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Sid Richardson & Orion post carbon black price rises for North America
FOCUS since then. In February 2016, Kansai Paint reported that it had purchased Nerolac shares, increasing its stake to 71.29% and valuing Nerolac as a whole at $2.08 bn. The company has made no secret of its ambition to widen its global reach, the 2013-2016 sponsorship deal with Manchester United FC representing a platform for advertising Alesco as Kansai Paint's global brandname. However, Kansai Paint has not yet identified any further acquisition targets in the paint industry. Asian Paints (headquartered in Mumbai/Bombay) is by far the largest paint manufacturer in India and it has paint factories in Bangladesh, Nepal, Sri Lanka and Indonesia, as well as in the Middle East, the Caribbean region and several of the South Pacific islands of Oceania. In February 2015, it moved into Africa, with the purchase of a 51% stake in Kadisco (Ethiopia). Berger Paints India (headquartered in Kolkata/ Calcutta) increased its international presence in 2008 with the $39 M acquisition of Bolix (of Poland). The company now has factories in Poland, Russia, Bangladesh and Nepal, as well as in India. Its capacity in India was boosted by the acquisition of SherwinWilliams' architectural paints business in India in May 2013. In the Latin American paint industry, apart from the sale of the Consorcio Comex assets to Sherwin-Williams and PPG, the biggest recent transaction was the $120 M purchase in August 2012 of HB Fuller's last three paint factories (in Costa Rica, Honduras and Panama) by Pintuco (headquartered in Medellin, Colombia). Added to its existing paint manufacturing capacity in Colombia, Ecuador and Venezuela, this acquisition propelled Pintuco into the ranks of the top 25 paintmakers in the world. As a result of all this acquisition activity, coupled with capacity expansions by direct investment, the structure of the world paintmakers' league is going to look like this by mid2017: a top tier of three companies (Sherwin-Williams, PPG and AkzoNobel); a second tier of seven companies with paint sales in the $2-5 bn per annum range, namely: Asian Paints, Axalta, BASF Coatings, Kansai Paint, Masco, Nippon Paint and RPM International; a third tier of five companies with paint sales in the $1-2 bn per annum range, namely: Amphibolin/DAW (Germany), Hempel (Denmark), Jotun (Norway), KCC (South Korea) and Shawcor (Canada); a fourth tier of 16 companies with paint sales in the $500-950 M per annum range, namely: Benjamin Moore (part of June 2016
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Berkshire Hathaway, US); Berger Paints India; Carpoly Chemical (China); Chugoku Marine (Japan), Cromology (France), Dai Nippon Toryo (Japan), Dulux (Australia), Fujikura Kasei (Japan), Lindén (Beckers Industrial and ColArt, Sweden), Looser Holding (Feyco, Ilag, Schekolin and Treffert, Switzerland), National Paints (Dubai), Pintuco (Colombia), Samhwa Paints (South Korea), SK Kaken (Japan) and Tikkurila (Finland); and a fifth tier of 20 companies, with paint sales in the $250480 M range, namely: Betek Boya (Turkey), CIN (Portugal), Dunn-Edwards (US), Ennis-Flint (US), Flugger (Denmark), Helios (Slovenia), JW Ostendorf (Germany), Kelly-Moore (US), Kunsul Chemical (South Korea), Lord Corp (US), Musashi Paint (Japan), Nihon Tokushu Toryo (Japan), Noroo Paint (South Korea), Origin Electric (Japan), Shanghai Coatings (China), Taiho Paint (China), Teknos (Finland), Tiger Coatings (Austria), Toa (Thailand) and Yasar (Turkey). According to Sherwin-Williams, there are more than 7500 paint manufacturing companies worldwide. This may well be an underestimate, given that there are reckoned to be at least 7500 paint factories in China alone. Anyway, the world paint industry certainly remains quite fragmented, with plenty of scope for consolidation by mergers and acquisitions and by the exit of many of the smaller and least efficient paint manufacturers. Meanwhile, in the upper echelons of the paintmakers' league, the multinationals who are expanding will doubtless exert greater bargaining power vis-a`-vis their pigment suppliers. Reg Adams 1) Original Source: Sherwin-Williams, 20 Mar 2016 (Website: http://investors. sherwin-williams.com) © Sherwin-Williams 2016 2) Original Source: Coatings World, Jul 2015, 20 (7) (Website: http://www.coatingsworld. com) © Rodman Media 2015
MARKETS Sid Richardson & Orion post carbon black price rises for North America On 17 May 2016, Sid Richardson Carbon Co (SRC) announced that it will increase its prices for carbon black shipped to North American prices by 46%, effective 1 July 2016. SRC will also make certain changes to its standard
