The Pigments Report

By Kerry Pianoforte | August 11, 2005

Increasing raw material prices and rising fuel costs are two of the biggest issues affecting the pigment market

Increasing raw material prices coupled with rising fuel costs are two of the biggest challenges facing the pigments industry today.

"We have experienced cost increases in all categories of raw materials including intermediates, bulk chemicals and specialty chemicals," said Bob Schweitzer, GM coatings business unit, Sun Chemical. "These increases, when combined with the sharp rise in energy costs have put us into a position where we have been forced to raise prices for our pigments and pigment preparations."

Many pigment companies are working hard to make adjustments internally to offset rising prices, but they're feeling the affects. "Increased raw material costs continue to affect our profits in view of the fact that we have not entirely passed along these price increases to our customers," said Suzanne Bernardi, creative director color and effect, EMD Chemicals Inc. "Alternatively, we have focused internally and wherever possible streamlined our production and logistic process."

"After a long period of relative cost stability, the iron-oxide industry is facing major raw material price pressures along with the increasing energy costs that are effecting all pigments," said Chuck Hoover Jr., COO, Hoover Color Corp. "This, coupled with strong demand for our products has pushed out lead times and pushed up prices in the marketplace."

Like domestic suppliers, importers are feeling the affects too. "As an importer of organic pigments we are faced with price increase from our suppliers," said Torsten Schwerdt, marketing manager organic pigments Europe, Kromachem. "Sometimes there is room for negotiation but not enough to reach the old price levels. Also, oil prices and increasing petrol prices make transport more expensive."

Increased raw material prices have forced pigment manufacturers to implement price increases.

According to Hoover, the cost increases are too large in magnitude to be absorbed by the pigment industry, so they are being passed on at a rapid pace.

"Increasing prices is the major issue these days in the pigment industry, added Schwerdt. "We have to pass along at least a part of the increased prices to our customers."

"In some cases, we are forced to pass along increased costs to our customers," said Bernardi. "As we move forward, we will have to pass even more of these costs along but we want to remain sensitive to this delicate situation."

"The tremendous increase in the cost of raw material combined with the higher cost of producing and transporting organic pigments have necessitated a price increase on our part," said Schweitzer.

Also, maintaining quality service is a costly endeavor, according to suppliers Coatings World spoke with. "Servicing our customers with ample inventories, technical support and proper quality systems are important to fulfilling our customers' expectations, but come with increases costs that are not borne by small pigment traders," said Frank Lavieri, executive vice president and general manger, Lansco Colors.

Further complicating matters for the pigment industry, as a result of the instability in the Middle East, oil prices have been rising steadily, resulting in increases in fuel and transportation costs.

"The increased costs of pigments and costs of transportation are very important issues for our company at this time," said Lavieri.

"Increased costs in other areas such as oil, energy and transportation continue to plague everyone," agreed Bernardi.

In addition, the importation of less expensive pigments from Asia continues to challenge U.S. and European pigment manufacturers.

"The global restructuring of manufacturing to Asia continues to challenge the industry," said Hoover. "While the industry initially looked at Asia as an inexpensive source of raw material it is now a customer base of growing importance."

In addition to offshore competition, there are other challenges facing the organic pigment industry, especially in North America and Europe. According to Schweitzer, higher customer expectations in terms of pigment performance and the need to meet tougher regulatory requirements are key issues.

Bernardi agreed. "Increased competition from offshore pigment suppliers, the rate of exchange, along with the movement of OEM manufacturing from North America to Asia have significantly impacted the coatings environment which ultimately influences the pigment industry," she said.

The outlook is not entirely bleak for the pigments industry. Some suppliers were optimistic that prices will stabilize in the coming year.

"We are cautiously optimistic that the worse is behind us, but a lot has to do with high demand levels," said Hoover. "If raw materials become scarcer than they are now, more price increases will take place."

"We have worked closely with our factories concerning these escalating costs and believe that prices have now stabilized at these higher levels," said Lavieri.

