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    Features

    The 2021 Asia-Pacific Ink Report

    The region is rebounding from COVID-19, but many of the countries remain impacted by the pandemic.

    The 2021  Asia-Pacific Ink Report
    Photo courtesy of Siegwerk
    The 2021  Asia-Pacific Ink Report
    Photo courtesy of hubergroup
    David Savastano, Editor10.14.21
    Driven by China, India and a host of fast-growing countries, the Asia-Pacific region has become the world’s largest region for printing ink. Ink World estimates the region’s ink sales are more than $7.5 billion annually, with China thought to have the largest share at approximately $3 billion, followed by Japan, India and Korea.

    The region is home to many of the largest multinational ink manufacturers. DIC, Sakata INX, Toyo Ink and T&K Toka call Japan home, and the rest of the major leaders have large operations in the region. There is also a strong domestic market in China, led by Bauhinia Ink Company Limited, the ink manufacturing subsidiary of Yip’s Chemical Holdings Limited.

    It is important to note that the Asia-Pacific region is not heterogeneous. Aside from China, Japan and India, South Asia, Southeast Asia and ANZ (Australia-New Zealand) are robust segments.

    The Asia-Pacific region had been growing quickly prior to the COVID-19 pandemic, and like everyone else, has been impacted heavily. While China has come through relatively quickly, other countries are still coping with the pandemic.

    Masamichi Sota, managing executive officer, president, Packaging & Graphic Business Group, DIC Corporation, reported that DIC is seeing varying market dynamics by country.

    “In many markets, COVID has greatly affected operations and economic activities,” Sota said. “As China and Taiwan remain relatively unaffected by COVID, China shows stronger growth than other countries, but increased raw material costs are affecting the country as well. Additionally, Vietnam has seen stronger growth than most, but recently slowed due to COVID lockdowns.

    “While some countries are experiencing recovery from COVID-19 as well as economic growth, others are still struggling to manage the pandemic,” Sota added. “Overall, increased raw material costs, logistics costs and other operational costs remain a challenge throughout the region.”

    Katsuya Tanaka, GM – International Operations Department of the Corporate Planning Division of Sakata INX, said that the packaging market has remained a strength in the region, adding that Vietnam has been a particularly strong area of growth.

    “Even with the COVID-19 pandemic, demand for packaging ink remains strong and firm as an essential business and has contributed to an acceptable level of sales,” Tanaka observed. “On the other hand, offset ink sales have declined significantly due to ongoing digitization and a decrease of advertising and events caused by lockdown restrictions.”

    Ashish Pradhan, president of Siegwerk Asia, said that some business segments, such as tourism, remain affected by the pandemic.

    “As a result of the COVID-19 pandemic, we still see the restriction of movement in some countries within the Asia-Pacific region, which has a negative impact on economic activities such as printing for cosmetics and ink for the tourism-related segments,” Pradhan noted. “The packaging, printing and ink market for essentials such as food packaging remains robust in Asia-Pacific. In the end, the whole COVID situation has made demand predictions extremely volatile.

    “Besides India and China, where we saw a strong rebound from the past year, we also see continued growth in countries such as Vietnam and Indonesia,” said Pradhan. “Generally, packaging and printing follows GDP patterns as they address the bottom of the pyramid market. Packaging, in general, and flexible packaging, in particular, grow higher than the GDP. So, economies which will see an uptick in GDP will see an overproportionate growth in packaging.”

    Akihiro Takamizawa, GM, Overseas Ink Sales Division of T&K Toka, reported that the ink market remains pretty much the same as pre-pandemic.

    “Commercial printing/book printing are on the decline while package printing including flexible packaging remains strong,” Takamizawa said. “However, the ongoing COVID-19 has overall resulted in shrinking market volume. In the future, package printing, including flexible packaging mainly for household goods, is expected to grow firmly, and we also expect further expansion in the digital field for building materials and environmentally conscious water-based products.”

    A Bauhinia Ink spokesperson said their company weathered the COVID-19 pandemic, growing in sales while also developing new products, including environmentally friendly inks.

    In particular, sales of Bauhinia Ink’s gravure food packaging inks were excellent, as the Chinese domestic market grew strongly. However, sales of the company’s offset printing inks were negatively affected by a drastic reduction in export of printed products to the US and Europe.

    Hubergroup’s corporate communication team in Asia reported that they see the trends of recent years continuing, with the packaging segment growing in offset as well as UV and liquid inks, while web offset and sheetfed commercial printing are declining. Hubergroup’s team added that the packaging segment, especially in countries like India, Indonesia and Vietnam, is growing due to higher consumption levels.

    China and India

    Industry leaders noted that China and India are two fast-growing markets for inks and printing.