and premium packaging price schedules, effective 1 July. Mr William Jones (President & CEO) said: "These price increases are necessary to offset increased operational costs associated with increasing governmental regulations, increases in the cost of labour and capital equipment necessary to maintain plant infrastructure and inflation-related impacts. Over the last several years, SRC has made significant investments in its production facilities in the US to drive productivity and to continuously improve the quality of products and services for our customers. In addition, painstaking efforts have been made to reduce production costs. While in past years we have made every effort to avoid passing on any cost increase to our customer base, this situation is no longer sustainable. We will continue to take every action to minimise our cost structure, but we have come to a point where we are forced to appropriately adjust our prices to offset cost increases imposed on us.'' SRC's revised list of packaging charges includes: $0.01 per pound for shipments in hopper trucks; $0.12 per pound for shipments in cardboard boxes (with paper or poly bags); $0.02 per pound for shipments in hopper cars or plastic pallets with skids greater than 1600 pounds); $0.40 per pound for smaller plastic pallets; $0.05 per pound for 50 pound (or 25 kilo) paper or poly bags; $0.06 per pound for 38 cu ft intermediate bulk containers; $0.05 per pound for 60 cu ft intermediate bulk containers; and $0.04 per pound for larger intermediate bulk containers. Eight days later, Orion Engineered Carbons responded to SRC's pricing initiative. The company announced that, with effect from 1 July 2016, invoice prices on shipments of rubber grade carbon blacks will be raised by 6%. This 6% increase will be additional to any applicable price changes derived from formulae accounting for raw material cost changes. Orion will also change its standard packaging surcharges, with effect from 1 July 2016. On an individual case-by-case basis, further price adjustments may be implemented for certain special grades of carbon black shipped to rubber industry customers. Justifying the price increases, Orion cited increased operating expenses and the costs involved in meeting more stringent customer quality standards. By the end of May, there had been no response from Cabot, Birla or
3
FOCUS Continental Carbon, with regard to the North American market. Meanwhile, on 21 March 2016, Orion had introduced a special feedstock surcharge to cater for the rising cost of carbon black oil, applicable to all shipments to customers in the Europe, Middle East and Africa (EMEA) region. (See 'Focus on Pigments', May 2016, 4). Orion did not reveal the amount of the surcharge in its press-release. Cabot was rather more specific when it notified its customers in the EMEA region that it would be raising prices on all its carbon black products in the Reinforcement Materials segment (ie all rubber grades) because of feedstock cost pressures. Effective 1 May 2016, Cabot's prices will rise by €60-90 per tonne, in addition to any applicable feedstock index-related adjustments. The company stated: "We continue to face significant cost pressures and sourcing challenges for oil-derived feedstocks that are specifically selected for the production of carbon black in the EMEA region. While every effort is made to optimise the procurement of such feedstocks, the changing energy market conditions that began in 2015 have intensified and they remain unabated. This has caused Cabot's raw material costs to increase as compared to relative fuel oil indices that are largely used to determine carbon black prices, resulting in an unfavourable differential.'' Original Source: Sid Richardson Carbon & Energy Co, 17 May 2016 (Suite 420, 3560 West Market Street, Akron, OH 44333, USA, Website: http://www.sidrich.com) © Sid Richardson 2016. Original Source: Orion Engineered Carbons LLC, 25 May 2016 (Suite 106, 4501 Magnolia Cove Drive, Kingwood, TX 77345, USA, Website: http://www. orioncarbons.com). Original Source: Cabot Corp, 1 Apr 2016 (2 Seaport Lane, Boston, MA 02210-2019, USA, Website: http://www. cabotcorp.com) © Cabot 2016
World market for iron oxide pigments to pass $2 bn mark in three years’ time Markets & Markets Ltd (M&M) and MicroMarketMonitor Ltd (MMM) are separately listed companies, both offering custom market research consultancy services in a wide variety of industries, as well as being prolific publishers of off-the-shelf multi-client reports. The two companies share the same head office address at PuneMagarpatta (India) and the same branch office addresses in Vancouver, WA
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(15 km north of Portland), Chicago and Sydney. On their respective websites, M&M reports that it employs more than 850 full-time analysts and publishes more than 1200 premium studies per year, while MMM reports that it employs 600 analysts and publishes about 12,000 market research reports per year. We reviewed M&M's studies on world markets for cosmetic pigments, plastic masterbatches and pigments used in the animal feeds industry in 'Focus on Pigments', Oct 2015, 4-5. We reviewed MMM's three regional reports on food colorants in Europe, North America and Asia/Pacific in 'Focus on Pigments', Dec 2015, 5. Both companies have recently published studies on iron oxide pigments and not surprisingly there is a lot of overlapping content. Moreover, the apparent inaccuracies or misconceptions seem to be duplicated! The M&M report on iron oxide pigments runs to nearly 150 pages, divided into 12 chapters plus an appendix highlighting M&M's