Pigments Update

The pigments market was estimated at $14.86 billion in 2018, according to Global Market Insights.

The market is forecasted to reach $20 billion by 2025, as it registers a 4.9 percent CAGR between 2019 and 2026, according to Global Market Insights.

Global Market Insights said that the paint and coatings industry – valued at more than $128 billion in 2018 – will remain the largest demand segment for pigments over the timespan.

The production of paints and coatings accounted for 45 percent of total global demand in 2017, according to market research company Ceresana.

However, escalating raw material prices may hamper the product demand to some extent during that period, per Global Market Insights.

Market in 2019

Heucotech, Ltd.’s Vice President of sales & marketing Christine Gehres said 2019 will be remembered as a “very volatile and challenging year.”

“As a result of ‘Blue Sky’ [an initiative looking to improve energy efficiency while targeting polluters and charging for carbon emissions], fires, explosions, the availability and cost of raw materials, as well as certain pigments became very unpredictable,” she said. “The availability of raw materials improved compared to 2018, but there were still some issues mostly due to environmental issues in China.”

“In 2019, the pigments market was significantly impacted,” said Brandon Devis, head of Coatings, Global Marketing & Innovation at Clariant Colorant Solutions. “Already in the fall of 2018 we witnessed stricter enforcement of China’s anti-pollution regulations causing scarcities of raw-materials and influencing the availability of products. Prices for both intermediates and organic pigments were volatile.”

The pigment marked finished “mixed” with the Americas, doing better than most regions, reported Frank Lavieri, DCC Lansco’s executive VP of sales & marketing.

According to David Wawer, executive director, Color Pigments Manufacturers Association, Inc., color pigment sales in North America were lower in 2018 than they were in 2017.

“Sales for 2019 were projected to be the same level as 2018,” he said. “Global manufacturing was flat in 2018 and projected to be at the same level for 2019. There is potential for an increase in manufacturing for 2020.”

“There was growth in the high performance and specialty segments in the US, but traditional markets were negatively impacted,” Gehres added.

Potential growth regions

Asia Pacific and North America offer the greatest potential for growth in 2020, according to Wawer.

“Asia remains as the region with the highest growth rate,” said Milan Krumbe, general manager, Sudarshan Europe B.V. “Europe and North America are the regions with the highest volume demand and increased growth opportunities driven by external impacts as market consolidation and trade wars.”

“We continue to see above-average growth in Southeast Asia, driven by lower VOC dispersions and high-performance organic pigments,” Devis added. “However, the North American market, long considered a mature market, has also shown significant growth opportunities in organic pigments for both decorative and industrial coatings. In Europe and Latin America, we see a consistent value of the pigment market.”

Segment-wise, Wawer sees growth in architectural, powder and industrial coatings.

Tariffs

The top issues for the color pigments industry in 2019, per Wawer, were: the overall U.S. economy, industry consolidation, raw materials cost, raw materials availability, and trade and tariffs.

He expects the U.S. economy to remain the top issue in 2020, followed by trade and tariffs.

“This is, of course, one piece of the puzzle affecting the growth in China and worldwide,” Gehres said. “The increase in import duties for Chinese pigments has caused massive cost crunches in the U.S. for the pigment processing industries and has in some cases led to a reduction in pigment consumption. Tariff increases have been very disruptive to supply chains, market shares and inventories.

“In addition, the hardened situation has direct and negative economic consequences, resulting in increased uncertainty and decreasing acceptance for products of American origin within the Asian/Chinese market and vice versa,” she continued.

“The tariffs themselves have caused pigment manufacturers into a backward-looking stance, as we have needed to focus on stabilizing raw material supply chain as much as possible to minimize disruption and cost increases to our customers,” said Darren Bianchi, founder and CEO of Brilliant Group, Inc. “With certain key raw materials only available in China, there has been no choice but to absorb what we can and pass on the rest.

