UV/EB raw materials market: rising energy costs and environmental regulations continue to drive the market for UV/EB technologies

Ink World, April, 2008 by Kerry Pianoforte

The UV ink market overall fared well in 2007, according to suppliers to the market. "We see the various segments of the energy cured ink market continuing to grow at a rate slightly greater than GDP in the both the EU and U.S. and at a generally faster rate than competitive technologies," said Harald Boner, technical marketing, pigments and additives division, Clariant. "UV inks are generally perceived as an environmentally friendly technology, which may also help drive growth."

"While we have seen another year of double digit growth in the European and overseas markets, the environment in North America proved to be more difficult," said Marcel Gatti, vice president energy curing, Rahn Group. "The downturn in the U.S. economy and the weakening dollar has created a highly competitive market, especially in the second half of 2007, where even smaller volumes were battled for with high intensity. Nevertheless, going into 2008 we remain optimistic for UV/EB market as a whole, as it continues to benefit from above average growth rates over other technologies due to ever increasing penetration into new applications. We are also benefiting from an increased awareness for total converting costs and productivity gains versus a simple kg by kg cost comparison between conventional and UV/EB materials."

"The radiation curing industry has generally followed the economy," said Patrick Saab, market manager radcure graphics, Americas, Cytec. "For growth, our expectations are the technology will continue penetrating into conventional/solventborne printing methods."

"We expect to see a 6 to 8 percent increase in UV over the next several years," said Joe Leon, general manager for Bomar Specialties.

Key growth markets include UV flexo and UV inkjet.

"We see the demand for digital inks growing at the expense of screen inks," Mr. Saab said. "Also, in food packaging we see a shift to flexible packaging from rigid packaging. With this change, there are new challenges for inks and coatings which will require more functionality along with shelf appeal for the packaging."

"Flexo remains a major growth market where radiation curing has come to be a dominating industry standard," said Mr. Gatti. "Increasing demand for packaging and labeling from less developed market areas will support this trend for the years to come. Although still considerably smaller in total volume, UV inkjet printing is developing to be the next major UV application in graphic arts."

Raw Material Costs

As has been the case for the last several years, raw material price increases continue to negatively impact the market. The challenge remains to be whether these prices increases can be passed along to their customers.

"The prices of raw materials keep escalating largely because of the cost pressures from feedstocks," said Mr. Saab. "Generally, our customers have understood what's driving price increases."

"Raw material prices have seen major increases over the last 12 months," said Mr. Gatti "The reasons for this are were known: increases in the basic raw materials, rising energy and transportation costs, as well as adverse currency exchange rate fluctuations for Asian-sourced materials. Through long-term relations along the whole supply chain, we have been able to mitigate some of these influences for a long time, but we just recently had to announce price increases for Q2 2008 across the whole product portfolio. Looking at the margin pressure that ink and coatings manufacturers have been facing for quite some time now, it is clear that such announcements are not well received by our customers. But obviously most of them are very familiar with these developments on the macro scale and had to announced increases themselves. For some products the concern tends to move even more towards supply security rather than pricing alone."

"Despite accelerated restructuring efforts, Clariant has not been able to any longer compensate for the significant raw material and energy prices increases by cost saving," said Chris Patterson, technical marketing, pigments and additives division, Clariant. "The cost increases have been partly passed on in order to remain a reliable, predictable and accountable supplier. Clariant will continue to monitor cost developments carefully and respond with appropriate measures, accordingly."

"Price increases are never welcomed, but the increases have been generally accepted due to widely publicized increases in oil, which directly affect most raw materials used in inks," Mr. Leon noted.

In addition to rising raw material costs, supply shortages are another concern in the market.

"A challenge will continue to be supply issues in some product categories," said Mr. Gatti. "There are also no signs that the upwards price pressure will go away anytime soon. We should also not forget that for basic raw materials, such as acrylic acid, our industry is competing with other, more dominant applications. There are many other examples where production capabilities of major players such as Dow, Perstrop, Daicel and others have not always been able to keep up with increasing demand."