capabilities for providing real-time market intelligence updates, content customisation and other related publications. Within the body of the report, world consumption of iron oxide pigments is broken down, in volume and value terms: by product type (natural and synthetic); by colour (red, yellow, black, blended, etc); by geographical region; and by end-use sector (concrete paving and roofing, plastics, paints, cosmetics, etc). There are also chapter sections on: perceived market drivers (urbanisation, infrastructure development, packaging industry growth, lifestyle changes, etc) and restraints (health concerns and volatile raw material pricing); product life cycle analysis; the competitive landscape; recent industry mergers and acquisitions; new pigment manufacturing technologies, etc. Globally, the paint industry is expected to be the fastest growing end-use sector over the next five years. But within the Americas, the construction industry (concrete products) is expected to be the fastest growing end-use sector. Within Europe, the plastics industry is said to be the largest end-use sector for iron oxide pigments. The plastics industry is expected to be the fastest growing enduse sector over the next five years in Asia/Pacific, the Middle East and Africa. Red pigments have normally been the most popular iron oxide pigments worldwide, but over the next five years black pigments will show faster growth than other colours in the Americas, while yellow pigments will show faster
growth than other colours in the Middle East and Africa. Asia/Pacific is already the largest region, in terms of iron oxide pigment consumption. It is also expected to show the fastest growth over the next five years, at more than 6% per annum. Meanwhile, growth in the Americas will be around 2.5% per annum, while growth in Europe will be only 2% per annum. Explaining its research methodology, M&M states: "We began by capturing data on revenues of key market players through secondary research (ie looking at published information sources, financial reports, etc). The bottom-up procedure was employed to arrive at the overall market size of the market from the revenue of the key players. After arriving at the overall market size, the total market was split into several segments and sub-segments which were then verified through primary research, by conducting extensive interviews with key people such as chief executives, vice presidents, directors and executives. Data triangulation and market breakdown procedures were employed to complete the overall market engineering process and arrive at the exact statistics for all segments and sub-segments.'' Chapter 12 contains profiles of some of the iron oxide pigment market leaders, as identified by M&M. The list of selected companies is certainly surprising! Lanxess, Huntsman and Cathay Pigments – widely acknowledged as the top three in the industry – are included here. So too are: Applied Minerals Inc (US), Heubach (India) and Hunan Three Rings Pigment (China). BASF is also included in the list. In fact, BASF is described as "the most active player in the competitive landscape.'' While it is true that BASF's pigment portfolio includes Sicotrans transparent iron oxides and Paliochrom Brilliant Orange (essentially iron oxide coated aluminium platelets), BASF does not produce standard red, yellow or black pigments. Prominent iron oxide pigment producers that do not appear on M&M's list include: Jiangsu Yuxing, Shanghai Yipin, Shenghua Deqing Huayuan (China); Interstar Materials (Canada); Alabama Pigments, Hoover Color and New Riverside Ochre (US); Nubiola (Colombia); Precheza (Czech Republic); and Titan Kogyo (Japan). Perhaps most surprising of all, DuPont, Kronos and Tronox are described as "key players operational in the iron oxide pigments market'', but these companies have never produced iron oxide pigments! June 2016
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Berkshire Hathaway, US); Berger Paints India; Carpoly Chemical (China); Chugoku Marine (Japan), Cromology (France), Dai Nippon Toryo (Japan), Dulux (Australia), Fujikura Kasei (Japan), Lindén (Beckers Industrial and ColArt, Sweden), Looser Holding (Feyco, Ilag, Schekolin and Treffert, Switzerland), National Paints (Dubai), Pintuco (Colombia), Samhwa Paints (South Korea), SK Kaken (Japan) and Tikkurila (Finland); and a fifth tier of 20 companies, with paint sales in the $250480 M range, namely: Betek Boya (Turkey), CIN (Portugal), Dunn-Edwards (US), Ennis-Flint (US), Flugger (Denmark), Helios (Slovenia), JW Ostendorf (Germany), Kelly-Moore (US), Kunsul Chemical (South Korea), Lord Corp (US), Musashi Paint (Japan), Nihon Tokushu Toryo (Japan), Noroo Paint (South Korea), Origin Electric (Japan), Shanghai Coatings (China), Taiho Paint (China), Teknos (Finland), Tiger Coatings (Austria), Toa (Thailand) and Yasar (Turkey). According to Sherwin-Williams, there are more than 7500 paint manufacturing companies worldwide. This may well be an underestimate, given that there are reckoned to be at least 7500 paint factories in China alone. Anyway, the world paint industry certainly remains quite fragmented, with plenty of scope for consolidation by mergers and acquisitions and by the exit of many of the smaller and least efficient paint manufacturers. Meanwhile, in the upper echelons of the paintmakers' league, the multinationals who are expanding will doubtless exert greater bargaining power vis-a`-vis their pigment suppliers. Reg Adams 1) Original Source: Sherwin-Williams, 20 Mar 2016 (Website: http://investors. sherwin-williams.com) © Sherwin-Williams 2016 2) Original Source: Coatings World, Jul 2015, 20 (7) (Website: http://www.coatingsworld. com) © Rodman Media 2015
