Sean Milmo, European Editor05.20.19
The European pigments sector is facing a radical restructuring as a result of two major European players – BASF and Clariant – deciding to pull out of the sector, opening the way to greater consolidation in the global pigments market, including the part embracing printing inks.
However, this additional concentration is likely to be mainly confined to the high volume producers and distributors of pigments. It will be offset by continued increases in numbers of specialty pigment producers serving mostly niche markets or sectors.
This stronger shift into specialties is also being combined with more customization of pigments, for example, in their size, shaping and surface treatment. With this customization there is also a bigger need for services and technical backup.
Most of the companies active in these niche segments are European SMEs focusing on specific technologies and who are relative newcomers to the market.
They could provide a foundation for the European printing ink pigments sector of the future – one which will be more high tech and as a result will be able to operate on bigger margins because of their ability to be more innovative.
A two-tiered ink pigments sector in Europe – with large global bulk players, probably mainly non-European, at one level and a fragmented, technology-driven SME-dominated segment on the other – is emerging at a time when even more priority is being given to sustainability.
Sustainability and Consolidation
There is an accelerating trend to circular economic systems in which ultimately the majority of chemicals and materials in inks and other coatings will be recycled or reused.
With products having to be even cleaner and safer for human health and the environment, regulations will become stricter, with big international players rather than the SMEs being in a stronger position to afford the additional costs of complying.
Sustainability also offers opportunities for innovation, for example in the use of biomaterials. It can provide an opening for new technologies, but these do not usually yield the high volume sales needed by large producers.
At the 2019 European Coatings Show (ECS) in Nuremberg, Germany, in March, sustainability and innovation was a major theme for printing inks and coatings pigments makers for whom the event is a big opportunity to showcase their products and technologies.
Both BASF and Clariant have indicated that the lack of scope for significant innovations was a reason for deciding to divest their pigment businesses. Although a big portion of their sales come from high performance, large volume products, the basic technologies behind them have not changed for decades. Some top selling high-performance organic pigments were developed in the 1970s or even earlier.
As a result, European pigment manufacturers, for a long time leaders in the global high-performance market, have been suffering from rising competition from Asian producers.
For BASF, pigments also do not fit in well with its Verbund strategy of integrating production and R&D with other chemicals in its portfolio.It sees a brighter future in dispersions, where it can achieve large sales volume and added value through its expertise in binders and particle technologies.
Clariant is following a similar strategy of divesting its pigments operation while continuing to expand its dispersions activities as well as its coatings additives business. The Swiss company wants to gain a stronger position in higher margin areas through initiatives like the creation of a high-performance materials operation through a joint venture with Saudi Arabia’s Saudi Basic Industries Corporation (SABIC), with the objective of an EBITDA margin of nearly 20%.
BASF has a development partnership with Landa Labs, the technology innovation arm of Landa Group, which has been pioneering a new digital process using nanotechnology to apply pigments in a thin film on the substrate. This generates more intense colors while employing less ink.
ALTANA, owners of ECKART, a leading maker of metallic pigments and also a 48% shareholder in Landa’s printing arm, Landa Digital Printing, has been seen as a possible acquirer of the BASF pigments business.
A more likely option is that both BASF’s and Clariant’s activities will be taken over by equity funds or will be merged after being acquired by a single financial investor.
Another scenario is that the two businesses will be taken over by one or more Chinese or Indian companies or investors, in line with plans by Asian players in pigments and other sectors to establish a stronger presence in Europe.
Sudarshan, leader of the pigments market in India which exports 45% of its output from its site in Pune, India, opened early this year its first applications development laboratory outside of the country in Germany. The company has subsidiaries in Netherlands, US, Mexico, and Shanghai.
The research unit, which will be developing digital pigments, is on a site owned by Evonik. It will have links with Niederrhein University of Applied Sciences and will work closely with customers on new products.
“(Our) target is to become the third largest in the pigments industry (worldwide) and therefore we are investing in new markets,” said Milan Krumbe, general manager, Sudarshan Europe, which believes it is already the fourth largest globally and will be considerably helped in overtaking international competitors by its current double-digit growth rate.
“Our fast growth requires pragmatic and fast acting partners, which we found here,” added Christian Maus, Sudarshan’s head of technical marketing and product development digital.
The company is targeting specific, above-average growth segments, such as digital inks, UV inks and packaging inks. At the same time, it is seeking to become more backward integrated into the production of inks and coatings raw materials in order to deal with the global industry’s chronic difficulties with scarcities.
