Inks Mark the Spot in Specialty Chemicals

Source: CMR

2003/05/04

While overall growth in the global inks market has been slow to flat over the past several years, certain product areas are promising. Industrial inkjet applications, security and UV/electron beam (EB) products are some of the segments recently targeted by the major ink manufacturers and suppliers.

The global market for inks is estimated at $13.8 billion, according to Chemark Consulting Group, a Southern Pines, N.C.-based consultancy. The North American market is the largest market, estimated at roughly $5 billion, followed by Asia-Pacific ($3.6 billion), Western Europe ($3.2 billion), Eastern Europe ($800 million) and the rest of the world at $1.2 billion, says Phil Phillips, president of Chemark. Overall, global growth in the inks market was flat in 2002, and the market is expected to increase only 0.8 percent in 2003.

The US market is $4.24 billion, based on 2001 estimates, according to Impact Marketing Consultants Inc., a Manchester, Vt.-based market research firm. Lithographic applications is the largest area at 42 percent, followed by flexographic (24 percent), gravure (14 percent), screen printing (4 percent), letterpress (3 percent), ink jet (3 percent) and other applications at 10 percent.

The US consumed an estimated 2.05 billion pounds of raw materials with an estimated dollar value of roughly $1.7 billion, according to Impact Marketing. By volume, solvents, including hydrocarbons, hydrocarbon oils and oxygenated solvents (excluding water), accounted for 46 percent of consumption, followed by plastic resins and varnishes at 27 percent, and pigments (organic, inorganic and carbon black) at 23 percent. On a dollar basis, pigment and carbon black had the greatest share at 51 percent, based on 2001 estimates, followed by resins, varnishes and rosin (34 percent), solvents (10 percent) and additives (4 percent).

The inks market continues to deal with consolidation. "The key issue of the global ink industry is not if suppliers will continue to consolidate due to margin pressure and poor formulator differentiation, but when and who will have the staying power," says Che-mark's Mr. Phillips. The top ten ink companies accounted for roughly 65 percent of the total US market, with Sun Chemical Corp. at the top, followed by Flint Ink Corp.

Major Ink Producers

Make Key Acquisitions

Among the major ink manufacturers, Flint has been particularly active in adding to its product portfolio. In March, the company acquired the worldwide heatset and coldset ink business of Lausanne, Switzerland-based Sicpa, the number five US merchant ink manufacturer and leading European producer. In return, Sicpa acquired Flint Ink's worldwide business for security inks used on currency and other negotiable instruments. The transaction does not include any of the security technology associated with brand protection or supply chain management that Flint Ink is currently exploring with alliance partners.

"The exchange supports each company's business strengths," says Dave Frescoln, president of Flint Ink. "Flint Ink is a leading manufacturer of news and publication printing inks while Sicpa inks are used on the majority of the world's banknotes."

The acquisition adds to Flint's heatset and coldset printing ink business for Flint-Schmidt GmbH & Co. KG in Europe. Production will be transferred to Flint-Schmidt facilities in Cologne, Germany; Gravenzande, the Nether-lands; Wolverhampton, England; and a new facility in Finland. Flint-Schmidt is a European producer of publication gravure inks and heatset and coldset inks. Last year, Flint merged its Eur-opean operations with Gebr. Schmidt, a privately owned German ink manufacturer, to create Flint-Schmidt GmbH as one of the three largest ink companies in Europe with sales of roughly $400 million. Flint also acquired Gebr. Schmidt's operations in Canada.

For Sicpa, another top ink producer, the sale of its heatset and coldset business allows the company to accelerate its specialization in packaging inks. Sicpa says it remains fully committed to its sheetfed publication business.

The Sicpa deal follows Flint's creation of Jetrion LLC, a new company created in January, which provides industrial inkjet products, services, and custom printing solutions. Flint says the new company will result in a tripling of its dedicated digital staff in 2003. Jetrion will provide a combination of ink, hardware, software and services for continuous inkjet (CIJ) and drop-on-demand (DOD) applications.

"Large-scale printers and converters are seeking partners to help them turn the potential of inkjet into profitable reality," says Ken Stack, former vice president/general manager of Flint Ink's digital division and new president of Jetrion. "Simply supplying inkjet products is no longer good enough. Jetrion will leverage our industry experience and deep resources to provide differentiated support that includes systems integration and advanced technical and application services."

Flint is also targeting growth in so-called "smart inks." The company plans to make a multi-million dollar commitment to become a leading provider of conductive and advanced printing inks and printed electronics technology and processes.

