Kerry Pianoforte, Editor01.06.23
Included in this round table discussion on pigments are Darren Bianchi , CEO, Brilliant Group; Kevin Sonby, vice president sales – Coatings, Plastics Specialties, Cathay Industries USA; Mark Ryan, marketing manager, The Shepherd Color Company; and Falko Orlowski, executive vice president marketing and sales, Trust Chem USA.
CW: How did the pigments market perform in 2022?
Brilliant Group: Demand has been solid. There were still some supply chain issues in the first part of the year, but our policy of holding inventory allowed us to meet customer demand.
Cathay Industries: Given the strong demand we experienced during the COVID years for inorganic pigments, we expected to see things level off in 2022. While we did see this occur in specific niche areas, our core markets of coatings, plastics and construction remained particularly strong, and we saw a year-over-year increase in the demand for our products. The fourth quarter has started to show some weakness.
Shepherd Color: Demand continued to be strong through most of 2022 but the future in 2023 is difficult to parse out as lingering supply chain effects and regional and market challenges could (this doesn’t seem finished) stifle growth.
Trust Chem: The first three quarters of 2022 performed above expectation with additional growth for Trust Chem. The fourth quarter we do see a slowdown mainly to customer inventory adjustments and uncertainty.
CW: Does the pandemic continue to impact the market for pigments (supply chain issues, price increases, availability)?
Brilliant Group: We have successfully navigated the gyrations of the fluorescent pigment market; it remains to be seen if China’s easing of their strict “zero COVID” policy will cause renewed supply chain issues for raw materials early next year.
Cathay Industries: The pandemic wreaked havoc on the supply chain and it changed the buying patterns that had been in place for over a decade. People built in unprecedented lead times to their ordering process because of ocean freight shortages, port congestion, lockdowns in cities and a significant reduction in the workforce. All of these new realities were pandemic related and have caused the market to expect lengthy gaps in the supply chain. Cathay Industries has consistently held a significant amount of inventory for our partners, and this allowed us to maintain our service level to our existing customer base while strategically growing it in select areas.
While many of the issues have started to improve, some impacts are still being felt in the domestic portion of the supply chain. Local shipping, storage and other costs are continuing to be higher than
pre-pandemic levels.
Trust Chem: There are still some problems in supply chain, but it got much better compared to middle and late 2021. Timing for containers from overseas have extended from four to five weeks in the past to more realistically six to eight weeks per container at still much higher cost. There are still some feedstock problems in China and India causing supply issues with specific pigments.
CW: Have you witnessed any recovery back to pre-COVID times?
Brilliant Group: We did not significantly lose volume during the pandemic. There were some raw material issues but customers are back to their normal ordering patterns.
Cathay Industries: While demand for our products remains as strong as it was pre-COVID, many other aspects regarding how we interact with our colleagues and customers has changed and will likely not revert to the pre-COVID environment. Availability of products appears to have greatly improved, as well as ocean freight rates.
Shepherd Color: Tradeshows, conferences and customer meetings are getting back to normal outside of some specific areas but at the same time we continue to leverage the remote resources and capabilities to better communicate in and outside our organization. Sometimes a face-to-face meeting is the best, but from a convenience and timing standpoint, remote methods have
their place.
Trust Chem: Yes, sales are back to levels before the pandemic.
CW: Geographically, which regions offer the most opportunity for growth?
Brilliant Group: With 85% of the world’s population living outside the Americas, we see Asia Pacific as the fastest growing region.
Cathay Industries: While growth in the APAC region far outpaced the rest of the world for the last two decades, we have seen a considerable leveling off over the last couple of years and have experienced strong consistent growth in all of the geographies that we are selling our products.
Shepherd Color: While the EU area has seen a decrease in demand, depending on the instability and actions taken to reduce inflation, the demand could come back quickly.
CW: What are the major trends and challenges influencing the global pigments market today?
Brilliant Group: It is largely back to basics: having inventory on hand, lab capabilities to support formulation and re-formulation, and great customer service.
Cathay Industries: The trend we are all reckoning is consolidation. As the number of pigment producers, distributors and customers become fewer through acquisition, it changes the industry dynamics. While this does pose some challenges, it also presents opportunities and the groups that offer quality and available product will have an advantage.