    “We would say that China has attained significant growth in the past year, partly due to special demand for exports which had helped other countries during lockdown and industries that have been temporarily shut down,” Takamizawa said. “Currently, as the economies of developed nations and other countries recover, transportation costs are rising, and export products in small margin and large volume business are starting to show signs of slowing down in some areas. Nonetheless, we see continued growth in the market which had quickly returned from the coronavirus lockdown.

    “Although there was a recovery trend in the first quarter, the outlook is uncertain in the second quarter due to the spread of COVID infection again,” Takamizawa added. “Business confidence in the region has deteriorated significantly due to lockdown of major cities in various countries.”

    “We see a strong rebound of the Indian and Chinese markets, which were negatively impacted due to COVID-19 lockdowns in the past year,” Pradhan added. “The underlying macroeconomic factors are still valid in both countries. In China, we are facing a movement from a manufacturing economy to a consumption economy, while in India, the underlying GDP growth and the demographic dividend are still driving the economy forward. Further, both large countries have a per capita consumption of packaging that still lags the developed economies, which means there is still a lot of headroom to grow in the long term.”

    “While graphic arts began to pick up during periods of post-COVID recovery, those gains have retreated as COVID cases continue to rise,” Sota said. “The China region shows better signs of recovery, but exports remain much lower than before COVID. India and China are being greatly impacted by increased raw material costs, which have significantly affected both markets. India, in particular, faces further difficulties from lockdowns.”

    “Our sales in China have been strong and are in line with the economic recovery,” Tanaka said. “They have gained more momentum than prior to the COVID-19 pandemic. In India, the pandemic has been a factor in declining newspaper ink sales. However, sales of packaging ink have recovered considerably and are returning to the same level before the pandemic.”

    Hubergroup is a market leader in India due to its wide product range and strong supply chain.

    “We are continuously introducing new technologies helping our customers to fulfill their obligations towards safety and environmental issues and have been proactively promoting products and solutions for safe food packaging for the last few years now,” hubergroup’s corporate communication team in Asia reported.

    Changes in the Graphic Arts Market

    While COVID-19 has clearly affected the graphic arts world in the Asia-Pacific region, the reality is that printing and inks are changing. Pradhan pointed to the shift toward digital printing.

    “Graphic arts is clearly under pressure due to the changed market conditions driven by COVID,” said Pradhan. “This industry will take a long time to recover and also see a permanent shift in demand to digital formats.”

    Sota observed that environmental regulations have been strengthened in China and the rest of the region in recent years, and that is continuing.

    “Many countries are strengthening environmental regulations,” Sota said. “The ink and printing market has focused on easier packaging materials recycling over the last few years. Now the market has begun considering CO2 reduction also, which will undoubtedly impact ink and printing in the region.”

    “Strict government environmental regulations are continuing to impact ink and printing in China,” Tanaka observed. “They not only increase raw material costs but also eliminate small and medium-sized printing companies that cannot comply with the requirements. In other countries as well, environmental regulations are becoming stricter due to the global trend toward greenhouse gas reductions.”

    “Declining graphic arts sales in the region continue to be fundamentally severe and harsh,” said Tanaka. “However, China is an exception. Our sales in that country are growing faster than in 2019 due to the recovery of the domestic economy.”

    Biggest Post-COVID Challenges

    Asking virtually every ink company what their biggest concern is right now, and raw material supply, costs and logistics are at the top of the list.

    “The biggest challenges we see for the markets in Asia-Pacific are the soaring prices for raw materials and steep increases of transportation costs,” said Pradhan. “Besides, there are also shortages of certain raw materials and freight availability due to various factors such as supply chain bottlenecks and shortages caused by manufacturing shutdowns. Siegwerk has a strong and extensive network of vendors and managed to mitigate the impacts of the shortages. Concerning the soaring raw material prices, we had to pass some costs on to our customers like other market players too.”

    Sakata INX’s Tanaka also pointed to rising raw material and logistical costs.

    “In Asia, COVID remains a challenge. Increased raw material costs, due to rising oil prices and force majeure incidents, are the biggest challenge,” Sota said. “All ink makers are suffering now; we see this situation continuing through 2021.The container ship shortage and higher fuel prices are increasing transportation costs as well.”

    Bauhinia Ink’s spokesperson noted that the company closely communicated with suppliers and entered into “pre-contract” agreements to ensure adequate raw materials supply.

    “The pricing of the major raw materials in ink manufacturing, solvents, has been rising and we could hardly see a downward trend while the pricing of resins greatly hinges on the solvents. Meanwhile, the pricing of pigments is more stable and drops slightly,” the spokesperson reported.

    “In the current, tight commodity situation, supplying our customers with products and securing the supply chains continues to be a major challenge,” Hubergroup’s corporate communication team in Asia noted. “But we want to assure our customers: We are working hard to deliver best products on time.”

