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    Features

    Pigment Manufacturers Face Numerous Challenges in 2019

    Availability and cost of key raw materials, increasing regulatory pressure are among the concerns suppliers are facing.

    Pigment Manufacturers Face Numerous Challenges in 2019
    Photo courtesy of Orion Engineered Carbons.
    Pigment Manufacturers Face Numerous Challenges in 2019
    Photo courtesy of Clariant.
    Pigment Manufacturers Face Numerous Challenges in 2019
    Photo courtesy of Clariant.
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    David Savastano, Editor03.15.19
    Colorants, of course, bring the color to printing. Whether it is organic or inorganic pigments, dyes, metallics, fluorescents or special effects, colorants supply the brilliant hues that consumers look for in packages and publications. From Coke Red to Tide Orange to countless numbers of shades, from carbon black to the whites from titanium dioxide, colorants are everywhere we look.

    It is also a sizable market. MarketsandMarkets’ report, “Dyes & Pigments Market by Type (Dyes (Reactive, Disperse, Vat, Acid), Pigments (Titanium Dioxide, Inorganic, Organic), Application (Textile, Leather, Paper, Paints & Coatings, Plastics, Construction) - Global Forecast to 2021,” placed the global dyes and pigments market at $32.86 billion in 2016. MarketsandMarkets estimates that the demand for dyes and pigments will reach $42 billion by 2021, with a CAGR of 5%.

    On the pigments side, titanium dioxide (TiO2) is expected to hold the largest share.

    “The global pigments market is classified on the basis of type, namely, titanium dioxide, inorganic pigments and organic pigments,” per the report. “Titanium dioxide is expected to lead the global pigments market during the forecast period, followed by inorganic pigments. The growth is mainly due to capacity expansion and growing demand from emerging economies such as Brazil, China and India.”

    In its report, “World Dyes & Organic Pigments,” analysts from The Freedonia Group noted that rising global incomes and construction activity will drive demand for dyes and organic pigments. Its numbers were significantly lower than MarketsandMarkets.

    “Global demand for dyes and organic pigments is expected to grow 6% per year to $19.5 billion in 2019,” Freedonia Group analysts reported. “Rising consumer spending will drive increased demand for organic colorants in textiles and plastics, while strong growth in global construction activity will boost demand in paints and coatings. Advances will be capped by moderation in global vehicle production and slow growth in printing inks applications because of the challenges facing the print
    media industry.”

    Grand View Research offered numbers similar to MarketsandMarkets in its report, “Dyes & Pigments Market Analysis By Product [Dyes (Reactive, Vat, Acid, Direct, Disperse), Pigments (Organic, Inorganic)], By Application (Dyes, Pigments), And Segment Forecasts, 2018 - 2025.” Grand View Research valued the market at $30.42 billion in 2016.

    “Increasing demand from various applications such as textiles, paints & coatings, construction, paints and plastics are expected to drive the market growth,” Grand View Research reported. “Manufacturers of dyes & pigments actively ventured into enhancing their products by utilizing advanced technologies for efficient removal of environmental and hazardous pollutants during the manufacturing process.”

    Grand View Research reported that inorganic pigments earned a higher share in the market compared to organic pigments, adding that “organic pigments are anticipated to grow at a CAGR of 5.8%, in terms of revenue, from 2017 to 2025.”

    Textiles, it should be noted, are the primary market for dyes, although pigments are coming more into play. Paint and coatings are the largest markets for pigments, with plastics and printing inks behind them.

    According to Ceresana’s “Market Study: Pigments,” the company reported that paints and coatings made up 45% of total global demand. Plastics ranked second at 1.2 million tons used. In printing inks, Ceresana believes pigments for offset printing holds a 53% share of the printing ink market, with flexo inks second.

    Titanium dioxide (TiO2) accounts for approximately 60% of total pigment demand, Ceresana said, followed by iron oxide pigments and carbon black.

    “Registering a total volume of fewer than 1 million tons, organic pigments, as well as inorganic pigments, only account for a small share on global pigment market,” Ceresana reported. “Compared to many other pigments, organic pigments are much more expensive. They are often used for printing inks, followed by paints and plastics.”