Tinox GmbH is another Asian-backed pigments and chemicals company that has been raising its profile in Europe. The company has close ties with Pangang Titanium, a leading Chinese titanium dioxide producer for whom it is a European distributor.
Now it has extended its portfolio to include iron oxide and other metal oxide pigments, as well as some organic pigments. It has also expanded into Latin America.
“Our objective is to establish from our European base Tinox as a global brand name for pigments,” explained an official at the Tinox stand at the European Coatings Show. “The pigments are being produced to our own specifications and subject to our own quality controls. Our objective is to be able to guarantee to customers that they are buying pigments from a reliable source that provides consistent quality.”
A model for Chinese companies setting up international operations in Europe is UK-based Union Colours, an international division of Longyu Pigment and Chemicals Corporation, Changzhou, China, the country’s largest organic pigments manufacturer.
Seventeen years after it was created, Union Colours now runs a global network covering Europe, Africa and the Middle East and South Asia for the sale of output from Changzhou and a specialty products plant at Johannesburg, South Africa. In Europe, its sales offices cover approximately 20 countries, while it runs a service operation from a technical center in its northwest England headquarters.
Asian producers have for some time been making inroads into the European printing ink market by selling low priced classical organic pigments which domestic producers have had difficulties competing against, especially at times of high raw material costs.
Further penetration into the European market by Asian exporters is proving to be a harder task because they have to compete for less on price but more on aspects like quality, consistency, innovations, product development and other technical services, which are core to the competitiveness of European pigment makers, especially those in high margin and specialty segments.
For the Asian companies, it is a tough challenge. Despite losing a large share of their domestic market to Asian exporters, European producers still retain a technological leadership in printing inks and other pigments, especially in those markets requiring an innovative flair, for example in special effects and specialty niche products.
Preparing pigments for specific treatments and processing activities have become a means among European pigment makers for adding value to their products. ECKART has introduced a series of metallic pigments specially designed for LED curing technologies, although they can also be used for UV curing technologies as well.
Bodo Moeller Chemie, a specialist in offset, flexo and gravure printing colors, provides photoinitiators which match the properties of pigments. For this purpose and particularly in response to shortages of certain photoinitiators, it has been providing its own branded photoinitiator solutions.
For companies in Europe, the production of printing ink pigments has become more than the manufacture of colorants, but the provision of packages of products and supporting services to ensure the efficient application of the pigments.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
However, this additional concentration is likely to be mainly confined to the high volume producers and distributors of pigments. It will be offset by continued increases in numbers of specialty pigment producers serving mostly niche markets or sectors.
This stronger shift into specialties is also being combined with more customization of pigments, for example, in their size, shaping and surface treatment. With this customization there is also a bigger need for services and technical backup.
Most of the companies active in these niche segments are European SMEs focusing on specific technologies and who are relative newcomers to the market.
They could provide a foundation for the European printing ink pigments sector of the future – one which will be more high tech and as a result will be able to operate on bigger margins because of their ability to be more innovative.
A two-tiered ink pigments sector in Europe – with large global bulk players, probably mainly non-European, at one level and a fragmented, technology-driven SME-dominated segment on the other – is emerging at a time when even more priority is being given to sustainability.
Sustainability and Consolidation
There is an accelerating trend to circular economic systems in which ultimately the majority of chemicals and materials in inks and other coatings will be recycled or reused.
With products having to be even cleaner and safer for human health and the environment, regulations will become stricter, with big international players rather than the SMEs being in a stronger position to afford the additional costs of complying.
Sustainability also offers opportunities for innovation, for example in the use of biomaterials. It can provide an opening for new technologies, but these do not usually yield the high volume sales needed by large producers.
At the 2019 European Coatings Show (ECS) in Nuremberg, Germany, in March, sustainability and innovation was a major theme for printing inks and coatings pigments makers for whom the event is a big opportunity to showcase their products and technologies.
Both BASF and Clariant have indicated that the lack of scope for significant innovations was a reason for deciding to divest their pigment businesses. Although a big portion of their sales come from high performance, large volume products, the basic technologies behind them have not changed for decades. Some top selling high-performance organic pigments were developed in the 1970s or even earlier.
As a result, European pigment manufacturers, for a long time leaders in the global high-performance market, have been suffering from rising competition from Asian producers.
For BASF, pigments also do not fit in well with its Verbund strategy of integrating production and R&D with other chemicals in its portfolio.It sees a brighter future in dispersions, where it can achieve large sales volume and added value through its expertise in binders and particle technologies.
