Kerry Pianoforte01.17.11
“Although the economy continues to present challenges and uncertainties, we have seen noticeable improvements as it pertains to overall demand for pigments in 2010 versus the same time last year,” said Brian Marsicano, business director, pigments, BASF in North America. “We are not seeing quite as much of a seasonal slowdown this year, in fact, we have seen some signs of improvement. For 2011, BASF will continue to improve upon our position and increase our competitiveness by utilizing our broad portfolio.”
“Overall it was a better year than most expected, which contributed to a significant number of supply problems from the major manufacturers,” said Rick Campbell, president, Trust Chem. “Companies like ours will be able to take advantage of these new opportunities. Most people are optimistic that 2011 will be stronger than 2010. Trust Chem is very optimistic about 2011.”
“The pigments market show mixed results for 2010,” said Robert Poemer, business manager, Heucotech. “Automotive was particularly strong versus 2009 showing double-digit growth rates due to the recovery of this industry. However, the automotive sector was still below 2008 figures. Industrial markets also exhibited strong growth over 2009 but unfortunately not as strong as automotive. Pigment sales into the building industry were essentially flat for 2010 and significant questions still remain about the timing of the recovery for this sector.
“The year 2010 was definitely an improvement over 2009,” said Poemer. “The year 2011 should show further recovery but will be a marginal improvement (2-4%) over 2010. If the building industry recovers quicker, than these numbers could improve somewhat but our perception is that a meaningful recovery for the building industry is still several years away.”
According to Mehran Yazdani, vice president, marketing performance pigments, Sun Chemical, due to a relatively strong bounce back year in the housing and auto markets in 2010, the pigments market rebounded in 2010 from 2009 levels, but not to pre-recession levels. “However, due to the supply rationalization that occurred during the downturn, and the increased costs of environmental and regulatory compliance, we have seen significant cost increases of the raw materials that we use to manufacture our pigments. In 2011, we expect that the magnitude of supply issues will decline, but not go away. Capacities for some raw materials should increase as incremental new capacity is restarted. However, where there are still fundamental imbalances in supply and demand, we would expect to see continued tightness and potential shortages again this year. Sun Chemical Performance Pigments is committed to fulfilling our obligation as the leader of the industry during this challenging time by remaining committed to investing in our strategic imperatives and providing value to our customers.”
Although there are reasons for optimism, raw material prices and supply issues continue to plague the pigment manufacturers.
“A key trend and challenge we saw in 2010 was the substantial increase of raw materials costs,” said Yazdani. “After two years of rapid decline in demand, we saw a significant increase in demand in 2010. Unfortunately due to raw material shortages and increased environmental and regulatory compliance costs, we saw a significant amount of cost increases in raw materials. We expect this trend to continue in 2011.
“There also continues to be strong positive trends toward the usage of high performance and effects pigments,” said Yazdani. “At Sun Chemical Performance Pigments, we continue to work on controlling our own costs closely with our supply chain partners, to improve our internal operations, and to develop new value oriented products that can help customers grow their business. We will continue to invest in those areas that provide our customers with innovative products and services allowing them to be more competitive and present the best value propositions in the market.”
“The major concern facing the global pigments market today is raw material supply and pricing,” said Poemer. “Commodities and oil prices are rising which are affecting raw material prices and subsequently pigment prices. There have also been shortages in the availability of intermediates for the pigments. These have been caused by a variety of reasons including regulatory issues in India and China and inventory reduction of intermediates due to the global economy.
“Another major challenge for the global pigment market continue to be the global economy,” Poemer continued. “There are countries in Europe that are essentially going bankrupt and are having to be bailed out by the EC. The U.S. economy and in particular the baking industry needs to regain the confidence in order to assist in rebuilding the housing industry. Pigment manufacturers are therefore challenged to provide environmentally responsible products with higher performance properties at pricing that is equivalent to current offerings,” said Poemer.
“Competition is intense and we are seeing ongoing consolidation of traditional suppliers with new sources expanding to fill the void,” said Campbell. “Some key issues are cost instability and the general trend of increasing cost because of currency issues, inflation and growing environmental compliance cost in countries like China where an increasing percentage of pigments and more importantly, pigment raw materials are made.”