MARKETS Sid Richardson & Orion post carbon black price rises for North America On 17 May 2016, Sid Richardson Carbon Co (SRC) announced that it will increase its prices for carbon black shipped to North American prices by 46%, effective 1 July 2016. SRC will also make certain changes to its standard
and premium packaging price schedules, effective 1 July. Mr William Jones (President & CEO) said: "These price increases are necessary to offset increased operational costs associated with increasing governmental regulations, increases in the cost of labour and capital equipment necessary to maintain plant infrastructure and inflation-related impacts. Over the last several years, SRC has made significant investments in its production facilities in the US to drive productivity and to continuously improve the quality of products and services for our customers. In addition, painstaking efforts have been made to reduce production costs. While in past years we have made every effort to avoid passing on any cost increase to our customer base, this situation is no longer sustainable. We will continue to take every action to minimise our cost structure, but we have come to a point where we are forced to appropriately adjust our prices to offset cost increases imposed on us.'' SRC's revised list of packaging charges includes: $0.01 per pound for shipments in hopper trucks; $0.12 per pound for shipments in cardboard boxes (with paper or poly bags); $0.02 per pound for shipments in hopper cars or plastic pallets with skids greater than 1600 pounds); $0.40 per pound for smaller plastic pallets; $0.05 per pound for 50 pound (or 25 kilo) paper or poly bags; $0.06 per pound for 38 cu ft intermediate bulk containers; $0.05 per pound for 60 cu ft intermediate bulk containers; and $0.04 per pound for larger intermediate bulk containers. Eight days later, Orion Engineered Carbons responded to SRC's pricing initiative. The company announced that, with effect from 1 July 2016, invoice prices on shipments of rubber grade carbon blacks will be raised by 6%. This 6% increase will be additional to any applicable price changes derived from formulae accounting for raw material cost changes. Orion will also change its standard packaging surcharges, with effect from 1 July 2016. On an individual case-by-case basis, further price adjustments may be implemented for certain special grades of carbon black shipped to rubber industry customers. Justifying the price increases, Orion cited increased operating expenses and the costs involved in meeting more stringent customer quality standards. By the end of May, there had been no response from Cabot, Birla or
3
FOCUS Continental Carbon, with regard to the North American market. Meanwhile, on 21 March 2016, Orion had introduced a special feedstock surcharge to cater for the rising cost of carbon black oil, applicable to all shipments to customers in the Europe, Middle East and Africa (EMEA) region. (See 'Focus on Pigments', May 2016, 4). Orion did not reveal the amount of the surcharge in its press-release. Cabot was rather more specific when it notified its customers in the EMEA region that it would be raising prices on all its carbon black products in the Reinforcement Materials segment (ie all rubber grades) because of feedstock cost pressures. Effective 1 May 2016, Cabot's prices will rise by €60-90 per tonne, in addition to any applicable feedstock index-related adjustments. The company stated: "We continue to face significant cost pressures and sourcing challenges for oil-derived feedstocks that are specifically selected for the production of carbon black in the EMEA region. While every effort is made to optimise the procurement of such feedstocks, the changing energy market conditions that began in 2015 have intensified and they remain unabated. This has caused Cabot's raw material costs to increase as compared to relative fuel oil indices that are largely used to determine carbon black prices, resulting in an unfavourable differential.'' Original Source: Sid Richardson Carbon & Energy Co, 17 May 2016 (Suite 420, 3560 West Market Street, Akron, OH 44333, USA, Website: http://www.sidrich.com) © Sid Richardson 2016. Original Source: Orion Engineered Carbons LLC, 25 May 2016 (Suite 106, 4501 Magnolia Cove Drive, Kingwood, TX 77345, USA, Website: http://www. orioncarbons.com). Original Source: Cabot Corp, 1 Apr 2016 (2 Seaport Lane, Boston, MA 02210-2019, USA, Website: http://www. cabotcorp.com) © Cabot 2016
