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    Features

    The 2016 Pigment Report

    Strong growth in the Asia-Pacific region and increased activity in developed regions will continue to drive demand.

    The 2016  Pigment Report
    The 2016 Pigment Report
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    Catherine Diamond, Associate Editor03.29.16
    The global pigments market is expected to reach revenues of $34.2 billion USD by 2020, due largely to extraordinary growth in the Asia-Pacific region. According to a study done by Ceresana, Asia-Pacific accounts for almost half of global consumption of pigments already, and is expected to increase its share of the market even further.

    “This region will continue to be the growth motor of the pigments industry, as China and India in particular are substantially increasing demand for pigments,” the report states. “Eastern Europe, the Middle East and South America will see demand rise by more than 3% p.a. each as well and thus contribute to the positive development of the pigment industry. The rather saturated markets in Western Europe and North America will slowly return onto a growth path after they suffered losses in the past couple of years.”

    The authors of Ceresana’s report, titled Market Study: Pigments, 3rd Edition, found that there are significant regional differences in demand for individual products. For example, titanium dioxide is dominating the pigment market, given its widespread use in paints, varnishes and the processing of plastics.

    “North America consumes a disproportionately large amount of organic pigments; in Asia-Pacific, on the other hand, iron oxides are accounting for a comparatively large share of regional consumption. The largest growth potential in Asia-Pacific is expected for carbon black pigments,” the authors noted.

    The report also found that paints and varnishes are by far the most important sales market for pigments worldwide; more than 43% of global demand originates in this segment. The processing of plastics, the report states, reports the second largest market volume and accounts for 27% of pigment demand. Plastics will develop at the second highest growth rates in the future; only printing inks will develop more dynamically, due to the growing market for printed packaging.

    Another report, World Dyes & Organic Pigments Market, published in April 2015 by The Freedonia Group, found that global demand for dyes and organic pigments will increase to more than $30 billion in 2019. Researchers found that rising personal consumption expenditures will drive increased dye and organic pigment demand in textiles and plastics, while strong growth in global construction expenditures will boost demand in paints and coatings.

    According to the report, increases in value demand will further reflect the growing importance of more expensive, higher value dyes and pigments that meet increasingly stringent performance standards and preferences for more environmentally friendly products. Despite the healthy growth, the authors note, even faster advances will be limited by a moderation in worldwide motor vehicle production and slow growth in printing inks due to challenges facing the print media industry.

    The textile market accounted for more than half of world dye and organic pigment demand in 2014, and due to increased textile demand, it will be the primary contributor to increased global demand going forward.

    “However, increased consumer expenditures will also contribute to above average growth in organic pigment demand in plastic products,” the report stated. “Dye and organic pigment consumption will remain concentrated in the Asia-Pacific region, where the majority of world textiles and consumer plastic products are manufactured. While China will remain the dominant consumer of dyes and organic pigments, more rapid growth will be experienced in some of the smaller Asian markets such as Bangladesh, India and Vietnam, as textile and plastic producers continue to seek out the lowest cost options. In addition, consumer preferences for new, unusual colors that don’t fade, and yet are environmentally friendly, will boost growth.”

    Freedonia researchers found that the fastest growth in dye and organic pigment demand will be in paint and coatings applications, driven primarily by strong advances in construction expenditures in North America and continued growth in the Asia-Pacific region. More moderate advances are forecast in dye and organic pigment demand in printing inks, due to the growing publishing of information in electronic form. The authors also found that opportunities exist for dyes and organic pigments for digital inks.

    The report states that dyes will continue to represent the majority of the overall market in both volume and value. “Disperse and reactive dyes will continue to represent nearly half of total world dye demand, due to their popularity in the large textile market. Organic pigment demand will rise moderately faster than dyes going forward, though from a smaller base. Organic pigments are expected to gain further market share due to the increased usage of high performance pigments in printing inks, coatings and plastics applications,” the authors noted.

    Supplier Perspectives

    The pigment industry has been on an upswing in recent years, and suppliers are confirming that, despite a minor downturn in the second quarter, signs of improvement were evident in 2015.

    Peter O’Loughlin, director of marketing for performance pigments at Sun Chemical, said that his company has seen a significant increase in water- and solvent-based packaging inks using both flexographic and gravure printing processes.

    “In the packaging ink market segment, the trend in the market is moving toward functional and sensory packaging. The packaging market faces different challenges than other market segments, such as low migration, the push toward smaller package size, recyclability, and other efforts to reduce the impact of packaging on the environment.

    “These trends in the packaging inks market have resulted in a greater demand for higher quality and more consistent pigments that are both color stable and viscosity stable, compatible with a wide range of resin systems, and print on a wide variety of substrates,” he continued.

    “We have also seen a significant increase in the amount of printing on packaging for food products. This has led to the growth of a wider variety of colors and special effect pigments, which in turn has led to the need for a wider selection of pigment color index types and special mica and metallic pigments.”

    O’Loughlin added that there has been significant growth of alternative ink types, such as UV and EB inks. These types of inks place an even greater demand on pigment properties such as viscosity stability and compatibility.

    “The growth of digital printing and the special demands it places on the pigments for quality of dispersion, viscosity and consistency is another trend we are seeing,” he said.

    Emerald Performance Materials’ Garrett Gebhardt, manager of dispersions, said that carbon black pigment demand has been growing thanks to a strong performance in rubber applications, which consume greater than 90% of carbon black use.

    “Ink represents only 2% of carbon black consumption overall and continues to decline,” Gebhardt said. “Fundamentally, car ownership (and applications that use carbon black, such as tire, hose and other parts) is expected to increase globally with the expanding global middle class. Closer to home, North American automobile production has returned to pre-recession levels. In contrast, printing of newspapers (about 35%-40% of the carbon black consumption in ink applications) has been declining globally. This trend is unlikely to change, as consumers today have more options to receive the news, and advertisers have increasingly used other media to reach consumers. Newspapers have become fewer, and those that have remained are thinner than they used to be. Higher growth areas, such as packaging and specialty applications, which tend to grow at or above GDP, have partially offset the losses in publication.”