Pigment manufacturers are also dealing with complying with increasingly stringent environmental regulations such as the EU’s REACH. “Trust Chem expects to fully register more different pigment chemistry than other Asia suppliers,” said Campbell. “We do not think pigment buyers fully understand how the REACH registration program could effect the availability of organic pigments worldwide. In 2011 we expect only a small impact but over the next five years, no one really knows if REACH will result in fewer suppliers and further product line consolidations. And of course no one really knows when the economies in the major industrial countries will recover causing uncertainly and reluctance to expand capacity.”
According to Marsicano, another challenge is meeting coatings customers demand for higher performance pigments, such as lightfastness, weatherfastness, alkalai resistance and improved color space at prices equivalent to or below that of current offerings. “The increasing demand for high performance, special effect and heat management pigment solutions represent key market trends,” he said. “BASF has a robust portfolio of pigments that provide unique performance characteristics and benefits that address each of these three trends. High performance pigments (HPP) enable enhanced durability, opacity and higher hiding and are compatible across broad application areas. Special effect pigments provide exceptional brilliance and ultra-high chroma needed for the creation of novel designs and product differentiation. Heat management pigments provide solar energy management solutions, including near-infrared (NIR) reflective pigments, NIR transparent organic pigments, and stir=in pigment dispersions and additives for transparent applications.”
Despite the many challenges facing the pigment industry, there are also plenty of opportunities for growth. “From the market segment viewpoint, we expect continue growth in cosmetics, specialties, and niche markets,” said Yazdani. “We also expect flat to declining market in automotive, architectural, and ink markets. The trend for more efficient and smaller cars in the automotive market will see a reduction in paint consumption, however, it will also increase the demand for color. This trend will help to fuel the continued growth in high performance and effect pigments.”
“Traditional markets such as automotive and the industrial segment will continue to be primary consumers of high performance and special effect pigments,” said Marsicano. “Similar to last year, we see interior and exterior decorative applications as a high growth area for HPP based on increased interest for materials with improved durability, opacity and weatherfastness properties by our customers. Used in a wide range of end market applications from automobiles, house exteriors to electronics and many more, special effect pigments address demands for brand and product differentiation as the range of aesthetic color values continues to expand. Further, we anticipate growth in demand for heat management pigments as rising energy costs and global warming concerns increase the need for solar management solutions within architectural and construction applications.”
“For our company, growth is happening in all market sectors,” said Campbell. “Worldwide demand for printing ink is expected to decline gradually because of the effects of the internet, especially for publication inks. For our company, we expect the demand for high performance pigments to grow faster than ‘traditonal’ pigments.”
From a geographical viewpoint, the emerging industrial giants, China, India, Brazil and Eastern Europe, are seen as the markets where per capita gross domestic product (GDP) is expected to grow most rapidly. According to Yazdani, related to the GDP growth of these emerging markets will be the growth in the demand for high performance pigments for the coatings of durable goods, buildings and the automotive sector.
“The demand for pigments in the emerging markets like China and India actually increased significantly in 2010,” said Yazdani. “Overall, the demand in the emerging markets is still closely tied to their exports of manufactured goods to Europe and North America. In China, higher local demand, tighter environmental controls, and less available credit, will most likely make pigment producers there less competitive. As a consequence, we are exploring potential opportunities to better utilize our North America and European pigment manufacturing operations.”
“The production and consumption of organic pigment in India and China is strong,” said Campbell. “No one expects this to change. There is concern about when there will be sustained growth in the U.S. and Europe and the governments in China and India are trying to slow growth and inflation. However, some wonder if total world capacity is growing fast enough to support local demand and an expected continual improvement in world demand. Less cost effective Western factories are being closed, taking out capacity in Western countries for both finished pigment and raw materials.”
“Nearly every major coatings and ink company traveled to China in 2010 to learn about the capabilities within China to meet their worldwide supply and quality requirements,” Campbell continued. “Almost all have programs in place to increase the share of pigment they buy from China. There is significant interest in high performance pigments and the desire to develop alternative sources.”
“It is our perception that pigment demand in the emerging markets, particularly India and China, has remained at relatively consistent levels despite the economic downturn,” said Poemer. “However, exports from these emerging countries have certainly been affected dramatically by the economic downturn. The emerging countries are beginning to see other factors that are having major impacts on their pigment production. These include pricing increases on items such as crude oil and intermediates, increased regulatory pressures and higher wage level demands from their workforce. These impacts will in all likelihood slow but not stop the movement of pigment production to these emerging countries.”
