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High Performance Pigments Market.

Coatings World had the opportunity to interview a number of experts in the high performance pigments market. Included in this interview are: Brandon Devis--head of business segment Coatings at Clariant's Business Unit Pigments; Frank Lavieri, executive vice president sales and marketing, DCC Lansco; Christine Gehres, VP Business Unit sales & marketing, Heucotech, Ltd.; Frank Bursch, president, Sudarshan North America; and Michael Venturini, marketing director, coatings, Sun Chemical Performance Pigments.

CW: How did the high performance pigments market fare in 2018?

Clariant: The market for high performance pigments (HPP) developed better than that for traditional pigments, and the demand for high performance pigments continues to increase as an offset to more traditional pigments due to multiple factors, including pigment performance characteristics, cost of usage, increased durability and raw material availability.

DCC Lansco: Use of high performance pigments continues to grow and earlier this year we announced a major expansion of our Canadian manufacturing capacity to be completed later this year to accommodate our higher sales. When complete we will be the largest manufacturer of benzimidazolone pigments for coatings in the North America including Yellow 151,154 and Orange 36. We are also increasing our capacity to manufacture pigments used in the plastic industry including Yellow 62, 168, 180,183,191 and Orange 64.

Heubach: Demand for HPP continues to grow with demanding applications and securing supply has been our major concern. Heubach therefore started production of Anti Corrosive Pigments in our US facility in PA. We are also expanding our capacities for Phthalos in India, as well as Complex Inorganic Color Pigments in Germany. Overall, we were able to generate growth within the plastics and industrial coatings industry. The HPP market continued to develop into the commodity area, with customers shifting from standard pigments to HPPs.

Sudarshan: The HPP market continues to grow as customers take advantage of the price erosion which took place over the past 10 years. For example, chemistries like DPPs are now being used where low performance reds where used in the past. Therefore, the overall usage of HPPs is increasing above market average.

Sun Chemical: 2018 was a dynamic year for high performance pigments. There has been significant impact from raw materials, tariffs and unfortunate plant incidents that have tragically impacted people's lives and affected the industry. Sun Chemical is working diligently on both sides with our raw material suppliers and global customers to work through the recent challenges.

CW: Are you concerned about the impact of a trade war with China?

Clariant: Since Clariant is a global player operating in 52 countries, the effect of potential (additional) tariffs on the Group's business is likely to be limited. Still, an increase in tariffs being applied between China and the U.S. and even more the ongoing controversy could adversely affect global economic growth.

The latest developments in this situation include increased tariffs by both sides announced in May 2019, as well as measures to individual companies. These fuel this uncertainty further and forces companies to consider its own situations in the light of such measures.

Therefore, Clariant will continue to review whether any tariffs or measures impact the economic viability of US or China-based production that is destined for export to the US or China. If so, this may result in shifting such production to elsewhere. However, the evaluation is still ongoing and therefore no final decision has yet been made.

DCC Lansco: Yes the 25 percent additional tariffs being levied on Chinese pigments imported into the U.S. distorts the market and has come at a time of supply disruptions due to changes in pollution prevention initiatives in China. The combination of these two issues have been very challenging for our U.S. customers and we hope the tariffs end soon but in the meantime DCC LANSCO has the largest product range of pigments not impacted by these tariffs and offer customers options to avoid them.

Heubach: The trade war impacts the U.S. consumers, and we see demand weaken in price sensitive areas, especially in lower end printing ink applications. We do not manufacture in China. However, most pigment manufacturers are dependent to some degree on raw materials from China. Finding ways of dealing with unprecedented increases, due to duties as well as raw material shortages and environmental costs is a challenge. Our customers expect a continuous pricing/supply balance as we also do from our raw materials suppliers. This is currently highly jeopardized by some unpredictability in the market, causing additional (non-value-added) work.

Sudarshan: Sudarshan is India's largest organic pigment manufacture and market leader. The majority of our raw materials are either sourced from India or manufactured in our own plants. Only very few intermediates come from China. Hence the trade war is to our advantage. Many customers are concerned about the uncertainty of the trade war as well as the blue sky initiative in China. They are looking for alternative competitive sources. We never been busier than we are right now.

Sun Chemical: Our extensive supply chain and global sourcing strategy are helping to mitigate the impact from the tariffs and we are committed to work through future challenges to provide uninterrupted delivery to our customers.

CW: How have emerging regions such as India and Southeast Asia effected the market?

Clariant: India is more and more recognized as alternative supply point concerning HPP in alternative to China.

They impact the market from both the supply and demand sides. Paint manufacturers across the globe need high performance pigments to meet customer expectations for weatherability, heat stability and light fastness. These customer expectations are no different in India or Southeast Asia as they are in Europe or the United States. From a supply side, India is more and more recognized as alternative supply point concerning high performance pigments in alternative to China. Clariant has been a major producer of pigments in India for a long time, with two major pigment manufacturing plants and a global innovation center to offset our work in Frankfurt, Germany.

Heubach: These regions also continue to evolve, so that the demand for high performance products is steadily growing. The demand for established products continues to be strong and adds pressure to availability.

Sudarshan: Over the past 10 years, suppliers like Sudarshan have made significant impact on the industry. Traditional suppliers continue to deal with their internal challenges and complexity, while we Sudarshan is focusing on customer service by expanding our product portfolio and securing supply. By doing so, we are able to capture extremely high growth rates.

Sun Chemical: Organic pigments--and specifically high-performance organic pigments--is a very dynamic market with many regional and global players. The uncertainties around tariffs and general availability of products from China have certainly prompted coatings producers to evaluate their supply chain. With more than four domestic and more than 20 global pigment manufacturing sites, Sun Chemical's extensive capabilities are well positioned to supply both U.S. and regional accounts throughout Asia, India, the Americas, Europe, Middle East and Africa. In many regions, including Asia and India, heavy metal replacement remains an influential trend supporting growth in high performance yellows, orange and red pigments.

CW: How is your company dealing with continued raw material price increases?

Clariant: With our Clariant Excellence program our company is aiming to offset inflation costs and increased raw material prices (as seen 2018).

Heubach: At Heubach we work continuously with our suppliers at securing supply of good quality raw materials. As part of this process, we have ongoing efforts of finding alternatives. Ultimately, we have to share the situation with our customers, and pass real cost increases on to them. At the same time Heubach implements backward integration for some of its products like for example for the Indanthrone Blue (C.I. Pigment Blue 60). Our own crude production improves the availability situation.

Sudarshan: Sudarshan has historical relationships with most raw material suppliers in India. These relationships allow Sudarshan the opportunity to offset raw material shortages in China. However, in many cases our Indian suppliers have increased the costs of their raw materials forcing Sudarshan to also increase prices for selected color indexes.

Sun Chemical: Prices of raw materials continue to increase quarterly/monthly in many markets. These increases have impacted all levels of the pigment supply chain, from basic chemicals to specialty raw materials. The major driver of these cost increases is a general lack of raw material availability due to the stronger enforcement of environmental and safety regulations globally. This is especially affecting supply from key markets in Asia. Many of these products are sourced from China and have been subjected to supply shortages and escalating feedstocks.

Kerry Pianoforte, Editor
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Author:Pianoforte, Kerry
Publication:Coatings World
Article Type:Interview
Geographic Code:9CHIN
Date:Aug 1, 2019
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