According to Ahmed Tahir, industry marketing manager, Transportation and Industrial Coatings and Pigments for Plastics, BASF Corp., the pigment market benefited from the rebound in the auto market in 2014, with light vehicle builds approaching record levels with continued interest in differentiated effects.
“The industrial coatings market also showed an improvement in 2014,” he said. “The housing market continued its uneven and slow recovery in 2014. For 2015, we expect a similar trend, albeit with a smaller growth for automotive and industrial sectors.”
Competition remains stiff for the pigments market, and industry experts expect that to stay true in the coming year.
“Sun Chemical Performance Pigments continued to see a positive upswing in the global pigments market in 2014, especially in the high performance and special effect pigments markets,” said Michael T. Venturini, global marketing manager Coatings, Performance Pigments, Sun Chemical.
He added, “Sun Chemical increasingly sees the supplier base becoming more global as regional suppliers enter other regions and markets. The competitive pressure, however, tends to give rise to regional requirements as producers respond to local needs and requirements.
“We expect an increased focus on technical service, quality, performance and environmental considerations. We are always looking to other pigment markets, global technology and consumer trends that influence pigment consumption. The trends can be driven both by legislation and the end consumer.”
Gary Wulf, VP operations and general manager at Sincol USA, said that the pigments market grew in 2014 because of “the general stabilization of the global economy.” Pigment consumption, he said, is a reflection of increased consumer demand.
“We expect the climate for pigment consumption in 2015 to continue to expand with the general health of the global economy,” Wulf said. “For Sincol in particular, we expect growth to exceed the general growth of the economy due to our emphasis on development of higher performance pigments demanded by the paint and coatings markets. Our investment in pollution control will see dividends as well with the closure of more pigment manufacturing plants in both China and India.”
What to Expect in 2015
Given the scope of the pigments market, it is strongly influenced by economic, environmental and at times, political factors. According to Falko Orlowski, executive vice president of sales and marketing at Trust Chem USA, most pigment relevant intermediates by now are produced in China.
“As the Chinese government is increasingly paying attention to environmental protection, it is becoming more difficult to predict cost,” he said. “There are an increasing number of temporary shutdowns, creating a challenge for all manufacturers who will have to plan accordingly and ensure proper supply lines.”
Orlowski added that both China and North America are expected to be key areas for growth in 2015.
Sincol’s Wulf said that consolidation of both pigment manufacturers and pigment intermediate manufacturers is having a significant impact on the pigment market.
“Those who have invested in the infrastructure and intellectual property to meet environmental and regulatory demand will be the long term survivors,” Wulf said. “There have been instances this past year where competition between intermediate suppliers was reduced with the closure of plants as a result of environmental compliance. This caused some dramatic fluctuations in raw material costs and resultant pigment costs. The decline in commercial publication has impacted pigment demand for this segment with pigment manufacturers needing to refocus on other markets.”
Wulf said that the developed markets of North America, the European Union and Japan will increase at the rate of the general economic recovery. “It is the demand of consumer consumption in the developing parts of the world that will yield the greatest growth,” he said. “As a middle class develops and grows, so will the demand for consumable products that have pigmentation.”
Venturini of Sun Chemical said that he expected to continue seeing demand for pigments with unique performance properties that are tailored specially for the end user’s application, such as stability/flocculation resistance in zero VOC systems, enhanced chemical and bleach resistance, increased strength and more value, and improved dispersability.
“Environmental regulations and social change for sustainable raw materials with less environmental impact are driving rapid change and innovation in all segments of the coatings market. The trend is well established in Europe and the United States, but is quickly growing in other regions.
“Consumers today have access to more information than ever before and increasingly educate themselves prior to making purchases to be sure the product meets their socio-environmental requirements,” he said. “Paint producers are responding and this in turn drives upstream suppliers, including pigment suppliers.”
Venturini said that China, India and Eastern Europe, are the markets where per capita gross domestic product is the fastest growing. “Automotive and industrial coatings will remain the foundation for growth of high performance pigments markets, however, growing requirements for improved stability and functionality will position architectural and building materials for tremendous potential growth.