    “We are repeatedly asked to accept price increase of raw materials, but the biggest challenge is the increase in price of sea transportation as well as its delay,” Takamizawa said. “Moreover, there are cases where the sales of goods and the virus infections have a direct connection with market trends, which makes it difficult for us to adjust the inventory. We at T&K Toka are doing our best to avoid affecting the business of our customers.”

    Environmental Regulations and the Ink Industry

    Meanwhile, environmental regulations alone aren’t the only regulatory concern. Ink companies are also facing sustainability and packaging changes.

    “It is an opportunity for our company to differentiate ourselves from others with an environmentally friendly product lineup,” added Tanaka. “Sales of our Botanical ink series, which contains plant-derived ingredients in some raw materials, are increasing accordingly.”

    “Many countries are strengthening environmental regulations,” Sota said. “The ink and printing market has focused on easier packaging materials recycling over the last few years. Now the market has begun considering CO2 reduction also, which will undoubtedly impact ink and printing in the region.”

    “The awareness regarding environmental concerns especially related to packaging is constantly increasing in the region,” said Pradhan. “Sustainability and food safety concerns remain top of agenda in the minds of Asian consumers. This is propelling the regulators in many countries to push for stricter norms in both these areas.

    “China and India are, for example, increasingly adopting regulations to limit the use of multilayer packaging and encourage companies to move to an eco-friendlier packaging design focusing on an enhanced recyclability of future packaging solutions,” Pradhan added. “It is about tightened VOC norms, banning toluene as ingredient in printing inks for food packaging or banning certain materials like single use plastic or PE coated paper cups – to just mention a few examples of current regulations.”

    Pradhan noted that as one of the leading ink manufacturers in the region, Siegwerk is committed to sustainability.

    “Saying so, Siegwerk India has for example been the first ink manufacturing company in the country who changed to a complete toluene-free manufacturing environment,” Pradhan reported. “Next to this, we also intend to offer mineral oil-free inks to raise the bar on packaging safety and offer further advancements in terms of consumer safety.

    “Sustainability means progress to us,” Pradhan noted. “We strongly believe that the Circular Economy will be one of the most important success factors for our society in the future. That’s why packaging solutions for a circular economy are at the center of our innovation efforts with the goal to further increase the recyclability of printed packaging with our inks and coatings. In other words, we want to become a Circular Economy solutions company supporting customers with customized solutions to rethink and redesign packaging in terms of the three key levers of a Circular Economy: reduce, reuse, and recycle.”

    “Overall, environmental regulations continue to be more stringent, and its impact continues as we respond to regulations and restrictions,” Takamizawa said. “T&K Toka is striving to design and develop inks that are both sustainable and user-friendly, taking into consideration society, the environment, and users, while meeting the regulatory requirements of each country.”

    Hubergroup’s corporate communication team in Asia reported that sustainable solutions are important in the Asian market.

    “On the one hand, governmental norms on the environment are getting stricter,” the hubergroup team added. “On the other hand, customers and converters are insisting on environment certification and best practices. However, since we at hubergroup have long attached great importance to sustainable production and products, we are well prepared.”

    Outlook for the Asia-Pacific Region

    Overall, ink manufacturers believe that the region will continue to see growth in the coming years,

    “We see slower raw material cost increases in the fourth quarter of 2021,” Sota said. “We see rising vaccination rates helping countries overcome COVID, making 2022 a better year.”

    “Due to sharply rising raw material prices, we expect our profit in the second half of 2021 to be lower than last year, although we are implementing sales price revisions,” Tanaka noted. “However, our sales in the region are gradually recovering and some are experiencing faster growth than before the COVID-19 pandemic. Of course, our business still can be affected by the pandemic but the region has maintained steady growth in population and economy. We believe it will continue to grow with the region.”

    “We are expecting further economic growth and the growth of printing market is expected to follow,” said T&K Toka’s Takamizawa. “As we have our presence in many countries, we see this market as an alternative to Japan as a new profit foundation.”

    “We still see large numbers of COVID-19 infections in Asia-Pacific while vaccination rates are still low, leading to continued movement restrictions,” Pradhan said. “That’s why tourism is not expected to recover in the near future, further harming economic activities in the region. We do, however, have a positive outlook for Asia-Pacific and see sustainable growth potential in the print and ink markets in the region.”

    “The operating environment is still ridden with uncertainties and challenges as COVID-19 is still raging around the world and far from being contained,” the Bauhinia Ink’s spokesperson said. “Yip’s Chemical feels optimistic with the favorable ‘dual circulation’ development approach in Mainland China that is based primarily on the domestic economic cycle to drive the international economic cycle.” 

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