    Neil Forsythe, sales manager for pigments at BASF, said that BASF saw the pigment industry perform close to GDP. Within this space, he noted, there were some stronger and weaker areas by market and application.

    “For instance, in print, we continued to see a rise with inkjet and UV curable printing inks,” he said. “During the recession, print continued performing relatively strong while the automotive and deco sectors were weak. Over the last few years, as automotive and deco have picked up, print has been a relatively weaker part of the overall pigments industry. Looking within the overall printing industry, there are stronger areas – for example digital – but the larger areas of the market are not showing significant growth.”

    Gary Wulf, VP of operations and GM of Sincol USA Corp., said that the first quarter 2015 showed great promise, but tapered off during the second half of the year along with the downturn of the global economy.

    “While our sales had increased year over year, we believe some of this was due to consolidation of pigment manufacturing in China. We expect to see continued closure of pigment plants that are not capable of meeting increased environmental regulatory requirements,” he said.

    Oliver Pfefferkorn, sales director of Union Colours Ltd. (Sincol USA Corp. and Union Colours Ltd. are both owned by Chinese company Longyu Pigments & Chemicals Corporation) said that the packaging ink segment continued to see modest growth, while other segments are still in decline.

    “Our product line for packaging inks is diversified, well established and will grow,” he said. “Outside of packaging inks we do not see much opportunity as a result of market growth, but do see opportunity with the consolidation of pigment manufacturers and some old name suppliers backing away from the pigments generally used in printing inks.”

    Chinese pigment supplier Hongda reports that in the past year, due to increased focus on the environment, more and more companies slowed down their development, and it did, too.

    “Our company is seeking progress in stability in the export part,” a company spokesperson said. “We are continually working to classify our products in more detail because of increasing demands from customers.”

    Joe Alex, president of Alex Color Company, said that while 2015 was a little slow for his company, business has significantly improved already in 2016.

    “Our year-to-date sales are more than double what they were at this time last year,” Alex said.

    Regulations and Expectations

    The changing expectations of pigment customers include ever-more detailed and complex requirements. Suppliers have found that in order to meet the needs of global customers, continuing to offer diverse product lines is key.

    Darren Bianchi, founder and CEO of Brilliant Group, said that he is definitely seeing an increased interest in the regulatory concerns of the ink industry. “This is a challenging task, creating products that meet the regulations of the world marketplace. With our products, we are able to offer our customers varying options within each set of regulations,” he said.

    DonMcBride, COO of Heucotech, Ltd., has found that customer requests for regulatory information have become more numerous, detailed and complex.

    “More and more companies are working to comply globally, with various countries specified and brand owner criteria that exist today in both US and European markets, particularly in the area of food packaging,” he said. “This expanding need for accurate information continues to demand additional skilled resource allocation.”

    Brand owners are now requesting pigments and inks that meet purity standards beyond what government regulations dictate, said Frank Lavieri, EVP and GM at LANSCO Colors.

    “LANSCO Colors is well positioned to satisfy these needs with our broad range of organic pigments, including an extensive range of FDA approved pigments, whose quality we managed using our six-step QC process,” he said.

    Gebhardt, of Emerald Performance Materials, said that food safety is a significant concern globally, which translates through to all components involved in food packaging.

    “Studies have shown that certain components, even those in indirect contact, may migrate into the food or beverage under certain conditions,” Gebhardt said. “As a result, certain mineral oil saturated and aromatic components used in printing inks are one area that has been identified as a concern. A number of approaches are being used to address and eliminate undesirable migration into food: package design, material selection in ink, adhesive and coating formulations, and use of recycled paper and paperboard. The potential for ink migration into the packaging is be expected to be less with aqueous inks, and the desire to avoid higher solvent inks continues to drive the movement toward aqueous inks in general.”

    Sincol USA’s Wulf has found that suppliers of pigment intermediates have become aggressive in pricing in order to maintain market share. This, he said, is due largely to the slowdown in global demand, particularly in China. “While this has, at least where there are still enough competitors, resulted in lower pigment prices in the short term, it may result in some transient shortages as the entire supply chain reduces inventory. Longer term, there will probably be a shake out of weaker suppliers and gradual upward price pressures again,” he said.

    Expectations for the Future

    Though raw material costs, regulations and complicated customer requirements can strain suppliers, many believe that there is reason to be optimistic for the future. These challenges, suppliers say, are not impediments to success; they are simply illuminating ways in which they can re-route their strengths for customers.

    Looking ahead, McBride said that Heubach remains very optimistic for 2016.

    “We have an extensive range of both resin-supported and surfactant-based dispersions to suit a wide variety of performance applications to complement our pigment palette,” he said. “Our R&D and sourcing efforts continue to provide us with consistent raw materials that allow us to be very competitive without sacrificing ongoing quality. This commitment to quality enables us to continually produce consistent high performing products that meet and exceed the standards established by our customers.”

    BASF’s Forsythe believes that the industry will continue to see more of the same trends, especially in regards to regulatory, quality and consistency demands.

    “BASF feels that with a dedicated and focused global pigment group, we will be in a stronger position and better equipped to serve the ink market and other industries we supply,” he said.

    O’Loughlin, of Sun Chemical, said that 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.

    “Overall we expect flat to declining demand for publication offset by continued growth in packaging,” he said. “However, from the market segment viewpoint, we expect continued growth in automotive, architecture, fiber, nylon, specialties and niche markets. 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.” 
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