“In short, the primary impact is that our U.S.-made products are not as competitive globally as they were previously. Furthermore, the search for alternate raw materials has also caused a drain on lab resources that could be put to better use for new product development.”

Added Krumbe: “The tariff situation impacted and shifted significantly the global supply chain from China to India and lead to increased supply activities from India to the U.S. market. Supply chain dynamics and competition increased and requires the change from operational to strategic sourcing.”

For Clariant, “We have found the impact to be limited, as the majority of the organic pigments we sell in the U.S. are produced in Germany, India, Mexico, Brazil and Japan.

“We do have a joint-venture in China, and only very few products are imported,” he added.

Demand for more sustainable solutions

At the World Procurement Awards 2019, which took place in London, Clariant was recognized in the “Supplier Risk Management” category for leading the way in risk mitigation, Devis said.

“According to the judging panel, Clariant received the award for its best-in-class implementation of a holistic risk management process that involves external and internal stakeholders in an application that is breaking new grounds,” he continued. “Clariant monitors risks in five key areas: Environmental, financial, production/supplies, social and governance risks. Using data from a range of external partners, real time information is available to the risk manager who engages responsible buyers if a risk or event needs attention or mitigation.” 

“There is nothing more sustainable than anticorrosive pigments and high performance inorganic pigments,” Gehres said. “Both product lines enable customers to produce durable products, therefore reducing costs and material consumption to a minimum.”

To that extent, Heubach is offering a comprehensive product portfolio of zinc-free and more environmentally friendly alternatives to zinc phosphate-based products, she noted.

In addition, Heubach’s broad product portfolio includes a wide range of lead-free alternatives (i.e. single inorganic or organic pigments, pigment preparations), Gehres added.

DCC Lansco will soon open its new, Canada-based organic pigment production plant, which uses state-of-art technology that is highly efficient in its use of manpower, electricity and water, Lavieri said.

“We will be making high-performance pigments in this new equipment primarily for the coatings and plastics markets globally,” he added. “When sold in the U.S., these products will be free of all duties. We believe that this is the first new organic pigment plant built in North America in decades.”

According to Marketing Manager Mark Ryan, the Shepherd Color Company is addressing sustainability “in how we source raw materials, our production process, our product properties, and how we deal with all of our stakeholders. 

“We source our raw materials ethically and are always looking at reducing energy and water usage to make our production more efficient,” Ryan continued. “The colorants are extremely inert which leads to long service materials and low interaction with the environment.”

Brilliant continues to develop new, non-formaldehyde chemistries for applications where non-formaldehyde fluorescent pigments were not suitable, per Bianchi.

“There are several facets that encompass sustainability, including renewable raw materials, new environmentally-friendly technologies and responsible manufacturing,” said Michael Venturini, marketing director, Coatings, Sun Chemical Performance Pigments, adding that the company strives to meet customer demands through those three approaches.

“On the technology side, in addition to our offerings to replace heavy metal pigments, Sun Chemical has a family of organic pigments designed to have a smaller environmental footprint based on our ‘do-more-with-less’ approach,” he continued. “The family includes Sunbrite Yellow 74, Fastogen Violet 23 and Quindo Red 122.

These products are primarily designed for deco coatings, but also find usage in a wide array of industrial coatings. Their environmental benefit comes from their higher tint strength, allowing formulators to reduce their usage. Reducing consumption is one of the most effective ways to improve all environmental aspects from CO2 output and raw material usage to energy reduction, packaging, and shipping.”

M&A

In August, DIC Corporation entered into a definitive agreement to acquire BASF’s global pigments business, known as BASF Colors & Effects. The purchase price on a cash and debt-free basis is €1.15 billion ($1.28 billion), according to DIC.

“We have outlined a clear growth path for DIC with the target to increase our sales to one trillion yen [approximately €8 billion] by 2025,” said Kaoru Ino, president and CEO of DIC.

The acquisition will broaden DIC’s portfolio as a global manufacturer of pigments, including those for electronic displays, cosmetics, coatings, plastics, inks and specialty applications.