Log on to www.coatingsworld.com for additional information on the pigments market, including the latest product offerings.
“Overall it was a better year than most expected, which contributed to a significant number of supply problems from the major manufacturers,” said Rick Campbell, president, Trust Chem. “Companies like ours will be able to take advantage of these new opportunities. Most people are optimistic that 2011 will be stronger than 2010. Trust Chem is very optimistic about 2011.”
“The pigments market show mixed results for 2010,” said Robert Poemer, business manager, Heucotech. “Automotive was particularly strong versus 2009 showing double-digit growth rates due to the recovery of this industry. However, the automotive sector was still below 2008 figures. Industrial markets also exhibited strong growth over 2009 but unfortunately not as strong as automotive. Pigment sales into the building industry were essentially flat for 2010 and significant questions still remain about the timing of the recovery for this sector.
“The year 2010 was definitely an improvement over 2009,” said Poemer. “The year 2011 should show further recovery but will be a marginal improvement (2-4%) over 2010. If the building industry recovers quicker, than these numbers could improve somewhat but our perception is that a meaningful recovery for the building industry is still several years away.”
According to Mehran Yazdani, vice president, marketing performance pigments, Sun Chemical, due to a relatively strong bounce back year in the housing and auto markets in 2010, the pigments market rebounded in 2010 from 2009 levels, but not to pre-recession levels. “However, due to the supply rationalization that occurred during the downturn, and the increased costs of environmental and regulatory compliance, we have seen significant cost increases of the raw materials that we use to manufacture our pigments. In 2011, we expect that the magnitude of supply issues will decline, but not go away. Capacities for some raw materials should increase as incremental new capacity is restarted. However, where there are still fundamental imbalances in supply and demand, we would expect to see continued tightness and potential shortages again this year. Sun Chemical Performance Pigments is committed to fulfilling our obligation as the leader of the industry during this challenging time by remaining committed to investing in our strategic imperatives and providing value to our customers.”
Although there are reasons for optimism, raw material prices and supply issues continue to plague the pigment manufacturers.
“A key trend and challenge we saw in 2010 was the substantial increase of raw materials costs,” said Yazdani. “After two years of rapid decline in demand, we saw a significant increase in demand in 2010. Unfortunately due to raw material shortages and increased environmental and regulatory compliance costs, we saw a significant amount of cost increases in raw materials. We expect this trend to continue in 2011.
“There also continues to be strong positive trends toward the usage of high performance and effects pigments,” said Yazdani. “At Sun Chemical Performance Pigments, we continue to work on controlling our own costs closely with our supply chain partners, to improve our internal operations, and to develop new value oriented products that can help customers grow their business. We will continue to invest in those areas that provide our customers with innovative products and services allowing them to be more competitive and present the best value propositions in the market.”
“The major concern facing the global pigments market today is raw material supply and pricing,” said Poemer. “Commodities and oil prices are rising which are affecting raw material prices and subsequently pigment prices. There have also been shortages in the availability of intermediates for the pigments. These have been caused by a variety of reasons including regulatory issues in India and China and inventory reduction of intermediates due to the global economy.
“Another major challenge for the global pigment market continue to be the global economy,” Poemer continued. “There are countries in Europe that are essentially going bankrupt and are having to be bailed out by the EC. The U.S. economy and in particular the baking industry needs to regain the confidence in order to assist in rebuilding the housing industry. Pigment manufacturers are therefore challenged to provide environmentally responsible products with higher performance properties at pricing that is equivalent to current offerings,” said Poemer.
“Competition is intense and we are seeing ongoing consolidation of traditional suppliers with new sources expanding to fill the void,” said Campbell. “Some key issues are cost instability and the general trend of increasing cost because of currency issues, inflation and growing environmental compliance cost in countries like China where an increasing percentage of pigments and more importantly, pigment raw materials are made.”
Pigment manufacturers are also dealing with complying with increasingly stringent environmental regulations such as the EU’s REACH. “Trust Chem expects to fully register more different pigment chemistry than other Asia suppliers,” said Campbell. “We do not think pigment buyers fully understand how the REACH registration program could effect the availability of organic pigments worldwide. In 2011 we expect only a small impact but over the next five years, no one really knows if REACH will result in fewer suppliers and further product line consolidations. And of course no one really knows when the economies in the major industrial countries will recover causing uncertainly and reluctance to expand capacity.”
