With the continuous improvement of the level of social development, the technology of dye production is also improving, the global dye industry as a whole shows an upward trend, according to the industry research report released by Beijing Yanjing Bizhi Information Consulting, the market size of the global dye industry in 2021 reached more than 240 billion yuan, and it is predicted that by 2025 it will be expected to exceed 275 billion yuan. Market growth potential is huge.

In addition, Pampatwar sees the global inorganic pigments market size at $22.01 billion in 2021 and expects a compound annual growth rate of 5.38% to reach $35.28 billion during the 2022-2030 forecast period, he reported that the global specialty pigments market size in 2021 is $22.91 billion, and the market size is $35.28 billion. It will grow at a compound annual growth rate of 5.8% to reach $35.13 billion during the forecast period 2022-2030.

VMR's Pampatwar report said that the pigments industry, especially the organic pigments industry, has expanded significantly with the advancement of inks and will grow at a high rate, "however, the size of the organic, inorganic and specialty pigments market varies according to the different applications and consumer preferences of the class pigments." Pampatwar adds, "Most of the organic pigments used in inks are azo pigments (azo, monoazo, hydroxybenzimidazole, azo condensation), precipitate pigments (alkaline and acidic precipitate) and phthalocyanine pigments, which come in a variety of common shades, including blue and green pigments. Pigments make up 50 percent of the ingredients needed to make inks, and it's critical to utilize best-in-class pigments to create rich, bright and reliable inks for long-term use, as these inks can change the appearance of anything.

Consolidation has always been a key factor in the pigments industry, which has seen two huge mergers in recent years, with DIC and Sun Chemical acquiring BASF Pigments and Heubach acquiring Clariant Pigments division.

"Acquisitions and consolidation among small and major pigment players have been a feature of the past few years," said Suzana Rupcic, Head of Sun Chemical's global Division Managed inks, Color Materials. "The pigments market has experienced many of the same challenges as other industries over the past few years since the global outbreak of COVID-19, including unforeseen changes in demand, supply chain disruptions, and rising inflation rates since the beginning of the year."

Rupcic noted that after a slow recovery from the pandemic, the pigments market continues to operate under cost pressure, which is impacting the entire printing value chain. "Nevertheless, overall stability in raw material supply can be observed despite recent challenges," Rupcic added, "as with other industries, upcoming inflation and recession will determine growth rates in 2023 and beyond, and overall, we expect the global pigments market to grow at least as fast as GDP."

As for the growth market, packaging is still a bright spot in the ink industry. "The packaging market continues to be an area of continuous growth for Heubach and remains an area of focus for the future of our company," said Mike Rester, Manager of the Heubach Group Printing Market Division.

Rupcic said: "The market needs more sustainable products, especially in the packaging printing sector, and consumer awareness of sustainability has increased and led ink manufacturers to meet these requirements. "Ink manufacturers are increasingly focusing on more sustainable packaging inks, as well as low-odor and migration-free inks that meet regulatory requirements, and we are also seeing increased interest in pigments for digital inkjet printing."

Fujifilm Ink Solutions Group provides inkjet inks to original equipment manufacturers and pigment dispersions to other ink formulators, and Rachel Li, marketing manager of Fujifilm Ink Solutions Group, observes that the growth of the new inkjet market is driving the demand for water-based inkjet pigment dispersions.

"Inkjet is particularly suited to the current volatile market situation and the changing needs of printing production: Cost-effective short run, waste reduction to reduce costs, centralization to localized print production to reduce logistics risks and shorten delivery times, JIT (just in time) manufacturing, personalization of goods through mass customization, sustainable production through waste and energy reduction, and supply chain efficiency, "Li said.

"Ink chemistry is one of the contributing factors to making inkjet suitable for new applications, and pigment dispersion technology is a key core ingredient in ink formulations," Lee added, "We believe the demand for inkjet will continue to increase, and Fujifilm is committed to providing technology to drive this growth."

In terms of specialty pigments, Brilliant Color President Darren Bianchi reports that demand for fluorescent pigments has been steady, adding that there is a strong trend toward brighter, bolder colors in packaging, and fluorescent colors are the best choice.

"There were still some supply chain issues in the first half of the year, but our policy of holding inventory has allowed us to meet customer demand," Bianchi added. "We have successfully navigated the volatility in the fluorescent pigment market, and it remains to be seen whether the relaxation of China's strict 'zero COVID' policy will lead to the re-emergence of raw material supply chain issues."

