The Asia-Pacific region has proved to be the strongest for growth in the printing and ink industries, as the growth of packaging and publishing in China, India, Vietnam and other nations is driving expansion. (China’s ink market will be covered in-depth in the September/October issue of Ink World).
As a result, ink manufacturers enjoyed a strong 2011 in the region, and 2012 is doing quite well.
“Starting in the third quarter of 2011, the printing ink market increased, and especially so in Asia,” said Kotaro Morita, managing director, Sakata INX Corp., who noted that India and Vietnam were particularly strong for the second consecutive year. “Printing ink sales in Asia increased nearly 4% compared to 2010. This was due mostly to the rapid appreciation of the yen in the third quarter. The competition for the packaging ink market is getting much stronger, and the price increases for raw materials did impact our business.”
“In Japan, sales were down due to declined sales of offset inks and news inks,” said Hiroshi Nagai, general manager, corporate communications, DIC. “This was exacerbated by paper shortages and procurement difficulties for certain raw materials, both of which were due to the Great East Japanese Earthquake. Sales of packaging inks, however, remained on a par.
“Special procurement demands, like that for food packaging and beverage containers, were offset by the impact of procurement difficulties of certain raw materials – both of which occurred as a result of the earthquake,” Mr. Nagai added. “The regular demand remained steady from 2010.
“In China, sales were on a par as the expanded sales of news inks, particularly colored inks, offset a slight dip in sales of offset inks and packaging inks. This is a consequence of flagging economic growth,” Mr. Nagai noted. “In Southeast Asia, we saw sales rise slightly as robust sales of packaging inks countered the decrease in sales of offset inks and news inks. In Oceania, sales remained level as sales of our new inks fell, but our market share of offset inks grew. Our biggest success was in India. Sales soared as we saw increased demand for all products. India by far had the strongest growth this past year.”
Toyo Ink Co., Ltd. officials noted that the ink and printing markets are expanding as the economic growth rate increases, notably in China and in India, where Toyo Ink enjoyed its strongest sales growth. However, the company experienced a downturn in profitability due to the rising cost of raw materials.
India is continuing to enjoy growth in printing, and ink manufacturers are sharing in that expansion. Vimal Mehra, managing director of Organic Coatings Ltd. (OC), said that 2011 was a mixed year for printers as well as for ink companies in India.
“The Indian ink market is around U.S. $700 million,” Mr. Mehra noted. “The ink industry grew by around 8% to 9%, primarily due to price increases affected in December 2010 and June 2011. The combined effect of these two price increases were around 8%.”
Mr. Mehra noted that as a result of inflationary trends, the Central Bank increased the interest rate every month, resulting in the higher cost of money.
“The current interest rates charged by banks is around 13% to 14% per annum,” Mr. Mehra said. “This impacted the bottom line of all companies. As printers typically pay in 90 to 120 days, the interest costs ate away the margins. The first half of the year saw steep increases in prices of pigments and resins, and the second half saw increases in titanium, carbon black and oils. Major ink companies like DIC, Huber, Sakata and OC made fresh investments in building additional capacities to meet the growing demand.
“Packaging printers and publishers saw increases in demand for their products and hence had a good year,” Mr. Mehra added. “There was new investments by packaging printers to offer upgraded quality packaging to multinational companies. Investments in post-printing to offer value-added products was seen to be the major thrust area. Narrow web flexo was another area which saw new investments, while digital presses saw a steep increase in numbers. Commercial printers were the most affected and saw this year as having negative growth. Digital is eating away their major share of business. Shorter run jobs affected their utilization of machines and fierce competition made them lose margins.”
Unlike other parts of the world, notably North America,the newspaper industry in India is thriving.
“In publication, too, newspapers continued their growth story of the past five to six years,” Mr. Mehra said. “We saw penetration of newspapers in semi-urban and rural areas. Local language newspapers had higher growth compared to English newspapers. For the first time in the country, we saw mergers and acquisition of regional newspapers by national dailies. Due to stiff competition, quality of printing saw tremendous improvement in the newspaper segment.”
India’s GDP growth was less than expected, although the economy did grow at a healthy rate of nearly 7%.
“Against expectation of a GDP growth of 8.5%, the country achieved a GDP growth of less than 7%,” Mr. Mehra pointed out. “The agriculture, engineering and servicing sectors showed good growth, but manufacturing showed very low growth. Inflationary trends and higher interest costs affected the manufacturing sector. Recessionary trends in Europe and the U.S. affected the export business. Cheaper finished products from China was another cause of concern for manufacturing.
“Overall, the year saw a lot of concerns in fresh investments, which resulted in lower GDP growth compared to expectation,” Mr. Mehra concluded. “But considering the global economic scenario, the growth achieved was satisfactory.”
Mr. Mehra reported that the strongest printing markets were packaging and publication.