    Challenges for the Pigment Industry

    For pigment and dye manufacturers, 2018 was a tumultuous year, as availability and cost of key raw materials and increasing regulatory pressure were among the concerns suppliers are facing.

    Oliver Pfefferkorn, sales director, Union Colours Limited, pointed to closures of pigment intermediates and pigment producers in China.

    Chris Weighill, VP and GM – ink industry, Sun Chemical Performance Pigments, pointed to price volatility of pigments and intermediates as a major challenge for the industry.

    “Many raw materials are sourced from China and have been subjected to supply shortages and escalating feedstocks,” Weighill added. “Managing supply and formulating agility have been critical to meet customer requirements and ensure an uninterrupted supply of product. Our supply chain team has established contingencies such as safety stock management, inventory positioning and sourcing more volume from a broader global supply base.”

    “Pigments produced in China or made elsewhere with feedstock from China remain in tight supply due to factory shutdowns,” Jyoti Gidvani, corporate purchasing, Toyo Ink America, LLC, noted. “Price increased due to tight supply. Prices further increased due to additional tariffs implemented in September 2018.”

    "Due to shut-downs of Chemical Industrial Zones in China, securing some raw material for pigment production and pushing through resulting price increases have been the bi
    ggest challenge in 2018," said Falko Orlowski, EVP of sales and marketing for Trust Chem USA. "These shut downs are a result of an attempt to strive towards "Green GDP" and improved the water and air quality in China. These shortages have caused in some cases severe supply issues on intermediates and the resulting pigment production. Prices increases are unavoidable. With the unavailability of Red Base B and Bordeaux Base GP as well as short supply of DCB and DB-70 last year, prices in some cases sky rocketed and intermediates were hard to come by."

    Chris P
    atterson, head of global technical & strategical marketing printing, BU Pigments at Clariant, said the biggest challenges for the pigments industry as a whole have been associated with raw material/intermediate availability and the attendant cost increases based on these supply constraints.

    “The scale of the problem was unprecedented,” Patterson reported. “Clariant, as a supplier with a global production base, has to ensure that we have a diverse supply base. While this does not mean we were immune to the supply problems or the significant price increases, it certainly helped reduce some of the availability problems some of our competitors experienced.”

    Alexis Capik, VP of Spectra Colors, noted that raw material shortages and raw material price increases are major concerns. “Environmental concerns and tightening restrictions on effluent water that is used to wash dyes and pigments has caused factories to upgrade to comply with laws or be forced into a shutdown,” Capik added. “I think this will have an effect on the market for the next three to five years.”

    Tim Polgar, sales manager, Liberty Specialty Chemicals Inc., said that the largest challenges that have faced his company along with all other pigment manufacturers have been to have the ability to forecast business based upon customer requests for just-in-time inventory.

    “We have found it necessary to build up our warehouse inventories based upon previous years poundage and dollars sold,” Polgar continued. “We have actually gone to the point where we have put excess inventory levels based upon our customers’ yearly requirements.

    “By setting these levels, it allows Liberty to set up additional levels to compensate for any increase in business that has not been forecasted,” he added. “This is primarily due to the closing of many Chinese pigment and dye manufacturers.”

    Frank Magdits, business development manager, dispersions, Aakash Chemicals & Dye-Stuffs, Inc., said that the Chinese Blue Sky initiative heavily impacted the environmental regulations in the entire chemical industry.

    “Dye and pigment intermediates factories were severely impacted, leading to supply issues of pigments, dyes and associated products,” Magdits noted. “While everyone was aware of this early on, there was too much speculation on when plants would be allowed to reopen, causing uncertainty on whether the supply issues would be short term or long term. This varied and continues to vary on a product to product basis. In addition, tariff speculation (0% vs. 10% vs. 25%) led to unusual demand patterns as some customers raced to build inventory and others chose to wait it out. Many tried to rush to other countries where supply was available.”

    “Customers want better and cheaper, and if it isn’t better, they’ll take cheaper,” said Mark Ryan, marketing manager, The Shepherd Color Co. “At the same time there are more regulations and testing of the products and now measuring the whole company’s sustainability. Sustainability also comes in many different shades of green.”