Shepherd Color: The cost of capital increasing could put a downward pressure on the consolidation activity in the industry. The issues around supply and logistics over the past few years has shown the advantage of holding inventory but as the financial markets respond to inflation and the actions taken to control it increase the cost of holding that inventory, a new optimum balance must be determined. At the same time, if there is an overall economic slowdown, it will take confident and competent leadership to satisfy current backlogs and fill emptied supply chains to be in a good supply situation after a slow-down so as not to re-live the issues of 2020-2021.
Besides logistics, products and technology can address these issues. Shepherd Color’s Dynamix easily-dispersed pigment technology means that color bases and paints can be made without the time-consuming, variable, and costly pigment dispersion step. Simple high-speed mixers can produce the right amount of paint, at the right time, with the right color. Make the amount of paint that you can sell, not the narrow amount of paint your manufacturing is designed for.
Trust Chem: Pricing and supply are still the most two important factors. Most customers test for back ups where they foresee supply issues rather than testing for new technologies.
CW: How are you responding to the demand for more sustainable solutions?
Brilliant Group: As a California-based manufacturer, we are subject to strict air quality rules and continuously look to ways to reduce our carbon footprint further. We evaluate new raw materials and keep working to make manufacturing more energy efficient.
Cathay Industries: EcoVadis is the global standard for developing and measuring sustainability and Cathay has been on the leading edge of measuring our processes and progress as we have maintained an EcoVadis rating since 2013.
Shepherd Color: Since sustainability is such a broad and relevant topic, Shepherd Color is proactive while also listening to our customers about meeting their sustainability goals. Reducing embodied carbon and the energy used to produce our products is a sustainability and financial advantage. Our Arctic IR Reflective products help building materials reduce their temperature when exposed to sunlight which can lead to energy savings.
Trust Chem: Besides the new Trust Chem plant coming onstream early 2023 with 10,000 tons of Azo pigment capacity, this new plant will make over 3,000 tons of intermediates to counteract supply issues for specific pigments. Secondly, we did build up extra local inventory in the U.S. and Canada and are able to supply most customer demand on time.
CW: What specific performance attributes are your customers looking for?
Brilliant Group: There is a strong trend towards brighter, more striking colors in packaging. Fluorescents are the best choice for this.
Cathay Industries: Customers want quality product available when they need it and strong customer support that is responsive.
Shepherd Color: We see increasing interest in sustainability as companies up and down the value chain determine what is the relevant and impactful measures and metrics to their markets.
CW: Are there any specific technologies that R&D is focusing on?
Brilliant Group: We use a range of technologies from non-formaldehyde to high strength to UV compatible to 100% reactive, where all have advantages depending on the customer application. We pride ourselves on offering a full fluorescents product range.
Shepherd Color: The hallmark of Shepherd Color’s CICP pigments are their inertness and chromaticity. We are always looking at ‘expanding the durable color envelope’. At the same time the inherent inertness of the pigments means that they receive regulatory approvals for the most sensitive applications like FDA Food Contact applications. While Shepherd Color may be known for developing new pigment chemistries like the NTP Yellow (PY227) and bringing to market the YInMn Blue (PBl86), we also find that established chemistries like cobalt blue (PBl28) still have room for improvement.
Cathay Industries: The Cathay EnvironOxide products are a reclaimed iron oxide from a proprietary remediation process that allow us to utilize materials from abandoned strip mines. We continue to improve and expand on our CathayTherm heat stable grades.
CW: Briefly provide a description of the latest products launched by your company.
Brilliant Group: Our 100% reactive, high strength fluorescent UVB Series, formulated to address customer need for higher color saturation and to perform better on non-porous substrates, is in beta testing at the moment.
Shepherd Color: Shepherd Color is known for its cobalt blue pigments, especially the red-shade Pigment Blue 28. After developing the high-gloss Blue 10C595, our R&D chemists took a deep dive looking further into the chemistry and developed a new product called Max Chroma Blue 20G599. It is the reddest and most chromatic masstone blue that we have ever produced and pushes the edge of the durable color envelope in another direction.