"Effects pigments reflect the printing industry and the overall economy, where we have experienced fluctuating demand, increased regulatory and environmental pressures, supply chain issues, labor challenges and rising costs," said Neil Hersh, director of marketing and technical services at Eckart America Corporation. "The supply of effect pigments is fairly stable, while cost pressures persist.

Carlos Hernandez, marketing manager of Coatings and printing systems for the Americas at Orion Engineered Carbons, reports that the demand for carbon black has steadily increased over the past few years for almost all specialty and rubber applications. "In general, we're seeing organic growth in liquid packaging," Hernandez said. "We also see interesting potential in the inkjet market, where we are a leader in delivering specific performance and outstanding performance in gaseous black." We sell our FANIPEX grades and other products specifically for this market to help ink manufacturers comply with required industry regulations.

Phillip Myles of Colorscapes says the pigments industry has seen many supply disruptions over the past few years. "The COVID period has changed the consumption dynamics," Myers continued. "The container shortage has led to a sharp increase in shipping costs, followed by a sharp increase in the cost of chemicals in Asia, including higher oil prices, all of which have increased pigment prices. Now, in the second half of 2022, we're seeing a big correction, weak demand, good availability, so suddenly there's a big drop in transportation and chemical costs from Asia. With weak demand for pigments expected to continue until 2023, soft pricing is here to stay.

Liberty Specialty Chemicals Inc. Sales manager Tim Polgar says the pigment market has done quite well over the past few years. "We have experienced good overall growth in both the water-based and solvent-based ink markets," Polgar noted. "Supply and prices have proved stable in the first half of 2020. The second half of 2020 proved to be a challenge due to higher prices for base intermediates, raw materials, packaging and freight.

"2021 is a huge challenge, with COVID-19 impacting all businesses globally," Polgar added. "Customers are worried about getting enough pigments to meet their plant and customer requirements, prices are rising, container costs and shipping costs are a nightmare." So, what did the customer do? They placed orders beyond normal levels just to make sure they had enough paint so they could meet customer requests. As a result, this has been a strong year for sales. 2022 proved to be a year of slight uptick in business as customers had to consume a lot of inventory due to overbuying in 2021. We see some price stabilization in 2023, but once again we see signs of future price increases.

Pravin Chaudhary, Pidilite, said: "As COVID restrictions began to diminish and the pigments market took off, the industry achieved very good growth in FY22. "Unfortunately, the momentum could not be carried over into this year. Factors such as geopolitical disruptions, high inflation and tighter monetary policy by many governments have affected consumer sentiment. Pigments catering to the fields of paints, inks and plastics are seeing a high wind in all industries. While we think the short term looks challenging, the long term remains optimistic. Last year's consolidation heralded a relatively new player offering viable alternatives to global customers.

The opportunities facing the industry

(1) The world's organic pigment industry continues to shift

Due to strict environmental protection requirements, investment and operating costs are too high, organic pigment manufacturing enterprises in developed countries in Europe and the United States continue to transfer production capacity to Asia, establish joint ventures in China, India and other countries, or cooperate with local manufacturing enterprises in various forms. At the same time, with the intensifying competition in the international organic pigment market, especially in the traditional azo pigment market, the transfer of the world's organic pigment industry will continue in the future. In this context, China's organic pigment manufacturing enterprises are facing huge development opportunities:

On the one hand, China is the world's most important fine chemical products production base and consumer market, the transfer of international manufacturing capacity is conducive to China to continue to strengthen the position of the largest producer of organic pigments.

On the other hand, through the joint venture cooperation with global organic pigment manufacturers, domestic excellent enterprises can quickly improve their technical level and management capabilities, and is expected to take advantage of localization advantages in the joint venture cooperation to occupy a dominant position, which is conducive to further implementing the internationalization strategy, and constantly improve the core competitiveness.

(2) National industrial policy support

Organic pigments are widely used in ink, coatings, plastics and other fields, and are closely related to people's lives. In recent years, with the rapid development of ink, coatings and plastics industries in China, the status of organic pigment industry in the national economy has been continuously improved.