    Dr. Sanjay Monie, marketing manager - inks, batteries & special applications for Orion Engineered Carbons, said that rising raw material costs, higher freight costs and very short supply of quality feedstocks have been the biggest challenges to the carbon black pigment industry.

    “There has been tight supply and more demand for the high-quality, low-sulfur oil that we use as feedstock, particularly for our specialty products,” Dr. Monie added.

    Raw Materials

    Pigment manufacturers said there are numerous reasons for concern over raw materials, and there is little reason to expect a change for the better going forward.

    “Prices of raw materials continue to increase quarterly/monthly in many markets,” Weighill said. “These increases have impacted all levels of the pigment supply chain, from basic chemicals to specialty raw materials. The major driver of these cost increases is a general lack of raw material availability due to the stronger enforcement of environmental and safety regulations globally. This is especially affecting supply from key markets in Asia. Many of these products are sourced from China and have been subjected to supply shortages and escalating feedstocks. Managing supply and formulating agility have been critical to meet customer requirements and ensure an uninterrupted supply of product.”

    Frank Lavieri, EVP sales and marketing, DCC LANSCO, said that the supply of key pigments and raw materials was disrupted this year when the Chinese government began Blue Sky initiatives directed at reducing the water and air emissions from industrial factories

    “This has particularly impacted pigment production for the ink industry, which relies heavily on Chinese raw materials and pigments,” Lavieri continued. “In the US, this was further exacerbated when the US administration imposed additional tariffs on Chinese made goods, including raw materials and pigments. As a result of these two actions, prices increased for pigments in 2018. DCC LANSCO manufactures selected pigments for the ink industry primarily in Canada but was impacted by these issues as all suppliers were.”

    “The Blue Sky initiative in China is believed to be a primary reason of shortage of feedstock to produce pigments and cost increases,” Gidvani added.

    Pfefferkorn said that environmental laws in China have been too lax in the past and the ones in place have not been enforced properly.

    “Several intermediates and several pigment producers have been using these loopholes to keep the cost down,” said Pfefferkorn. “The color using industry worldwide has enjoyed low-cost color and closed its eyes how that was achieved. A lot of these loopholes have been closed by the Chinese government within a short period of time and in a quite radical form. This has led to closures for weeks and sometimes months of intermediate producers.

    “Often, even for key intermediates, there are only a few producers left and often they are located in the same chemical parks. If these get shut down there are no alternatives,” Pfefferkorn added.

    “With the unforeseen closing of these Chinese chemicals plants, it has put a tremendous burden upon the availability of pigments and dyes for all color applications,” said Polgar. “Many of these raw materials for the making of intermediates are no longer available. Since the lack of key raw materials is occurring, it has forced manufacturers to allocate certain pigments and dyes simply because we cannot produce them fast enough or even produce them at all. When half or a third of raw materials are only available, it makes it impossible to produce your yearly consumption. The intermediate Red B Base and Bordeaux GP Base, which are key intermediates for many yellow pigments, are impossible to keep a steady stream of consumption for our manufacturing facilities.

    “For example: for every kilo of Red B Base it only allows us to make two kilos of a yellow pigment,” added Polgar. “When these raw materials are not available then every pigment manufacturer is after the same amount of raw material. Looking into our crystal ball for the upcoming several years, we do in fact see a continuing shortage of specific pigments and dyes. What they are or when a shortage will occur who knows since every day seems to be a new adventure. We are hoping that these shortages are short term and we are now seeing a small shift from the Chinese markets to India producers.”

    Dr. Monie spoke about the pressures on carbon black.

    “In China, a weak steel industry, weak coking demand and less crude coal tar (CCT) availability all drive the CCT price up,” Dr. Monie noted. “Environmental control measures are increasing carbon black production costs and driving plant utilization down in the carbon black industry, pushing carbon black costs higher. We see higher demand for steam cracker tar for use as a cheaper feedstock due to competition within the carbon black industry. In addition, there has been a higher demand for low-sulfur oil from other industries, further tightening supply and increasing cost.”

