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Pigments account for nearly 20% of an inkmaker’s costs
F O C US firmed up, while the US economy has failed to maintain its early promise. Investors’ confidence has been shaken by revelations of misleading accounting practices and deliberate fraud at a number of major US-based corporations, leading to falls in share prices, which in turn have precipitated cutbacks in US consumer spending. These relative changes have been reflected in foreign exchange rates. The value of the euro has improved from $0.89 at the end of December 2001 to $0.98 at the end of July 2002. The value of the Japanese yen has improved from 131.06 to the dollar at the end of December 2001 to 119.76 at the end of July 2002. The Australian dollar, which fell below the psychologically important $0.50 level in September 2001, has improved to $0.544 at the end of July 2002. What does this mean for the pigments industry and its customers? Most importantly, renewed worldwide economic growth should mean higher sales volumes. However, there is still a strong anti-inflationary backpressure feeding back from retailers to manufacturers (such as paintmakers) to raw material suppliers (such as pigment producers). The drive to hold down costs means that pigment suppliers will continue to find it difficult to raise their prices, especially in sectors where inventories remain high. Commenting on the latest results for its Coating Effects business, Ciba Speciality Chemicals reported: “A solid pick-up in demand in all coatings and plastics markets, with strong growth in digital printing and liquid crystal displays and a stable US automotive market, all helped the business to increase sales by 4% in local currencies, compared to 1H 2001. Sales volumes were 5% higher. But prices declined by 3%.” Kronos, one of the world’s top five TiO2 pigment producers, reported the highest quarterly sales volume in the company’s history in 2Q 2002. Mr J Landis Martin (the company’s president) stated: “Demand for TiO2 in the first half of 2002 was strong in all regions, reflecting improved economic conditions, some seasonality and customer restocking of inventories ahead of previously announced price increases. The downward price trend we experienced during 2001 and 1Q 2002 abated in the second quarter
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and we anticipate higher selling prices in 2H 2002, compared to 1H 2002. ” Millennium, the world’s second largest TiO2 pigment producer, reported sales at 168,000 tonnes for 2Q 2002 – 12% up on 1Q 2002, which in turn was 15% up on 4Q 2001. The company stated: “Volume was up in 2Q due to strong demand because of the (Northern Hemisphere) coatings season and improving global business conditions. But, in local currencies average 2Q 2002 prices were only 1% higher than in 1Q 2002 and they were 12% lower than in 2Q 2001. Millennium and most major producers announced two global price increases, which cumulatively total about 15%, during the first six months of 2002. The success and timing of (actual realisation) of these price increases will depend on the continuation of patterns of increase in downstream customer demand experienced in the first six months of this year. ” Cabot, the world’s largest supplier of carbon black, reported that its carbon black sales volume was 6% higher in the quarter to end-June 2002, compared against 1Q 2002 and more than 15% higher than in 4Q 2001. The company went on to state: “Despite higher volumes in carbon black, unit margins declined, primarily due to contract-related pricing adjustments.” Cabot also sounded a note of caution: “During the month of June 2002, volumes declined to 2001 levels due to customer plant shutdowns and inventory corrections in the pipeline. It is unclear if this is a short-term issue. As a result, heading into a seasonally slow period, the outlook for the coming months remains cautious. ” It is worthwhile recalling the words of Mr Malcolm Mitchell (Chief Economist at BP Chemicals), in his speech at the Annual Chemical Business Outlook Conference (See ‘Focus on Pigments’, Jan 2002, 1-3). He said: “The message is that for both the US and Europe, chemical volumes are currently at the bottom of the cycle. Going forward, we envisage positive growth throughout the remainder of the year. I wish I could be as confident on prices and unit margins. With excess capacity persisting in a number of key sectors, overall utilisation rates are likely to remain anaemic for much of this year and the struggle to raise profitability to
acceptable levels will remain a feature. But overall, I remain convinced that the mood of the global chemical industry a year from now will be different, will be better, will be positive.” Reg Adams
MARKETS Dow raises prices on solid plastic pigments sold to papermakers With effect from 1 July 2002, Dow Chemical increased by $0.03 per pound the price of its solid plastic pigments sold to North American papermakers. At the same time, Dow also implemented price rises for its SBR latices. Rubber and Plastics News, 1 Jul 2002, 31 (24), 4
