Global demand for high-performance and special effect pigments in 2020 will be 217,100 tons, with a value of $6.22 billion, as the industry reacts to a severe short-term fall in demand caused by the global coronavirus outbreak, according to Smithers.
New research contained in the Smithers market report – The Future of High-performance Pigments to 2025 – shows that the 2020 figures represent a 12% drop in value compared to 2019.
This has been caused by restrictions on economic activity and industry closures across the world caused by the COVID-19 pandemic, which has impacted nearly all end-users.
Smithers forecasts a gradual recovery for the industry across the first half of the new decade. There is a forecast 5% recovery in the market in 2021, but demand will not return to 2019 levels until 2023 or 2024.
Having negotiated this short-term shock and adjusted to the industry imperatives of a post-COVID world, consumption is forecast to reach 255,770 tons, with a value of $7.58 billion, in 2025.
Smithers’ study shows that the largest market shares remain for pearlescent, and aluminum and bronze metallic products; which combined in 2019 were 59% of the market by weight.
The 2019-2020 decline will affect all pigment classes but be most pronounced in the special-effects sector.
The short-term fall in demand and future recovery will be linked to the fortunes of major end-use industries.
The leading uses for high-performance and special effect pigments are in plastics and coatings; with smaller shares going to inks, cosmetics, and textiles.
The impact of COVID-19 is not uniform across or within these, however.
For example, decorative paints have performed well in H1 2020, as locked down consumers spend time on home improvement; while in contrast demand for automotive coatings has fallen by around 25% worldwide.
As they navigate this new commercial landscape, high-performance pigment suppliers will need to react to multiple business and evolving technology requirements. The principal ones are:
- The impact of major M&A activity reshaping the industry; with DIC buying BASF’s pigment division, and Clariant selling its masterbatch business to PolyOne to create the new company Avient. Further consolidation in the industry is a distinct possibility in the future;
- Responding to the increasing sophistication of performance pigment suppliers based in China;
- Ongoing demand for pigments with higher chroma that enable superior color options;
- Improvements in pigment grades to speed the transition from traditional milling to high-speed stirring;
- Pursuing greater portfolio diversification through integrating cutting-edge nano-pigment and smart pigment innovations;
- Introducing renewable or bio-based performance pigments to meet end-user demands for more sustainable solutions that cut their carbon footprint.