Mike Agosta08.09.05
Perhaps no characteristic of paint stands out more to consumers than the color. When someone wishes to purchase paint, it is the color that they spend the majority of their time debating. As such, pigments play a vital role in the composition of paints.
According to a study released by The Freedonia Group, demand for organic pigments is forecast to increase 5.5% annually, reaching $1.8 billion and 222 million pounds in volume in 2005. Demand for inorganic pigments is expected to increase 3.4% annually through 2005 to $1.2 billion, with a volume of 744 million pounds. Simply put, pigments are a big business.
According to industry insiders Coatings World spoke with, economic conditions were not overly kind to the pigment industry in 2001. In a company release dated Oct. 17, 2001, Clariant noted that markets for pigments remain depressed, as does demand for consumer goods in the U.S. and Europe.
The economy was shaky enough in 2001 to make any industry worry, and the pigment market was no exception. The market for pigments had a mixed year, which manages to raise both hopes and concerns among suppliers.
"Parts of Europe showed a slowdown towards the end of the second quarter," said Godwin Berner, global head, business line coatings, coatings and effects segment, Ciba Specialty Chemicals. "But higher sales were achieved in South America and parts of Asia."
"The pigments for paint market has suffered, as all other industries, from a poor economy in the first half of the year," said Joerg Hellwig, business head, Imperial Color Group, Bayer Corporation. But Mr. Hellwig added that there was some good news towards the latter half of the year. "From about June/July 2001 on we have seen better sales figures, which matched or exceeded last year's numbers."
Price Pressures and Concerns
Tough economic times require all companies to make efforts to cut costs to maintain margins. Coatings companies are applying downward pricing pressures on pigment makers in an effort to raise their own profit margins, and as the number of paint producers has decreased dramatically over the last 20 years, pigment suppliers are vying for fewer customers. These two factors have combined to put tremendous pressure on pigment manufacturers.
"The biggest impact on pricing is the overall weak economy, and the resulting drive by all customers to reduce costs," said Michael Greene, director, research and development, Bayer Corporation. "At the same time, this places pressure on the suppliers to avoid passing on raw material, energy and labor costs through work process optimization, or they risk losing market share."
The desire of pigment customers to cut costs is putting pressure on pricing in other ways as well. Because of the increased emphasis on cost, there is concern that customers will sacrifice performance for value. "The pressure on customers to make decisions based upon price rather than performance and unique application properties remains one of the greatest challenges," said Mr. Greene.
Currency fluctuation has also created difficult situations for the pigment market. Mr. Hellwig notes that customers increasingly want standardized pricing throughout the world. "With the globalization of our markets and a very strong U.S. dollar, there has been continuous price pressure from our global accounts to balance prices between Europe and the U.S.," he said.
Tony DiRisio, marketing manager, coatings at Clariant, believes that the relative strength of the U.S. dollar has affected pricing. The strong dollar, he said, allows foreign companies, mainly from India and China, to enter the U.S. market with products that are cheaper than domestic products. "Due to the strong U.S. dollar, cheaper imports have been entering the market competing mainly on price and not necessarily on quality," he said. "The U.S. is an attractive market for foreign competitors particularly from India and China."
Information from The Freedonia Group backs up this statement. The Cleveland, OH-based company contends further advances (in market growth) will be moderated by competition from low cost imports, particularly in the commodities sector, where some large volume organic pigments experienced price declines at the end of the 1990s. For example, the price of phthalocyanine blue fell nearly 10% in 1998 as a result of growing imports of low cost pigments from China, South Korea and other Asian nations, the company reported.
Globalization
While the paint industry is global, it is imperative that suppliers maintain a local presence to serve customers worldwide. Dr. Berner notes that "increasing globalization and industry consolidation make it essential to provide consistent quality throughout the world. Ciba has a global presence in and sells in all regions, and we see opportunities for sales growth in Asia and Latin America."
Many pigment manufacturers have recognized and reacted to growth potential in new markets. "The Asian market continues to develop a growing middle class," said Mr. Greene. "This trend will open new markets for all of our products."
New Technologies
According to The Freedonia Group, growth in the pigment industry will be spurred by the development of new products. Industry insiders agree with this sentiment, believing that product development is paramount to success in the marketplace.
Mr. Greene calls product development a cornerstone to maintaining a leadership position and answering the needs of customers. "While new products are used by some to ward off competitive pressures, we feel that they are primarily needed to enable our customers to develop new and improved applications."
Mr. Hellwig agreed that the purpose of new product development is to help the customer improve their products, noting that often it is the customer who initiates the development of pigment technology by voicing their needs. Customers often ask pigment suppliers to work with them on new products, Mr. Hellwig said.
Dr. Berner said that product development is critical to Ciba's business. "Bringing out new and above all novel products that provide improved effects gives our customers the competitive edge, ensuring their success in the market." According to Dr. Berner, Ciba launched more than 10 new products during 2001, including what it calls "Pigment X treatments," which meet customer demand for higher pigment loading, while maintaining the same coloristics and letdown stability in high performance coatings, he said.