Pigments account for nearly 20% of an inkmaker’s costs Pigments account for about 10% by weight of printing ink shipments, but they represent close to 20% of the cost of manufacturing ink. In the US, the total inks market was worth about $4.8 bn in 2001 and the total value of pigments used for making inks was $830 M. In Europe, the inks market was worth $2.7 bn and the total value of pigments used for making inks was over $450 M. Carbon black is by far the most widely used pigment, accounting for about 70% of the intake by volume. In the US market, packaging represents the most important enduse for inks, accounting for 36% of total demand. Commercial printing accounts for 33% and publishing accounts for 23%. Chemical and Engineering News, 5 May 2002, 80 (18), 23-30
US carbon black capacity close to 2 M tonnes/y Carbon black demand in the US fell back from 1.669 M tonnes in 2000 to 1.569 M tonnes in 2001. It is expected to recover gradually, reaching 1.678 M tonnes by 2005 Demand growth averaged only 0.4% per annum between 1996 and 2001. There is unlikely to be a sudden upsurge in US carbon black demand in the
AUGUST 2002
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and we anticipate higher selling prices in 2H 2002, compared to 1H 2002. ” Millennium, the world’s second largest TiO2 pigment producer, reported sales at 168,000 tonnes for 2Q 2002 – 12% up on 1Q 2002, which in turn was 15% up on 4Q 2001. The company stated: “Volume was up in 2Q due to strong demand because of the (Northern Hemisphere) coatings season and improving global business conditions. But, in local currencies average 2Q 2002 prices were only 1% higher than in 1Q 2002 and they were 12% lower than in 2Q 2001. Millennium and most major producers announced two global price increases, which cumulatively total about 15%, during the first six months of 2002. The success and timing of (actual realisation) of these price increases will depend on the continuation of patterns of increase in downstream customer demand experienced in the first six months of this year. ” Cabot, the world’s largest supplier of carbon black, reported that its carbon black sales volume was 6% higher in the quarter to end-June 2002, compared against 1Q 2002 and more than 15% higher than in 4Q 2001. The company went on to state: “Despite higher volumes in carbon black, unit margins declined, primarily due to contract-related pricing adjustments.” Cabot also sounded a note of caution: “During the month of June 2002, volumes declined to 2001 levels due to customer plant shutdowns and inventory corrections in the pipeline. It is unclear if this is a short-term issue. As a result, heading into a seasonally slow period, the outlook for the coming months remains cautious. ” It is worthwhile recalling the words of Mr Malcolm Mitchell (Chief Economist at BP Chemicals), in his speech at the Annual Chemical Business Outlook Conference (See ‘Focus on Pigments’, Jan 2002, 1-3). He said: “The message is that for both the US and Europe, chemical volumes are currently at the bottom of the cycle. Going forward, we envisage positive growth throughout the remainder of the year. I wish I could be as confident on prices and unit margins. With excess capacity persisting in a number of key sectors, overall utilisation rates are likely to remain anaemic for much of this year and the struggle to raise profitability to
acceptable levels will remain a feature. But overall, I remain convinced that the mood of the global chemical industry a year from now will be different, will be better, will be positive.” Reg Adams
MARKETS Dow raises prices on solid plastic pigments sold to papermakers With effect from 1 July 2002, Dow Chemical increased by $0.03 per pound the price of its solid plastic pigments sold to North American papermakers. At the same time, Dow also implemented price rises for its SBR latices. Rubber and Plastics News, 1 Jul 2002, 31 (24), 4
Pigments account for nearly 20% of an inkmaker’s costs Pigments account for about 10% by weight of printing ink shipments, but they represent close to 20% of the cost of manufacturing ink. In the US, the total inks market was worth about $4.8 bn in 2001 and the total value of pigments used for making inks was $830 M. In Europe, the inks market was worth $2.7 bn and the total value of pigments used for making inks was over $450 M. Carbon black is by far the most widely used pigment, accounting for about 70% of the intake by volume. In the US market, packaging represents the most important enduse for inks, accounting for 36% of total demand. Commercial printing accounts for 33% and publishing accounts for 23%. Chemical and Engineering News, 5 May 2002, 80 (18), 23-30
US carbon black capacity close to 2 M tonnes/y Carbon black demand in the US fell back from 1.669 M tonnes in 2000 to 1.569 M tonnes in 2001. It is expected to recover gradually, reaching 1.678 M tonnes by 2005 Demand growth averaged only 0.4% per annum between 1996 and 2001. There is unlikely to be a sudden upsurge in US carbon black demand in the
AUGUST 2002