World market for iron oxide pigments to pass $2 bn mark in three years’ time Markets & Markets Ltd (M&M) and MicroMarketMonitor Ltd (MMM) are separately listed companies, both offering custom market research consultancy services in a wide variety of industries, as well as being prolific publishers of off-the-shelf multi-client reports. The two companies share the same head office address at PuneMagarpatta (India) and the same branch office addresses in Vancouver, WA
4
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(15 km north of Portland), Chicago and Sydney. On their respective websites, M&M reports that it employs more than 850 full-time analysts and publishes more than 1200 premium studies per year, while MMM reports that it employs 600 analysts and publishes about 12,000 market research reports per year. We reviewed M&M's studies on world markets for cosmetic pigments, plastic masterbatches and pigments used in the animal feeds industry in 'Focus on Pigments', Oct 2015, 4-5. We reviewed MMM's three regional reports on food colorants in Europe, North America and Asia/Pacific in 'Focus on Pigments', Dec 2015, 5. Both companies have recently published studies on iron oxide pigments and not surprisingly there is a lot of overlapping content. Moreover, the apparent inaccuracies or misconceptions seem to be duplicated! The M&M report on iron oxide pigments runs to nearly 150 pages, divided into 12 chapters plus an appendix highlighting M&M's capabilities for providing real-time market intelligence updates, content customisation and other related publications. Within the body of the report, world consumption of iron oxide pigments is broken down, in volume and value terms: by product type (natural and synthetic); by colour (red, yellow, black, blended, etc); by geographical region; and by end-use sector (concrete paving and roofing, plastics, paints, cosmetics, etc). There are also chapter sections on: perceived market drivers (urbanisation, infrastructure development, packaging industry growth, lifestyle changes, etc) and restraints (health concerns and volatile raw material pricing); product life cycle analysis; the competitive landscape; recent industry mergers and acquisitions; new pigment manufacturing technologies, etc. Globally, the paint industry is expected to be the fastest growing end-use sector over the next five years. But within the Americas, the construction industry (concrete products) is expected to be the fastest growing end-use sector. Within Europe, the plastics industry is said to be the largest end-use sector for iron oxide pigments. The plastics industry is expected to be the fastest growing enduse sector over the next five years in Asia/Pacific, the Middle East and Africa. Red pigments have normally been the most popular iron oxide pigments worldwide, but over the next five years black pigments will show faster growth than other colours in the Americas, while yellow pigments will show faster
growth than other colours in the Middle East and Africa. Asia/Pacific is already the largest region, in terms of iron oxide pigment consumption. It is also expected to show the fastest growth over the next five years, at more than 6% per annum. Meanwhile, growth in the Americas will be around 2.5% per annum, while growth in Europe will be only 2% per annum. Explaining its research methodology, M&M states: "We began by capturing data on revenues of key market players through secondary research (ie looking at published information sources, financial reports, etc). The bottom-up procedure was employed to arrive at the overall market size of the market from the revenue of the key players. After arriving at the overall market size, the total market was split into several segments and sub-segments which were then verified through primary research, by conducting extensive interviews with key people such as chief executives, vice presidents, directors and executives. Data triangulation and market breakdown procedures were employed to complete the overall market engineering process and arrive at the exact statistics for all segments and sub-segments.'' Chapter 12 contains profiles of some of the iron oxide pigment market leaders, as identified by M&M. The list of selected companies is certainly surprising! Lanxess, Huntsman and Cathay Pigments – widely acknowledged as the top three in the industry – are included here. So too are: Applied Minerals Inc (US), Heubach (India) and Hunan Three Rings Pigment (China). BASF is also included in the list. In fact, BASF is described as "the most active player in the competitive landscape.'' While it is true that BASF's pigment portfolio includes Sicotrans transparent iron oxides and Paliochrom Brilliant Orange (essentially iron oxide coated aluminium platelets), BASF does not produce standard red, yellow or black pigments. Prominent iron oxide pigment producers that do not appear on M&M's list include: Jiangsu Yuxing, Shanghai Yipin, Shenghua Deqing Huayuan (China); Interstar Materials (Canada); Alabama Pigments, Hoover Color and New Riverside Ochre (US); Nubiola (Colombia); Precheza (Czech Republic); and Titan Kogyo (Japan). Perhaps most surprising of all, DuPont, Kronos and Tronox are described as "key players operational in the iron oxide pigments market'', but these companies have never produced iron oxide pigments! June 2016