Mr. DiRisio also agreed that new chemistry is vital to Clariant. "We continue to introduce new chemistry such as Benzimidazolone-Dioxazine, which is a PB 80 under the trade name Hostaperm Blue R5R, and Thiazinindigo chemistry, a PR 279 under the trade name Novoperm THI Red 4G 70."
Mr. DiRisio said that continued development of established products is also an important tool to helping customers. "Clariant is one of the few companies which performs basic research to improve the properties of classical pigments such as our PY 74 opaque with the introduction of a recrystallization stable version under the trade name Hansa Brilliant Yellow 2GX 70-S."
Environmental factors, particularly the replacement of heavy metals such as lead and cadmium, and the move towards waterborne coating technology is also influencing pigment development. According to the Rauch Guide, waterborne coatings in the architectural market have increased every year since 1979, and account for nearly 75% of the architectural market. The great potential for this technology is not lost on pigment suppliers.
"As the coatings market switches toward increased usage of waterborne systems, there is an increasing need for pigments that provide optimal performance in these new systems," said Mr. Greene. "At the same time, the solvent-based systems are evolving, and new products are needed to provide optimal performance. The introduction of new application systems, including water-, solvent- and powder-based, continue to present opportunities for introducing new products with enhanced performance," Mr. Greene agreed.
Bayer has introduced several products specifically for water-based paint systems. Among these are Palomar Blue B-4828, Quindo Red R-6708 and R-6710 and Perrindo Maroon ER-8765.
Ciba agrees that demand for products and processes that meet environmental regulations like lead replacement and waterborne and UV technology will have a major impact in the near future.
Among Ciba's new releases are Irgazin Yellow 2094 and Orange 2038, which fulfill demand for highly durable heavy metal-free pigments in the decorative and industrial paint markets.
Also focused on environmental technology, Clariant intends to introduce a new VOC-free series of pigments, Colanyl 500, to meet the demands of future environmental legislation, according to Mr. DiRisio.
Additional products from these companies and others are listed in the "New Pigments Directory" which begins on page 43 in the print version.
Predictions for 2002
No one really knows what 2002 holds for the pigment industry. The biggest concern for manufacturers is, of course, the economy. "We have to be concerned that the economy possibly is not recovering as soon or to the extent we are hoping for right now," said Mr. Hellwig. "However, we are very confident that 2002 will be much better than 2001."
This seems to be the prevailing sentiment. Companies in every industry are cautious but all believe that 2002 will be better across the board. According to Mr. DiRisio, the stage is set for an economic turnaround during the third quarter of 2002.
Dr. Berner sets no date, but agrees that things will pick up next year. "We are looking for a general improvement in the economy in both North America and Europe, and renewed growth within the Asian market," he said.
According to a study released by The Freedonia Group, demand for organic pigments is forecast to increase 5.5% annually, reaching $1.8 billion and 222 million pounds in volume in 2005. Demand for inorganic pigments is expected to increase 3.4% annually through 2005 to $1.2 billion, with a volume of 744 million pounds. Simply put, pigments are a big business.
According to industry insiders Coatings World spoke with, economic conditions were not overly kind to the pigment industry in 2001. In a company release dated Oct. 17, 2001, Clariant noted that markets for pigments remain depressed, as does demand for consumer goods in the U.S. and Europe.
The economy was shaky enough in 2001 to make any industry worry, and the pigment market was no exception. The market for pigments had a mixed year, which manages to raise both hopes and concerns among suppliers.
"Parts of Europe showed a slowdown towards the end of the second quarter," said Godwin Berner, global head, business line coatings, coatings and effects segment, Ciba Specialty Chemicals. "But higher sales were achieved in South America and parts of Asia."
"The pigments for paint market has suffered, as all other industries, from a poor economy in the first half of the year," said Joerg Hellwig, business head, Imperial Color Group, Bayer Corporation. But Mr. Hellwig added that there was some good news towards the latter half of the year. "From about June/July 2001 on we have seen better sales figures, which matched or exceeded last year's numbers."
Price Pressures and Concerns
Tough economic times require all companies to make efforts to cut costs to maintain margins. Coatings companies are applying downward pricing pressures on pigment makers in an effort to raise their own profit margins, and as the number of paint producers has decreased dramatically over the last 20 years, pigment suppliers are vying for fewer customers. These two factors have combined to put tremendous pressure on pigment manufacturers.
"The biggest impact on pricing is the overall weak economy, and the resulting drive by all customers to reduce costs," said Michael Greene, director, research and development, Bayer Corporation. "At the same time, this places pressure on the suppliers to avoid passing on raw material, energy and labor costs through work process optimization, or they risk losing market share."
The desire of pigment customers to cut costs is putting pressure on pricing in other ways as well. Because of the increased emphasis on cost, there is concern that customers will sacrifice performance for value. "The pressure on customers to make decisions based upon price rather than performance and unique application properties remains one of the greatest challenges," said Mr. Greene.
Currency fluctuation has also created difficult situations for the pigment market. Mr. Hellwig notes that customers increasingly want standardized pricing throughout the world. "With the globalization of our markets and a very strong U.S. dollar, there has been continuous price pressure from our global accounts to balance prices between Europe and the U.S.," he said.