Trust Chem: Trust Chem is launching a new pigment plant in Jinzhou City, Liaoning Province during the first quarter 2023. We added over 10,000 tons of new Azo chemistry in nine pigment shades and will be able to tailor make products for our larger customer demands.
CW: How did the pigments market perform in 2022?
Brilliant Group: Demand has been solid. There were still some supply chain issues in the first part of the year, but our policy of holding inventory allowed us to meet customer demand.
Cathay Industries: Given the strong demand we experienced during the COVID years for inorganic pigments, we expected to see things level off in 2022. While we did see this occur in specific niche areas, our core markets of coatings, plastics and construction remained particularly strong, and we saw a year-over-year increase in the demand for our products. The fourth quarter has started to show some weakness.
Shepherd Color: Demand continued to be strong through most of 2022 but the future in 2023 is difficult to parse out as lingering supply chain effects and regional and market challenges could (this doesn’t seem finished) stifle growth.
Trust Chem: The first three quarters of 2022 performed above expectation with additional growth for Trust Chem. The fourth quarter we do see a slowdown mainly to customer inventory adjustments and uncertainty.
CW: Does the pandemic continue to impact the market for pigments (supply chain issues, price increases, availability)?
Brilliant Group: We have successfully navigated the gyrations of the fluorescent pigment market; it remains to be seen if China’s easing of their strict “zero COVID” policy will cause renewed supply chain issues for raw materials early next year.
Cathay Industries: The pandemic wreaked havoc on the supply chain and it changed the buying patterns that had been in place for over a decade. People built in unprecedented lead times to their ordering process because of ocean freight shortages, port congestion, lockdowns in cities and a significant reduction in the workforce. All of these new realities were pandemic related and have caused the market to expect lengthy gaps in the supply chain. Cathay Industries has consistently held a significant amount of inventory for our partners, and this allowed us to maintain our service level to our existing customer base while strategically growing it in select areas.
While many of the issues have started to improve, some impacts are still being felt in the domestic portion of the supply chain. Local shipping, storage and other costs are continuing to be higher than
pre-pandemic levels.
Trust Chem: There are still some problems in supply chain, but it got much better compared to middle and late 2021. Timing for containers from overseas have extended from four to five weeks in the past to more realistically six to eight weeks per container at still much higher cost. There are still some feedstock problems in China and India causing supply issues with specific pigments.
CW: Have you witnessed any recovery back to pre-COVID times?
Brilliant Group: We did not significantly lose volume during the pandemic. There were some raw material issues but customers are back to their normal ordering patterns.
Cathay Industries: While demand for our products remains as strong as it was pre-COVID, many other aspects regarding how we interact with our colleagues and customers has changed and will likely not revert to the pre-COVID environment. Availability of products appears to have greatly improved, as well as ocean freight rates.
Shepherd Color: Tradeshows, conferences and customer meetings are getting back to normal outside of some specific areas but at the same time we continue to leverage the remote resources and capabilities to better communicate in and outside our organization. Sometimes a face-to-face meeting is the best, but from a convenience and timing standpoint, remote methods have
their place.
Trust Chem: Yes, sales are back to levels before the pandemic.
CW: Geographically, which regions offer the most opportunity for growth?
Brilliant Group: With 85% of the world’s population living outside the Americas, we see Asia Pacific as the fastest growing region.
Cathay Industries: While growth in the APAC region far outpaced the rest of the world for the last two decades, we have seen a considerable leveling off over the last couple of years and have experienced strong consistent growth in all of the geographies that we are selling our products.
Shepherd Color: While the EU area has seen a decrease in demand, depending on the instability and actions taken to reduce inflation, the demand could come back quickly.
CW: What are the major trends and challenges influencing the global pigments market today?
Brilliant Group: It is largely back to basics: having inventory on hand, lab capabilities to support formulation and re-formulation, and great customer service.
Cathay Industries: The trend we are all reckoning is consolidation. As the number of pigment producers, distributors and customers become fewer through acquisition, it changes the industry dynamics. While this does pose some challenges, it also presents opportunities and the groups that offer quality and available product will have an advantage.
