High Performance Pigments Update
The HPP market is off to a strong start for 2010, but will the trend continue?
BY KERRY PIANOFORTE
ASSOCIATE EDITOR
The high performance pigments (HPP) and special effects pigments market has had a rough few years. The recent economic downturn, declining U.S. housing starts and automobile crisis have had an undeniable
impact on the HPP market, but there are indications that
this trend is reversing. HPPs have experienced increased
demand in China and other emerging regions, where automotive and consumer goods production and consumption
are booming. HPP manufacturers Coatings World spoke
with have reported a rebound and hope that this upswing
will continue.
“While there continues to be positive strong trends toward
the usage of high performance and effect pigments, the down-
turn in the coatings markets in Europe and North America
and the worldwide economic crisis in 2009 strongly affected
the overall market demand for pigments,” said Mehran
Yazdani, vice president, marketing, performance pigments,
Sun Chemical. “However, we have seen an upswing in the
high performance and special effect pigments markets during
the first and second quarters of 2010. This improving eco-
nomic situation coupled with our focus on quality, service and
innovation has put us in an excellent position for long term
growth in high performance and effect pigments. Although
we are off to a strong start in 2010, there is still a high degree
of uncertainty regarding demand and there are continuing
reports of the recession ‘double dipping’ this year.”
“Although the economy continues to present uncertainties
and challenges, we are encouraged by a noticeable improve-
ment in overall market demand versus the same time last
year,” said Brian Marsicano, business manager, pigments, for
BASF in North America. “Market demand for high perform-
ance and special effect pigments continue to rebound, but
remains highly correlated with the global economy and tied
to critical segments such as automotive and durable goods.”
Reiner Martens, managing director, Heubach GmbH
reported that there was some recovery in the second half of
2009 so the performance of the second half of 2010 versus
2009 should be a good indicator for 2011. “Automotive OEM
has clearly improved over 2009 and the agricultural and
industrial markets are also showing signs of life,” he contin-
ued. “Construction is improving but low interest rates, high
foreclosure rates and low home values are impacting the mar-
ket often in varying directions.”
Although the outlook is generally optimistic going forward,
high raw material prices and supply chain issues continue to
be a challenge for the HPP market. Companies continue to
combat these challenges by controlling costs and improving
and optimizing operations, although in some instances these
costs must be passed on to the customer.
“At Sun Chemical, we’re working to control our own costs
closely with our supply chain partners and to improve our
internal manufacturing operations,” said Yazdani. “These
efforts have helped offset some of the rising operational costs.
However, we are again seeing raw material cost increases in
selected pigment areas that have outpaced our ability to off-
set them. As a result, we have needed to pass some of these
costs on to our customers. We will continue to invest in those
areas that provide our customers with innovative products
and services, allowing them to be more competitive and pres-
ent the best value propositions in the market.”
“As indicated, raw materials have continued to rise,” said
Martens. “Heubach has attempted to minimize the impact to
our customer base through cost control and working capital
reduction. However, due to their magnitude in certain prod-
uct areas, these costs must be passed on.”
According to Rick Campbell, president, Trust Chem USA,
there have been significant shortages of several high per-
formance pigments in recent months mostly caused by supply
chain problems. “In some cases it has been a critical raw
material, in some cases increased demand, in some cases pro-
duction problems and or low inventory levels and in a few
cases it has been interest in having new sources,” Campbell
said. “These issues have helped cause supply problems main-
ly for the large traditional sources for high performance pig-
ments but in some cases where it is raw material related, all
suppliers have had issues. These supply problems have cre-
ated significant opportunities for new suppliers of high per-
formance pigments like Trust Chem. As a result of very high
demand, we have moved quickly to increase our capacity,
which will be done gradually over the next several months
and results in a doubling of our capacity for benzimidazone,
azo condensation, quinacridones and several other key high
performance pigments within the next two to five months.
These expansions are mainly at our joint venture factories,
but also at a partner factory.”
“The main pressure from customers on Trust Chem is to