"Generally speaking, the price increase will slow down and come to an end, but the prices will remain on a higher level and finally the coating and ink makers have to pass these higher costs onto their customers," said Schwerdt.

Not all suppliers are as optimistic about price stabilization or supply. "In the foreseeable future, raw material prices are continually going to increase due to the globalization of the economy and the turbulent social environment," said Bernardi. "The increase in material demands, particularly from China, has changed the supply and demand curve drastically shifting the price equilibrium causing critical supply issues."

"If oil and natural gas stabilize, we have a chance," said Tom Pettijohn of Wayne Pigments. "When shortages hit, then customers will not be concerned about pricing."

Luckily, pigment customers understand the current market situation. But suppliers still need to provide their customers with value-added products in this difficult environment.

"We try to be transparent with our customers and let them know the challenges we face," said Bernardi. "In many cases, they are facing the exact same challenges. While we are always trying to help our customers manage their costs, we also work hard to be the kind of supplier who listens to their needs and looks for ways to help them develop new opportunities that may be less affected by issues of cost and prices. We do this with leadership in innovation, technical service and knowledge."

The key is to zero in on each customer's needs, said Schweitzer of Sun Chemical. "Of course, costs are an issue for everyone, but for some, cost can be reduced by improving the value in use of our product."

Pigment manufacturers can design the product to work better in the customer's system, make it easier to handle or provide a supply-chain solution. "The key is to understand the priorities of each customer in depth and then develop tailor made solutions to help them create value for their customers and their business," said Schweitzer.

"Innovation is the light at the end of the tunnel�innovations from the pigment supplier, but also from the customer," said Roland Valin, Manager, Sales & Technical Marketing.

Over the last few years Hoover Color has been actively working with its customers to minimize their total pigment costs. "We have one program which focuses on alternative raw material sources. We have successfully introduced products produced with these materials to our customers and hope to expand the usage of these materials in the future," said Hoover.

In addition, Hoover Color is working with its major customers on ways to eliminate non-value adding costs from the supply-chain. "By better understanding customers' true requirements we have successfully been able to reduce the costs of packaging, freight, handling and other costs," said Hoover.

"We work with customers to save costs throughout the entire supply chain including logistics, pigment selection and raw material cost," said Lavieri. "For example, costs are saved by our customers who use low cost alternatives to high performance, branded pigments."

Delivering quality products remains key, especially in light of all the added costs. "We are very quality focused," said Schwerdt. "So we offer high quality and special quality pigments, which are not always exchangeable." To keep its customers satisfied, Kromachem is offering a number of pigment-related services, including color matching, local warehousing and quality control testing.

As a result of rising costs, formulators are looking to make the most of their pigments. "As pigment costs increase, there is a need to optimize pigment dispersion to produce the maximum amount of color development from a given amount of pigment," said Jeff Norris, market development manager, specialty additives, Noveon Performance Coatings. "Including hyperdispersants in a formulation reduces concerns about using new pigments, providing reproducible color strength and dispersion stability."

Related Raw Materials:

blog comments powered by Disqus
  • Looking for suppliers?

    Tim Wright||September 1, 2009

  • Pigment Supplier Directory

    Pigment Supplier Directory

    October 19, 2015
    Here is a look at the latest offerings from select pigment suppliers.

  • High Performance and Special Effects Pigments Market

    High Performance and Special Effects Pigments Market

    Catherine Diamond, Associate Editor||August 17, 2015
    Continued growth is expected thanks to emerging markets.

  • Metallic  Pigments Market

    Metallic Pigments Market

    Catherine Diamond, Associate Editor||June 17, 2015
    Growth is on the horizon thanks to a revitalized automotive market and increased acceptance of aluminum.

  • Pigment Market Update

    Pigment Market Update

    Catherine Diamond, Associate Editor ||January 19, 2015
    The pigment market has been given a boost by a recovering economy and an invigorated automotive market.