“Globally, we expect to see further growth in high performance pigments as the replacement of heavy metal pigments continues,” he said. “Legislative requirements will play an increasing role in the reformulation.”
In Europe, Venturini added, there is upside in the automotive market and after a significant period of depressed sales, the sector is improving. “Currently black and white remain the top automotive colors supported by the popularity of effect blacks and pearlescent whites. Specialty colors indicate the consumers’ desire to differentiate and we expect an increase in chromatic colors as consumers seek out new color technology.”
While Asian countries will be influential in 2015, BASF’s Tahir said that Mexico is also noteworthy. “The United States has reduced the manufacturing cost gap to Asian producing nations significantly by narrowing predictions for 2015,” he said. “Mexico remains one of the leaders in low-cost manufacturing and attracting significant manufacturing investments.”
The demand for environmentally responsible products isn’t going anywhere, and the pigments market, in particular, presents suppliers with several opportunities to “go green.” According to Tahir, the industry’s conversation regarding sustainability has most recently become a conversation about total cost of ownership.
“Sustainability is a key component of TCO as well as regulatory compliance,” he said. “In certain markets - such as furniture and flooring - sustainable offerings are a differentiator. Sustainability is a key metric for us when undertaking any new development.”
Venturini said that self-regulation by paint producers and trade organizations will play “a larger role affecting everything from end-of-life directives to volatile organic compounds (VOCs) to environmental footprints.
“This drives change and creates opportunities that will favor those that manufacture to the highest global standards,” he said. “We see these challenges as great opportunities for growth at Sun Chemical. We’re working closely with our customers to provide them with solutions for that both meet their individual needs and regulatory requirements.”
As an example, Venturini added that in 2014, Sun Chemical introduced Sunfast Elastomer Black pigments, which are made from recycled rubber.
“It is a performance material that provides formulators with a low gloss black pigment with improved jetness for waterborne, solventborne and powder coatings that can impart physical toughness, chemical resistance and water resistance onto most applications,” he said.
“Made from 100 percent post-consumer recycled rubber, the newest addition to Sun Chemical Performance Pigments’ diverse pigment line utilizes a fine particle size black elastomer pigment that creates an attractive low sheen coating with excellent flow and leveling in thin, smooth finishes. Ideal for coatings on plastic, wood, coil and powder coatings, the new offering is well-suited for use on consumer electronics, automotive interiors, flooring, cabinets, furniture, direct to metal finishes, and sound-proofing coatings.”
For its part, Wulf said that Sincol invested in sustainable solutions years ago, which has certainly paid off.
“Sincol has long held the belief that environmental compliance would be crucial and made investments to stay ahead of new compliance regulations, having invested more than $30 million in pollution control of waste water from our manufacturing plant,” he said. “The new environmental regulations in China that take effect starting in 2015 have already been met or exceeded. We have also seen the trend for higher manufacturing costs as a result of demand for higher labor costs. Investments have been made to improve the efficiency in manufacturing resulting is lower labor demand.”
Meeting Customer Needs
In addition to offering customers eco-friendly products, suppliers are challenged with narrowing down a wide variety of options to meet specific customer needs, such as performance attributes. In order to do that, Venturini said, companies need to provide high-quality products, top-notch service and value.
“In terms of performance, [that includes] light fastness, durability, weather fastness and ease of use,” he said. “Additionally, the market is always looking for innovations – new materials that can help them differentiate their products and their customer’s products.”
Wulf said that Sincol’s customers are also looking for functional equivalents such as lightfastness that can be achieved with less expensive pigment chemistry. “We also see customers who prefer to deal with suppliers that are actual manufacturers of the pigment. Slight adjustments such as color can be made to meet specific requirements. Affiliation with the pigment manufacturer assures quicker responses with inquiries of regulatory data,” he said.
Tahir, of BASF, said that for specific industries, “customers are always interested in novel effects and a robust pipeline of pigment developments. Supply security for extended periods of time is important for customers in the automotive sector.”
He added, “Consistent products with reliable supply and support are important to all customers.”