“The thrust on packaging was due to the organized retail sector gaining ground and the better sense of hygiene among the growing literate population,” Mr. Mehra said. “Increasing per capita income of the vast middle class population also fueled the demand for better packaged products. New investments in UV and digital presses were the hallmark of this year as these technologies helped in giving value-added products.
“Due to theincrease in the literacy rate, the publication industry also saw increased activities,” Mr. Mehra added. “Semi-urban and rural editions were launched by national dailies, and at the same time, major metro cities saw newer publications being printed to take a piece of pie of the growing market.”
This growth should continue, as economists have projected a growth of around 8% to 9% for the country in next two years; Mr. Mehra added that beyond 2014, the economy is expected to grow in excess of 10%.
“The signs are very positive,” he said. “With a population of around 1.2 billion and average age of the population in the mid-20s, consumptions is bound to increase. The average salary increase per year in the country is around 12%, which means more money in the hands of the people to spend. Items like cars, household white goods, better furnished houses etc., once considered luxuries, are being considered as necessities, and will fuel consumption and hence growth for the economy. Infrastructure and housing are growing very fast, leading to growth for the cement and steel industries. I strongly believe that by 2020, India will be the third-largest economy of the world.”
However, India is in need of a strong government, as coalition government has very little power to bring in radical changes.
“It is believed that the growth achieved by China is due to the active and smart role played by the government of that country, whereas in India, it is due to the entrepreneurship of the business community,” Mr. Mehra said. “The government in the past two years has made some radical changes in the policy for pollution control and environmental issues. Industries are forced to adopt practices to ensure low emissions and treat wastes to save the environment. Stricter legislations are being drawn to ensure compliance by the manufacturers. Hopefully, the country will reap the benefits of these steps in the coming years.”
DIC, Sakata INX and Toyo Ink are emphasizing their manufacturing facilities in India.
Mr. Nagai said that India is an important growth area for DIC. “India’s population is huge. We have some plants in the country now and have been providing offset inks, news inks and packaging inks,” Mr. Nagai added.
“India is very important, especially with exports to the Middle East and Africa.We plan to complete expansion for offset ink capacity at our facility, and we are studying plans for construction of a new offset plant in India,” Mr. Morita said.
Toyo Ink sees India as an important area and has already started local production of offset printing inks, Toyo Ink officials reported. “We plan to start the production of liquid inks this year,” they added.
China continues to be a major growth area for the ink industry, particularly on the packaging side.
“DIC plays mainly in the middle and high-end markets in China,” Mr. Nagai said. “From what we observed, the economy of China has been flagging since the spring, probably triggered by the tight money policy enforced by the government. In that situation, sales remained level. Sales of news inks increased, particularly colored inks, and sales of offset inks and packaging inks decreased.
“China has a huge population and the economy is expected to grow,” Mr. Nagai said. “For that reason, DIC is placing heavy emphasis on China. However, the whole market is too large and too varied to cover all of it. DIC has been concentrating on middle- to high-end markets where our expertise can be utilized the most. Geographically, DIC has been targeting the most demanding districts such as Guangzhou, Shanghai and Beijing.
“We believe packaging inks are the keys to growth as the standard of life in the country increased and awareness of food safety increases,” Mr. Nagai added. “DIC’s strength lies really in synthetic resins, and as such, we will work advantageously to provide packaging inks to meet the needs of the market.”
To meet the growing need for packaging ink, DIC has announced the plan to build an environmentally-friendly mother plant for packaging inks in the city of Nantong, Jiangsu Province, China. “The plant is scheduled to start manufacturing in December 2012,” Mr. Nagai reported. “Upon completion, DIC’s production capacity of packaging inks in China will rise from our current 25,000 tons per year to 70,000 tons per year. We aim to raise our market share of packaging inks in China from our current 10% holding to 20% by 2020.”
“The Chinese economy continues to grow. Our offset and metal decorating inks saw increased sales.We consider China to be a very important market and the key to growth in this country will be to increase packaging sales,” Mr. Morita said. “We will introduce environmentally friendly inks to meet market requirements, especially on the food packaging side.”
Toyo Ink’s officials reported that both liquid and offset ink industries experienced a high rate of growth. Environmentally conscious products, such as toluene-free and MEK-free inks, achieved a significant growth in the liquid ink market.
Leading ink manufacturers in the region continue to anticipate growth throughout 2012. In the short-term, Toyo Ink expects growth in packaging applications. In addition, Toyo Ink plans to set up liquid ink production bases in Vietnam as well as India.
“We expect the printing ink market to keep growing this year,” said Mr. Morita. “INX will continue to introduce environmentally friendly inks to meet market requirements in Asia, as well as increase our sales.”
The Asia-Pacific Ink Report
The printing and printing ink industries continued to enjoy growth in 2011, and 2012 looks to be another strong year in the region.
By David Savastano, Ink World Editor