    Patterson said the most obvious reasons for the problems were limited supply chain security – a significant proportion of the global capacity for key raw materials and intermediates for pigments are now supplied out of China from manufacturers operating in geographically concentrated industry parks – and non-sustainable supply, and the failure of many of these same suppliers to meet established pollution or safety guidelines led to wide-scale plant closures.

    “But the underlying factor remains the desire of the Chinese government to de-emphasize industrial manufacturing in favor of high-value industries and their wish to reduce the environmental impact of their industrial sector,” Patterson added.

    Availability Concerns

    The amount of materials that are in questionable supply is fairly sizable. Lavieri, Pfefferkorn, Orlowski and Ruediger Baur, head of global technical marketing non-impact printing and color filter, BU Pigments at Clariant, all pointed to PY 74 as particularly challenging.

    “The availability and cost of raw materials continue to impact the pigment industry,” Lavieri said. “While some raw materials are more available now than mid-2018, severe shortages still exist for raw materials used to make Yellow 74 and other pigments used in packaging inks.”

    “One of the key intermediates for PY 74 is not available for months and keeps being very difficult,” said Pfefferkorn. “Other Yellows like PY 1, PY 3 and PY 65 are still severely affected too. Crude Violet for PV 23 is also still short and prices remain on the high side.”

    "Some of these shortages such as the current shortage for PY74 will continue in the near future," Orlowsky observed. "Some intermediates are improving in availability and some are still in severe shortage. It is a moving target."

    “While many of the problems of 2018 have been managed or resolved we still expect to see sporadic issues,” Baur said. “We continue to experience issues with smaller volume specialized intermediates. Currently, there are issues with the availability of nitro-aniline derivatives, so-called fast bases, that are used in a range of colorants for the ink and coating industries. One of the biggest color indices currently impacted is PY 74; we will continue to see both limited availability and dramatic price increases with this pigment through the first half of 2019.”

    “Global supply is flat and capacity utilization is very high in the carbon black industry,” Dr. Monie noted. “Capacity increases aren’t coming on fast enough to keep up with
    increasing demand.”

    Magdits said that the cost to improve factories is one aspect, but a factory isn’t necessarily safe even if it is operated in an environmentally friendly manner.

    “Many factory owners are hesitant to make this investment,” Magdits noted. “Some factories are compliant but have still been shut down due to surrounding factories’ environmental issues, since they are located in the same industrial park.”

    “Tariffs, plant shut-downs due to intrinsic (specific plant/product) or macro (regional environmental) can cause issues but always looking for, evaluating and approving alternate sources reduces the effects, but comes with costs of time and resources,” Hill observed.

    Gidvani reported that the availability of pigments seems slightly better as producers in China implement changes to comply with government regulations to better the environment.

    “However, the Blue Sky initiative in China continues to push pressure on the production of key feedstocks,” added Gidvani. “Many factories are still operating at a reduced capacity to comply with regulations.”

    “Sun Chemical does expect the unprecedented pressure around supply and price to continue into 2019, driven by force majeure situations, environmental and various other disruptions,” Weighill concluded. “The situation is being monitored on a case by case basis; however, primary feedstocks should remain somewhat stable barring any unforeseen events impacting supply or price.” 
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    Beauty Packaging

    Latest Breaking News From Beauty Packaging

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    Happi

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    Filipino Cosmetics Company Sunnies Face Enters US Market
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    Nazdar Ink Technologies to Manufacture VFP Ink Technologies Electronic Inks for US
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    Label & Narrow Web

    Latest Breaking News From Label & Narrow Web

    Essentra Packaging invests in Landa Nanographic press
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    Nonwovens Industry

    Latest Breaking News From Nonwovens Industry

    H&V Appoints Vice President and General Counsel
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    Orthopedic Design & Technology

    Latest Breaking News From Orthopedic Design & Technology

    Paragon 28 Launches Grappler Suture Anchor System
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    Printed Electronics Now

    Latest Breaking News From Printed Electronics Now

    Jabil Strengthens Additive Manufacturing Offerings
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