National Development and Reform Commission issued the "Industrial Structure Adjustment Guidance Catalogue (2019 edition)" (2019 "Organic pigments with high color fastness, functionality, low aromatic amines, no heavy metals, easy dispersion, and original pulp coloring", "The development and application of new technologies for the clean production of dyes, organic pigments and their intermediates, and intrinsic safety" are included in the encouraged investment projects, indicating the direction of industrial structure adjustment and optimization and upgrading for the domestic organic pigment industry. According to the Measures for the Identification and Administration of High-tech Enterprises issued by the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation and the Key High-tech Fields supported by the State, "New safe and environmental protection pigments and dyes" are included in the key high-tech fields supported by the State. After the promulgation of the policy, the new safety and environmental protection pigments and dyes have been supported by the policy, which is conducive to promoting the development of pigment production and product categories in the direction of safety and environmental protection.

(3) The growth trend of environmentally friendly organic pigments

The increasingly strict standards for the use of colorants by governments will further restrict the use of toxic and harmful substances, thus providing a broader space for the development of organic pigments. As early as 1994, the second batch of consumer goods regulations issued by the German government clarified that 20 kinds of pigments synthesized by prohibited aromatic amines were prohibited pigments; On September 11, 2002, the European Commission issued the 61st Directive of 2002, prohibiting the use of azo pigments that will decompose under reducing conditions to produce 22 carcinogenic aromatic amines; On 6 January 2003, the European Commission further banned the use and sale of chromium-containing azo pigments on the market for textiles, clothing and leather goods in the EU. The REACH regulation, which was formally implemented in 2007, replaced more than 40 previous directives and regulations on chemicals in the EU, and one of the focuses of its supervision is dyes, organic pigments, auxiliaries, intermediates and their downstream products, such as toys and textiles.

Relevant departments in China have also promulgated regulations and industry standards to restrict the use of products containing toxic and harmful substances. On January 1, 2002, the General Administration of Quality Supervision, Inspection and Quarantine promulgated and implemented the Limit of harmful Substances in Interior Decoration Materials; In 2010, the General Administration of Quality Supervision, Inspection and Quarantine of the State and the Standardization Administration of the State issued and implemented the "Limits of harmful Substances in Toy Coatings"; On June 1, 2010, the General Administration of Quality Supervision, Inspection and Quarantine promulgated and implemented the Limit of harmful Substances in Automotive Coatings; In October 2016, the National Health and Family Planning Commission issued GB9685-2016 "National Food Safety Standards for the use of Additives for Food Contact Materials and Products" and other standards. These regulations or industry standards explicitly limit the amount of hazardous substances such as lead and hexavalent chromium. Although China's limit on the use of chrome-containing pigment is still more relaxed than developed countries, with the development of the economy, the relevant standards in our country are bound to be further modified and converged to the developed countries. Therefore, the market for environmentally friendly organic pigments will become more and more extensive.

Raw material availability

As for the raw materials of pigments, Pampatwar reported that the raw materials market has been unpredictable in recent years.

"Several basic substances are becoming harder to find due to insufficient supply and rising prices," Pampatwar added. "Due to shifting raw material sourcing trends and China's growing influence on the printing industry supply chain, ink manufacturers and the petrochemical and grease chemical industries are experiencing price instability.

He added: "Many unforeseen events in the market have further restricted supply and exacerbated an already volatile situation." "As prices rise and supplies become scarce, printing inks and coatings manufacturers are increasingly affected by intense competition for materials and resources. However, in 2022, the trend is improving.

Pigment suppliers also report that raw materials continue to be a problem. Rester said that over the past few years, the industry has experienced unprecedented shortages and multiple delays in obtaining many of the key raw materials needed to produce pigments.

"While the overall global supply picture has improved in 2022, certain challenges remain and we will continue to find ways to meet customer demand," Rester added. "Energy costs in Europe continue to be very volatile and are an ongoing issue going into 2023.

"Some specialty grades are in tight supply, but at Orion Engineered Carbons, we have been improving our supply profile and responding well to the market through capital expenditures," Hernandez said.

"In the past few years, chemical procurement and supply chains have been extremely challenging due to capacity constraints and logistics delays," Li noted. "This has led to availability issues and strong price increases. Some of the key products affected are pigments, solvents, photoinitiators and resins. While the situation is reported to be leveling off, we do see some improvement in supply in Asia Pacific, but the overall picture remains fragile. However, the European supply chain remains very tight and challenging due to the situation in Ukraine, while being subject to ongoing inflationary pressures.

Article source: PWC Policy Consulting, Research Jing think tank, Jing Yan Chemical industry