Clariant is following a similar strategy of divesting its pigments operation while continuing to expand its dispersions activities as well as its coatings additives business. The Swiss company wants to gain a stronger position in higher margin areas through initiatives like the creation of a high-performance materials operation through a joint venture with Saudi Arabia’s Saudi Basic Industries Corporation (SABIC), with the objective of an EBITDA margin of nearly 20%.
BASF has a development partnership with Landa Labs, the technology innovation arm of Landa Group, which has been pioneering a new digital process using nanotechnology to apply pigments in a thin film on the substrate. This generates more intense colors while employing less ink.
ALTANA, owners of ECKART, a leading maker of metallic pigments and also a 48% shareholder in Landa’s printing arm, Landa Digital Printing, has been seen as a possible acquirer of the BASF pigments business.
A more likely option is that both BASF’s and Clariant’s activities will be taken over by equity funds or will be merged after being acquired by a single financial investor.
Another scenario is that the two businesses will be taken over by one or more Chinese or Indian companies or investors, in line with plans by Asian players in pigments and other sectors to establish a stronger presence in Europe.
Sudarshan, leader of the pigments market in India which exports 45% of its output from its site in Pune, India, opened early this year its first applications development laboratory outside of the country in Germany. The company has subsidiaries in Netherlands, US, Mexico, and Shanghai.
The research unit, which will be developing digital pigments, is on a site owned by Evonik. It will have links with Niederrhein University of Applied Sciences and will work closely with customers on new products.
“(Our) target is to become the third largest in the pigments industry (worldwide) and therefore we are investing in new markets,” said Milan Krumbe, general manager, Sudarshan Europe, which believes it is already the fourth largest globally and will be considerably helped in overtaking international competitors by its current double-digit growth rate.
“Our fast growth requires pragmatic and fast acting partners, which we found here,” added Christian Maus, Sudarshan’s head of technical marketing and product development digital.
The company is targeting specific, above-average growth segments, such as digital inks, UV inks and packaging inks. At the same time, it is seeking to become more backward integrated into the production of inks and coatings raw materials in order to deal with the global industry’s chronic difficulties with scarcities.
Tinox GmbH is another Asian-backed pigments and chemicals company that has been raising its profile in Europe. The company has close ties with Pangang Titanium, a leading Chinese titanium dioxide producer for whom it is a European distributor.
Now it has extended its portfolio to include iron oxide and other metal oxide pigments, as well as some organic pigments. It has also expanded into Latin America.
“Our objective is to establish from our European base Tinox as a global brand name for pigments,” explained an official at the Tinox stand at the European Coatings Show. “The pigments are being produced to our own specifications and subject to our own quality controls. Our objective is to be able to guarantee to customers that they are buying pigments from a reliable source that provides consistent quality.”
A model for Chinese companies setting up international operations in Europe is UK-based Union Colours, an international division of Longyu Pigment and Chemicals Corporation, Changzhou, China, the country’s largest organic pigments manufacturer.
Seventeen years after it was created, Union Colours now runs a global network covering Europe, Africa and the Middle East and South Asia for the sale of output from Changzhou and a specialty products plant at Johannesburg, South Africa. In Europe, its sales offices cover approximately 20 countries, while it runs a service operation from a technical center in its northwest England headquarters.
Asian producers have for some time been making inroads into the European printing ink market by selling low priced classical organic pigments which domestic producers have had difficulties competing against, especially at times of high raw material costs.
Further penetration into the European market by Asian exporters is proving to be a harder task because they have to compete for less on price but more on aspects like quality, consistency, innovations, product development and other technical services, which are core to the competitiveness of European pigment makers, especially those in high margin and specialty segments.
For the Asian companies, it is a tough challenge. Despite losing a large share of their domestic market to Asian exporters, European producers still retain a technological leadership in printing inks and other pigments, especially in those markets requiring an innovative flair, for example in special effects and specialty niche products.
Preparing pigments for specific treatments and processing activities have become a means among European pigment makers for adding value to their products. ECKART has introduced a series of metallic pigments specially designed for LED curing technologies, although they can also be used for UV curing technologies as well.
Bodo Moeller Chemie, a specialist in offset, flexo and gravure printing colors, provides photoinitiators which match the properties of pigments. For this purpose and particularly in response to shortages of certain photoinitiators, it has been providing its own branded photoinitiator solutions.
For companies in Europe, the production of printing ink pigments has become more than the manufacture of colorants, but the provision of packages of products and supporting services to ensure the efficient application of the pigments.
European Editor Sean Milmo is an Essex, UK-based writer specializing in coverage of the chemical industry.