Tony DiRisio, marketing manager, coatings at Clariant, believes that the relative strength of the U.S. dollar has affected pricing. The strong dollar, he said, allows foreign companies, mainly from India and China, to enter the U.S. market with products that are cheaper than domestic products. "Due to the strong U.S. dollar, cheaper imports have been entering the market competing mainly on price and not necessarily on quality," he said. "The U.S. is an attractive market for foreign competitors particularly from India and China."
Information from The Freedonia Group backs up this statement. The Cleveland, OH-based company contends further advances (in market growth) will be moderated by competition from low cost imports, particularly in the commodities sector, where some large volume organic pigments experienced price declines at the end of the 1990s. For example, the price of phthalocyanine blue fell nearly 10% in 1998 as a result of growing imports of low cost pigments from China, South Korea and other Asian nations, the company reported.
Globalization
While the paint industry is global, it is imperative that suppliers maintain a local presence to serve customers worldwide. Dr. Berner notes that "increasing globalization and industry consolidation make it essential to provide consistent quality throughout the world. Ciba has a global presence in and sells in all regions, and we see opportunities for sales growth in Asia and Latin America."
Many pigment manufacturers have recognized and reacted to growth potential in new markets. "The Asian market continues to develop a growing middle class," said Mr. Greene. "This trend will open new markets for all of our products."
New Technologies
According to The Freedonia Group, growth in the pigment industry will be spurred by the development of new products. Industry insiders agree with this sentiment, believing that product development is paramount to success in the marketplace.
Mr. Greene calls product development a cornerstone to maintaining a leadership position and answering the needs of customers. "While new products are used by some to ward off competitive pressures, we feel that they are primarily needed to enable our customers to develop new and improved applications."
Mr. Hellwig agreed that the purpose of new product development is to help the customer improve their products, noting that often it is the customer who initiates the development of pigment technology by voicing their needs. Customers often ask pigment suppliers to work with them on new products, Mr. Hellwig said.
Dr. Berner said that product development is critical to Ciba's business. "Bringing out new and above all novel products that provide improved effects gives our customers the competitive edge, ensuring their success in the market." According to Dr. Berner, Ciba launched more than 10 new products during 2001, including what it calls "Pigment X treatments," which meet customer demand for higher pigment loading, while maintaining the same coloristics and letdown stability in high performance coatings, he said.
Mr. DiRisio also agreed that new chemistry is vital to Clariant. "We continue to introduce new chemistry such as Benzimidazolone-Dioxazine, which is a PB 80 under the trade name Hostaperm Blue R5R, and Thiazinindigo chemistry, a PR 279 under the trade name Novoperm THI Red 4G 70."
Mr. DiRisio said that continued development of established products is also an important tool to helping customers. "Clariant is one of the few companies which performs basic research to improve the properties of classical pigments such as our PY 74 opaque with the introduction of a recrystallization stable version under the trade name Hansa Brilliant Yellow 2GX 70-S."
Environmental factors, particularly the replacement of heavy metals such as lead and cadmium, and the move towards waterborne coating technology is also influencing pigment development. According to the Rauch Guide, waterborne coatings in the architectural market have increased every year since 1979, and account for nearly 75% of the architectural market. The great potential for this technology is not lost on pigment suppliers.
"As the coatings market switches toward increased usage of waterborne systems, there is an increasing need for pigments that provide optimal performance in these new systems," said Mr. Greene. "At the same time, the solvent-based systems are evolving, and new products are needed to provide optimal performance. The introduction of new application systems, including water-, solvent- and powder-based, continue to present opportunities for introducing new products with enhanced performance," Mr. Greene agreed.
Bayer has introduced several products specifically for water-based paint systems. Among these are Palomar Blue B-4828, Quindo Red R-6708 and R-6710 and Perrindo Maroon ER-8765.
Ciba agrees that demand for products and processes that meet environmental regulations like lead replacement and waterborne and UV technology will have a major impact in the near future.
Among Ciba's new releases are Irgazin Yellow 2094 and Orange 2038, which fulfill demand for highly durable heavy metal-free pigments in the decorative and industrial paint markets.
Also focused on environmental technology, Clariant intends to introduce a new VOC-free series of pigments, Colanyl 500, to meet the demands of future environmental legislation, according to Mr. DiRisio.
Additional products from these companies and others are listed in the "New Pigments Directory" which begins on page 43 in the print version.
Predictions for 2002
No one really knows what 2002 holds for the pigment industry. The biggest concern for manufacturers is, of course, the economy. "We have to be concerned that the economy possibly is not recovering as soon or to the extent we are hoping for right now," said Mr. Hellwig. "However, we are very confident that 2002 will be much better than 2001."
This seems to be the prevailing sentiment. Companies in every industry are cautious but all believe that 2002 will be better across the board. According to Mr. DiRisio, the stage is set for an economic turnaround during the third quarter of 2002.
Dr. Berner sets no date, but agrees that things will pick up next year. "We are looking for a general improvement in the economy in both North America and Europe, and renewed growth within the Asian market," he said.