According to Marsicano, another challenge is meeting coatings customers demand for higher performance pigments, such as lightfastness, weatherfastness, alkalai resistance and improved color space at prices equivalent to or below that of current offerings. “The increasing demand for high performance, special effect and heat management pigment solutions represent key market trends,” he said. “BASF has a robust portfolio of pigments that provide unique performance characteristics and benefits that address each of these three trends. High performance pigments (HPP) enable enhanced durability, opacity and higher hiding and are compatible across broad application areas. Special effect pigments provide exceptional brilliance and ultra-high chroma needed for the creation of novel designs and product differentiation. Heat management pigments provide solar energy management solutions, including near-infrared (NIR) reflective pigments, NIR transparent organic pigments, and stir=in pigment dispersions and additives for transparent applications.”
Despite the many challenges facing the pigment industry, there are also plenty of opportunities for growth. “From the market segment viewpoint, we expect continue growth in cosmetics, specialties, and niche markets,” said Yazdani. “We also expect flat to declining market in automotive, architectural, and ink markets. The trend for more efficient and smaller cars in the automotive market will see a reduction in paint consumption, however, it will also increase the demand for color. This trend will help to fuel the continued growth in high performance and effect pigments.”
“Traditional markets such as automotive and the industrial segment will continue to be primary consumers of high performance and special effect pigments,” said Marsicano. “Similar to last year, we see interior and exterior decorative applications as a high growth area for HPP based on increased interest for materials with improved durability, opacity and weatherfastness properties by our customers. Used in a wide range of end market applications from automobiles, house exteriors to electronics and many more, special effect pigments address demands for brand and product differentiation as the range of aesthetic color values continues to expand. Further, we anticipate growth in demand for heat management pigments as rising energy costs and global warming concerns increase the need for solar management solutions within architectural and construction applications.”
“For our company, growth is happening in all market sectors,” said Campbell. “Worldwide demand for printing ink is expected to decline gradually because of the effects of the internet, especially for publication inks. For our company, we expect the demand for high performance pigments to grow faster than ‘traditonal’ pigments.”
From a geographical viewpoint, the emerging industrial giants, China, India, Brazil and Eastern Europe, are seen as the markets where per capita gross domestic product (GDP) is expected to grow most rapidly. According to Yazdani, related to the GDP growth of these emerging markets will be the growth in the demand for high performance pigments for the coatings of durable goods, buildings and the automotive sector.
“The demand for pigments in the emerging markets like China and India actually increased significantly in 2010,” said Yazdani. “Overall, the demand in the emerging markets is still closely tied to their exports of manufactured goods to Europe and North America. In China, higher local demand, tighter environmental controls, and less available credit, will most likely make pigment producers there less competitive. As a consequence, we are exploring potential opportunities to better utilize our North America and European pigment manufacturing operations.”
“The production and consumption of organic pigment in India and China is strong,” said Campbell. “No one expects this to change. There is concern about when there will be sustained growth in the U.S. and Europe and the governments in China and India are trying to slow growth and inflation. However, some wonder if total world capacity is growing fast enough to support local demand and an expected continual improvement in world demand. Less cost effective Western factories are being closed, taking out capacity in Western countries for both finished pigment and raw materials.”
“Nearly every major coatings and ink company traveled to China in 2010 to learn about the capabilities within China to meet their worldwide supply and quality requirements,” Campbell continued. “Almost all have programs in place to increase the share of pigment they buy from China. There is significant interest in high performance pigments and the desire to develop alternative sources.”
“It is our perception that pigment demand in the emerging markets, particularly India and China, has remained at relatively consistent levels despite the economic downturn,” said Poemer. “However, exports from these emerging countries have certainly been affected dramatically by the economic downturn. The emerging countries are beginning to see other factors that are having major impacts on their pigment production. These include pricing increases on items such as crude oil and intermediates, increased regulatory pressures and higher wage level demands from their workforce. These impacts will in all likelihood slow but not stop the movement of pigment production to these emerging countries.”
Log on to www.coatingsworld.com for additional information on the pigments market, including the latest product offerings.
