Yellow 83 is a transparent Yellow 83 primarily for solvent ink applications, while Lansco PR-299 Napthol Red 2 is a transparent yellow shade napthol red specifically designed for packaging ink applications. Lansco TiOx-230 Rutile Titanium Dioxide is a low cost, sulfate process TiO2 designed for solvent ink applications.
“The 2483 and PR-299 represent real innovations for the ink industry. TiOx-230 is a hot topic, with TiO2 being in short supply,” Mr. Lavieri said.
Eckart has launched two new silver inks for the flexo market. UltraStar UV FP 8253 is designed for the folding carton market, while RotoStar UV Shrink Silver is ideal for shrink sleeves and film labels.
“Our latest UV Flexo Silver, UltraStar UV FP 8253, is specifically designed for printers with front end coater capabilities for folding carton applications,” Mr. Perdue said. “The silver product offers extremely high reflective brilliance with exceptional ink trapping characteristics, engineered for printers and brand owners who are looking for alternative technologies as a replacement for metallized (foil) paperboard. This latest addition to Eckart’s UltraStar family is press ready and ‘user-friendly,’ offering a superior printed metallic effect that is both environmentally acceptable and economically attractive.
“RotoStar UV Shrink Silver is based on new high-end silver dollar pigments,” Mr. Perdue said. “This latest technology offers a highly functional aluminum effect with premium added benefits of brilliance and reduced cost. It has unique capabilities of maintaining its metallic effect without going dark in shrink applications. Once again, Eckart continues to listen to the users in the flexo market, where there is a high demand for metallic effects in the growing market of shrink-sleeve and film labels.”
Mr. Perdue also noted that Eckart has launched its new PlatinVario inks and pigments.
“In certain applications, they can offer a foil-like look with greatly improved economics compared to vacuum metallized pigments (VMP),” Mr. Perdue noted. “In addition to the improved effect, these pigments transfer significantly better than other silver dollar pigments of this type, opening up new opportunities for flexo applications where previous version of silver dollar pigment did not achieve enough hiding power or functionality to be considered.”
The SunMetallics aluminum-based pigment line is among the new products Sun Chemical Performance Pigments has introduced during the past year. The company also launched its Quindo Red 122 and Violet 19 high performance pigments for UV and non-aqueous systems.
“Recently expanded with a host of leafing and non-leafing grades that cover the spectrum of flake geometries (from cornflake to polished lenticular to VMP), SunMetallics offers a complete range of aluminum-based preparations for printing ink applications that provide metallic brilliance with exceptional coverage and adhesion,” Mr. Yazdani said. “True product differentiation can be created with the wide range of brilliant optical effects that can be achieved with SunMetallics.
“The new line of Quindo pigments for UV and non-aqueous systems amplify the properties that are critical to quality,” Mr. Yazdani said of the Quindo Red 122 and Violet 19 high performance pigments. “Leveraging Sun Chemical’s treatment technology, these pigments improve rheological behavior, colloidal stability, ink filtration rates, dispersability, optical density with the color consistency, and purity for UV and non-aqueous ink applications.”
Sun Chemical Performance Pigment Group is also showcasing its Flexiverse and Sunsperse APE-free aluminum phthalocyanine blue dispersions for water-based systems.
“Based on breakthrough pigment manufacturing technology, these water-based Blue 79 dispersions allow for copper-free formulation without the molybdenum and solvent residual concerns commonly associated with conventional aluminum blue,” Mr. Yazdani noted. “Sun Chemical’s new line of aluminum blue preparations delivers superior quality and excellent value.”
Expectations for 2012 and Beyond
Even with the concerns over raw materials and the economy, pigment manufacturers are still fairly optimistic heading into 2012.
Mr. Yazdani sees opportunities for high performance pigments in numerous markets, including graphic arts, where inkjet and packaging are enjoying growth.
“From the market segment viewpoint, we expect continued growth in automotive, architecture, fiber, nylon, specialties and niche markets,” Mr. Yazdani said. “The automotive market has seen an increase in demand for unique color and effects. This trend continues to help fuel the continued growth in high performance and effect pigments.
“In the graphic arts market, the increasing use of non-impact printing methods such as inkjet means increased demand for high performance pigments at the expense of those conventional pigments used in traditional printing inks,” Mr. Yazdani added. “Overall, we expect flat to declining demand for publication offset by continued growth in packaging.”
Ms. Capik also noted that the inkjet market is an excellent opportunity for dye manufacturers.
“Customers have told us growth for the inkjet industry will be in packaging from variable data and non-impact printing, track and trace, high resolution marking and coding and pre-press proofing,” Ms. Capik said.
Mr. McBride anticipates that Heucotech will enjoy growth in 2012.
“Although the economy is still fragile, Heucotech Ltd., a Heubach Company, is looking again for substantial growth in 2012,” Mr. McBride noted. “Our ever-increasing global technical network provides the Heubach companies the platform to continue to grow in the traditional and emerging marketplaces. We are committed to providing pigment and pigment preparation technology, quality and technical service so that our customers can concentrate on looking for new opportunities and leave the color details to us.”
Mr. Shah reported that Aakash Chemicals has expanded its facilities and executive personnel with an eye on growth in the coming years.
“We are very optimistic due to new innovations, product launches and plant openings combined with our new executive team, that 2012 will be the best year to date and we will continue to have between 30% to 40% growth,” Mr. Shah said.
“We expect 2012 will be another challenging year, but truly believe graphic arts are a market that will see growth,” Mr. Randolph said. “Solution Dispersions plans to do this through penetration at our existing accounts and by offering new innovative products.”
“We look forward to a year of continued growth in 2012,” Mr. Alex said.
Mr. Lui said that Hangzhou Colorful Pigment Co. has moved its plant to the chemical zone, and anticipates increasing its production. “We just finished the first workshop, and we hope our quantity could be 5,000MTs in 2012,” Mr. Lui added.
On the metallic pigment side, Mr. Perdue said that despite the uncertainty of the economy, Eckart believes that metallics will remain a strong choice for packaging and labels.
“This is a difficult question to answer as the economic landscape globally remains largely uncertain,” Mr. Perdue said. “That being said, we remain cautiously optimistic about 2012. The metallic market is continuously pressured to create more advanced effects and to be more cost effective against alternative decorating choices. New manufacturing capabilities in manufacturing metallic flake are just beginning to deliver the next generation to the market, so we expect a great future with these technologies. Printed metallic products continue to offer appeal and a means of differentiation for new packaging and labels, catching the attention and attracting consumers.”
Pigment producers said that the U.S. market seems to be the strongest right now.
“Uncertainty in Europe is of concern for our sales in that area,” Mr. Wu said. “However, in the U.S., we continue to be optimistic of significant new business as customers appreciate our combination of quality and cost savings.”
“We are cautiously optimistic about 2012,” Mr. Lavieri said. “While business conditions seem to be improving in the U.S., they are deteriorating in Europe and Asia. We believe that 2012 will be another year where the reliability of pigment supply is critical to success.”