Additives Market Update
The additives market, as is the case
for the coatings market as a whole,
has continued to feel the effects of
the bad economy. “In general, the additives industry enjoyed volume growth
during the first months of 2008 and
started to feel the economic slowdown
as of mid-year depending on the
region,” said Joachim Diem, marketing manager, specialty additives,
Europe, Middle East and Asia, Air
Products. “During the fourth quarter
business conditions in important markets like automotive, residential housing and commercial construction deteriorated and have yet to improve.”
“A critical factor affecting the additives market is the continued slowdown of the North American housing
market and its impact on the building
and construction industry,” added
Shruti Singhal, group market manager
for field marketing, North America,
Rohm and Haas. “VOC regulations and
issues of paint odor are also factors not
only for additives, but for other paint
ingredients as well. These issues present opportunities to the additives supplier who is best positioned to help
paint formulators select the right product to meet current requirements.”
“Additive sales into architectural
coatings are very much a function of
construction and remodeling activity,”
said William Woods, marketing manager, industrial biocides, International
Specialty Products (ISP). “This sector
of the economy is down and until a
turnaround occurs, additive sales will
remain flat to down.”
According to David Deters, VP and
general manager of King’s coatings additives division, the additive business has
been negatively impacted by the economy. “After an extremely robust business
for the first nine months of the year, it
now is tracking the economic conditions
worldwide,” he said. “This downturn not
only reflects the more traditional end of
BY KERRY PIANOFORTE
ASSOCIATE EDITOR
the year reductions, but more importantly mirrors the state of the business for
specific application areas. A good example is obviously the auto industry that
has experienced close to a 40% reduction
in production this quarter. Perhaps what
is unique with this particular slowdown
is the fact that it is global.”
“Because of the financial and economic crisis, there is a decline in orders for
almost all applications compared to the
previous year,” said Suzanne Beckmann,
marketing analyst, Clariant. “Our customers are suffering from over capacities
due to the decrease in global demand. We
do expect any improvement until the end
of Q2 2009, beginning of Q3 2009.”
Most additive suppliers Coatings
World spoke with agreed that business
has slowed overall, particularly in the
last quarter, but there are some specialized coatings segments that have not
slowed to the extent of the majority.
“Coating formulators are still typically
looking for one of three driving factors:
innovation, ease-of-use formats and
lower cost,” said Maria Nargiello, senior
technology manager, inorganic materials—SI Coatings for Evonik Degussa
Corp. “Formulation developments continue to move towards environmentally
friendly technologies; be they waterborne, high solids, radiation cure or powder. As these technologies move forward,
more solutions are sought to address the
hurdles these technologies encounter. We
still see formulation development, particularly in NAFTA even in the standard
solvent-based coatings arena, where
solutions are being sought for additives
that are compatible with VOC exempt
solvents and offer innovation, ease-of-use characteristics and lower cost.”
Additives suppliers must use these
challenges to develop innovative products that will set them apart from their
competition. “In the past, an economic
downturn automatically meant R&D
budgets were slashed and companies
were downsized,” said Andrea Nap-lowski, marketing manager, Tego
Coating Additives and Specialty Resins.
“Presently, more companies are taking a
long-term view that the economy is cyclical and that they need to be ready to
compete when conditions improve. We
actually have seen an increase in interest from the research community. On the
other side, fewer housing starts and an
overall poor economic performance
makes business very tough on the smaller paint companies. We are certain that
some will find it very difficult to find the
resources necessary to keep up with the
changes the market is demanding. Our
expectation is that we will see further
consolidation of the market.”
Additionally, rising raw material
prices continue to plague the industry.
“I think a very consistent trend over
2008 was as oil prices escalated over the
first six to seven months of the year,
raw material price increases dominated
the market news and as the dollar per
barrel price receded, so have many of
those prices,” said Nargiello. “Mirroring
the general economy, it was a very
volatile year for raw material prices. I
think with this volatility in the market
place, formulators have sought different
solutions, outside the typical go-to products and this has opened opportunities
for new, less traditional solutions to be
considered.”
“Raw material prices have been
volatile to say the least,” said Deters.
“From a period of seemingly daily price
increases as crude oil drove to record
levels to some minimal reductions as the
price of crude has retracted. I think practically everyone in the additive business
absorbed those increases until it became
economically unfeasible to do so and had
to pass along a portion of those and escalating energy costs onto their customers.
While select raw material costs rose as
much as 226% by mid-summer, none
have receded close to that extent by year