  • Pigments Market Update

    Pigments Market Update

    Kerry Pianoforte, Associate Editor||January 24, 2012
    Although still not back to pre-recession levels, the pigments market has continued to recover. Pigment companies are reporting a decrease in supply issues and an increase in demand for certain market segments, such as automotive coatings.

  • How Healthy is China’s TiO2 Market?

    How Healthy is China’s TiO2 Market?

    Chris Wu, CCM International Ltd.||October 12, 2011
    While China has risen to become the largest producer of TiO2 in the world, the market is burdened by over supply and increasing price pressure.

  • High Performance and Special Effect Pigments Market

    High Performance and Special Effect Pigments Market

    Kerry Pianoforte||August 15, 2011
    While the market is still not back to pre-recession levels, high performance and special effect pigments are seeing growth in China and other high growth markets.

  • Radcure Raw Materials and Equipment Directory

    Radcure Raw Materials and Equipment Directory

    August 15, 2011
    Here is a look at the latest offerings from radcure raw material suppliers. For more information on the products listed, please contact the company directly.

  • Toward a Clean Energy Future

    Toward a Clean Energy Future

    Tim Wright||March 10, 2011
    Coatings World caught up with former DuPont head Chad Holliday and discussed issues ranging from corporate environmental responsibility, sustainability, climate change and the American Energy Innovation Council.

  • Pigment Suppliers Directory

    Pigment Suppliers Directory

    December 2, 2009
    Here is a look at offerings from select suppliers of pigments. For more information on the products listed please contact the company directly.

  • International Buyers' Guide

    September 16, 2009
    The Coatings World Online Buyers' Guide is designed to help you find the perfect partner

  • High Performance Pigments Update

    High Performance Pigments Update

    Kerry Pianoforte||August 4, 2009
    The sluggish U.S. housing market and ailing auto industry mean HPP manufacturers will face another tough year.

  • Metallic Pigments Market

    Metallic Pigments Market

    Kerry Pianoforte||June 1, 2009
    The economic downturn has impacted the metallic pigments market due in large part to the ailing auto industry, a major consumer of the pigments.

  • Pigments Market Panel Discussion

    Tim Wright||January 8, 2009
    For this year's annual pigments market update, Coatings World asked a panel of experts to address key issues facing the market including the economy, new technology and strategies for moving forward in 2009. The panel is made up of individuals from some of the world's largest and most diverse pigment suppliers including BASF, Ciba, Clariant, Heucotech, Sun Chemical and Toyo Ink.

  • Black and White Pigments Update

    Black and White Pigments Update

    Kerry Pianoforte||October 3, 2008
    Black and white pigment producers continue to deal with rising costs.

  • Pigment Suppliers Directory

    Pigment Suppliers Directory

    August 28, 2008
    For more details on the products listed in this guide, contact the companies directly.

  • High Performance Pigments

    High Performance Pigments

    Kerry Pianoforte||August 11, 2008
    How are suppliers of HPPs dealing with record feedstock and fuel price increases?

  • Metallic Pigments

    Tim Wright||May 29, 2008
    The metallic look continues to be a hot styling trend among consumers.

  • Form and Function

    Christine Esposito||August 11, 2005
    Formulators can create paint that performs and pleases when incorporating high performance and special effect pigments.

  • High Performance & Special Effect Pigments

    Kerry Pianoforte||August 10, 2005

  • Metallic Pigments

    Christine Esposito||August 10, 2005
    Silver still tops the charts, but what�s next?

  • Pigment Market Update

    Kerry Pianoforte||August 10, 2005
    The pigment market has been besieged with dwindling demand, increasing price pressures and lower-priced imports. Will 2003 be an improvement?

  • High-Performance and Special Effect Pigments

    Kerry Pianoforte||August 10, 2005
    These technologies can give your coatings serious punch.

  • Metallic Pigments Update

    Kerry Pianoforte||August 10, 2005
    Metallic�s ubiquitous presence in the marketplace ensures that demand will remain strong.

  • Pigment Market Update

    Mike Agosta||August 9, 2005
    New technology is key in a market dealing with poor economy and pricing pressures.