Shepherd Color: The cost of capital increasing could put a downward pressure on the consolidation activity in the industry. The issues around supply and logistics over the past few years has shown the advantage of holding inventory but as the financial markets respond to inflation and the actions taken to control it increase the cost of holding that inventory, a new optimum balance must be determined. At the same time, if there is an overall economic slowdown, it will take confident and competent leadership to satisfy current backlogs and fill emptied supply chains to be in a good supply situation after a slow-down so as not to re-live the issues of 2020-2021.
Besides logistics, products and technology can address these issues. Shepherd Color’s Dynamix easily-dispersed pigment technology means that color bases and paints can be made without the time-consuming, variable, and costly pigment dispersion step. Simple high-speed mixers can produce the right amount of paint, at the right time, with the right color. Make the amount of paint that you can sell, not the narrow amount of paint your manufacturing is designed for.
Trust Chem: Pricing and supply are still the most two important factors. Most customers test for back ups where they foresee supply issues rather than testing for new technologies.
CW: How are you responding to the demand for more sustainable solutions?
Brilliant Group: As a California-based manufacturer, we are subject to strict air quality rules and continuously look to ways to reduce our carbon footprint further. We evaluate new raw materials and keep working to make manufacturing more energy efficient.
Cathay Industries: EcoVadis is the global standard for developing and measuring sustainability and Cathay has been on the leading edge of measuring our processes and progress as we have maintained an EcoVadis rating since 2013.
Shepherd Color: Since sustainability is such a broad and relevant topic, Shepherd Color is proactive while also listening to our customers about meeting their sustainability goals. Reducing embodied carbon and the energy used to produce our products is a sustainability and financial advantage. Our Arctic IR Reflective products help building materials reduce their temperature when exposed to sunlight which can lead to energy savings.
Trust Chem: Besides the new Trust Chem plant coming onstream early 2023 with 10,000 tons of Azo pigment capacity, this new plant will make over 3,000 tons of intermediates to counteract supply issues for specific pigments. Secondly, we did build up extra local inventory in the U.S. and Canada and are able to supply most customer demand on time.
CW: What specific performance attributes are your customers looking for?
Brilliant Group: There is a strong trend towards brighter, more striking colors in packaging. Fluorescents are the best choice for this.
Cathay Industries: Customers want quality product available when they need it and strong customer support that is responsive.
Shepherd Color: We see increasing interest in sustainability as companies up and down the value chain determine what is the relevant and impactful measures and metrics to their markets.
CW: Are there any specific technologies that R&D is focusing on?
Brilliant Group: We use a range of technologies from non-formaldehyde to high strength to UV compatible to 100% reactive, where all have advantages depending on the customer application. We pride ourselves on offering a full fluorescents product range.
Shepherd Color: The hallmark of Shepherd Color’s CICP pigments are their inertness and chromaticity. We are always looking at ‘expanding the durable color envelope’. At the same time the inherent inertness of the pigments means that they receive regulatory approvals for the most sensitive applications like FDA Food Contact applications. While Shepherd Color may be known for developing new pigment chemistries like the NTP Yellow (PY227) and bringing to market the YInMn Blue (PBl86), we also find that established chemistries like cobalt blue (PBl28) still have room for improvement.
Cathay Industries: The Cathay EnvironOxide products are a reclaimed iron oxide from a proprietary remediation process that allow us to utilize materials from abandoned strip mines. We continue to improve and expand on our CathayTherm heat stable grades.
CW: Briefly provide a description of the latest products launched by your company.
Brilliant Group: Our 100% reactive, high strength fluorescent UVB Series, formulated to address customer need for higher color saturation and to perform better on non-porous substrates, is in beta testing at the moment.
Shepherd Color: Shepherd Color is known for its cobalt blue pigments, especially the red-shade Pigment Blue 28. After developing the high-gloss Blue 10C595, our R&D chemists took a deep dive looking further into the chemistry and developed a new product called Max Chroma Blue 20G599. It is the reddest and most chromatic masstone blue that we have ever produced and pushes the edge of the durable color envelope in another direction.
Trust Chem: Trust Chem is launching a new pigment plant in Jinzhou City, Liaoning Province during the first quarter 2023. We added over 10,000 tons of new Azo chemistry in nine pigment shades and will be able to tailor make products for our larger customer demands.