The pigment report: although pigment companies generally noted that 2007 was a relatively good year for the industry, there are also numerous concerns for the future, including raw material costs, the economy, the elimination of the VAT in China and environmental mandates

Ink World, March, 2008 by David Savastano

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Overall, pigment manufacturers reported that 2007 was relatively good for business. However, there were plenty of concerns as well: the economic slowdown, higher petrochemical and raw material costs, the reduction and elimination of the value added tax (VAT) in China and closing of pigment companies due to environmental concerns in China.

Peter Carey-Yard, marketing director, coatings, high performance pigments for Sun Chemical, said that the pigments market worldwide was generally good, especially in Europe, but the U.S. market is struggling.

"The U.S. is currently the most challenging region of the world for the pigments market, primarily due to a weakened dollar, a struggling automotive market and a housing slump that led to a decline in home building and paint use," Mr. Carey-Yard said. "It was a slow start the first half of 2007," said Andrew Grabacki, vice president of sales for General Press Colors. "We picked up the second half of the year. From what we have heard, it was about the same for everyone else."

"Lansco Colors had a strong year in 2007," said Frank Lavieri, executive vice president and general manager for Lansco Colors. "The business conditions were challenging due to the dramatic cost increases experienced by the pigment industry."

David Woolven, head, imaging & inks business line NAFTA, coating effects segment, Ciba Specialty Chemicals, said that overall, the 2007 pigment market performed quite well, particularly in the commercial, packaging, digital and specialty segments. "The market for unique types of pigments and unique application areas continue to grow steadily, as brand owners become more demanding in terms of effects, performance and differentiation," Mr. Woolven added. "For Toyo, 2007 was above plan and saw a greater focus on high performance, violet, blue, red, magenta and green pigments," said Chris Whiston, regional marketing manager, Toyo Color America, LLC.

Ibrahim Zidan, head of global technical marketing printing inks for Clariant International AG, said that the past year included several challenges for Clariant and the pigment industry.

"The main challenge was and remains the strong increase of costs for raw materials, energy and transportation," Mr. Zidan said. "The elimination of export incentives in China, an increased focus on the resolution of environmental issues leading to tightened supply and a strong fluctuation between major currencies rank among the top influential factors. Demand remained strong for Clariant's products and services, confirming the need for high performing, cost effective materials in combination with a strong service orientation around the globe."

Thierry Chevrier, director, performance chemicals--coatings, plastics and specialties, for BASF in North America, said the pigment industry is relatively flat and growing slightly below gross domestic product (GDP) in North America. "Some segments, including markets for products in the building and construction industry, were soft," Mr. Chevrier noted. "Other segments, including the automotive industry and pigments for additives, reflected the industry fluctuations that have taken place. On the positive side, we saw growth in the plastic packaging and specialty ink segments."

Badal Shah, director, marketing at Aakash Chemicals & Dye-Stuffs, Inc., said that 2007 was a memorable year for his company. "It was a year which saw a complete economy of change," Mr. Shah said. "The U.S. economy incurred serious setbacks due to its depreciating currency as well as severe credit woes sparked by the housing market. These issues coupled with record oil prices, strengthening foreign economies as well as currencies, and pollution problems, created a shortage in raw material supply, increased prices, and longer lead times.

"This past year was an interesting journey for Heubach and the pigment producers in general," said Don McBride, COO for Heucotech Ltd. "On one side there was the continued rise in oil and key raw materials, combined with erratic metal pricing, U.S. dollar weakness and elimination of the VAT in China. On the other hand Heubach introduced several new pigments, added inorganic pigment capacity in Europe, built our third organic pigment facility in Asia and laid the groundwork for a new business unit in NAFTA."

"China began the price increase after the government retracted the export rebate from all factories, thus immediately increasing all prices by an average of 13 percent," Mr. Shah said. "This affected all raw materials in general from resins to pigments. Immediately markets began shifting in favor of India. However, within three months, the Indian currency had risen to record value against the dollar and all prices began increasing once again. The world market was in a tailspin and was forced to undesirably accept price increases. As many suppliers were lost in the increases, Aakash Chemicals saw this as opportunity and began to restrategize. Our new strategies were deemed successful as Aakash Chemicals had a record year and a very positive lookout for 2008."