"Intelligent packaging, radio frequency identification (RFID), and printed electronics technologies and applications are quickly developing," says Jim Rohrkemper, vice president, emerging business segments, at Flint. "Lighting and display markets also provide growth opportunities. Our new commitment will allow us to more quickly transform concepts into smart inks, printed electronic solutions, and RFID technologies for next-generation intelligent packaging and supply chain applications." The commitment includes staff expansion and a new development and resource center near Flint's headquarters in Ann Arbor, Mich., which is scheduled to open in the third quarter of 2003. Last year, Flint and KeyMaster Technologies Inc., a provider of counterfeit prevention and brand protection products, formed an agreement to provide "smart" ink and coatings systems to brand-name product manufacturers.

Sun Chemical also recently made a move in security/specialty inks. Last October, Sun Chemical acquired a 50 percent interest in Assemblage Inter-moleculaire en Chimie Organique (AIC), a special effect pigments, additives and inks company based in Libourne, France. AIC manufactures high performance additives that function as pigments in the security and specialty inks markets.

AIC has a technology position to position itself in thermo-chromic and photo-chromic coatings systems. AIC was established to continue the commercialization of the Aimco technology originally developed by Philippe Guillot, a French scientist specializing in specialty materials.

Emerging markets continue to attract investment by the large ink manufacturers. For example, Flint is setting its sights on China, specifically the newspaper ink market. Last May, it signed a joint venture agreement to manufacture printing ink in Beijing, China. The agreement creates a joint venture between Flint and Graphic-Tech, Flint Ink's long-time product distributor in Hong Kong and China. Also, Flint Ink-Graphic Tech Holding Company Ltd. becomes a majority partner with four major Beijing newspapers to establish Flint Ink (Beijing) Printing Ink Company Ltd., with plans to build an ink manufacturing plant there.

In addition to manufacturing new inks, the new plant will serve as a blending center for heatset inks. The plant, being built in the Daxing Industrial Development Area in Beijing, is scheduled to be completed in the fourth quarter of this year.

Siegwerk, headquartered in Sieg-burg, Germany, has a long-range "internationalizing plan," under which it plans to invest  75 million by 2004. Siegwerk plans to continue expanding its activities in the Polish and East European markets through a  1.5 million investment in an ultramodern dosing unit, an application technology laboratory and a new building in Warsaw. The dosing unit allows it to deliver special inks, and basic inks will be supplied to Warsaw from the company's headquarters in Siegburg. It also recently set up a new marketing company, Siegwerk Ink, in Great Britain, and established a separate company in Brazil. Siegwerk plans to increase its activities in France, Italy, Spain and Portugal.

Companies Build

Product Areas

Sensient has been building its technical colors business, which includes inks. To increase its technical colors business in Europe, Sensient acquired SynTec GmbH, a Wolfen, German-based manufacturer of specialty dyes and chemicals for the imaging industry, and ECS Specialty Inks and Dyes, a Morges, Switzerland, producer and marketer of inks for specialty printing applications in 2002.

Those acquisitions followed two important deals in 2001. The first was the acquisition of the industrial dye business of Crompton Colors Inc., which expanded Sensient's industrial and paper colors businesses. Sensient also acquired Kimberly-Clark Printing Technology (also known as Formu-labs), a manufacturer of specialty inks for inkjet inks and industrial applications. Formulabs now operates as a Sensient's subsidiary. It is a provider of specialty ink technology that is sold in bulk to printer OEMs, system integrators, and third-party aftermarket manufacturers of digital marking consumables. Sensient entered the inkjet inks market with the 1997 acquisition of Tricon Colors.

SynTec, ECS and Formulabs operate as part of Sensient Imaging Tech-nologies, which offers inkjet inks and specialty dyes and chemicals used for display imaging and specialized printing applications. The Syntec acquisition gave Sensient 100 chemicals used in organic light-emitting diodes (OLED).

Sensient Imaging Technologies is one of three groups within Sensient's color group related to industrial color applications. The others are Sensient Paper Colors (paper dyes and colorants) and Sensient Industrial Colors (technical colors used for various industrial applications, such as plastics, leather, wood stains and antifreeze).

The inks business is an important growth area for the company. It has a goal of increasing technical color sales to $140 million this year. "We plan to grow organically; however, if the right acquisition candidate were available, we would consider it," says Tom O'Brien, president of Sensient's color group. While the desktop portion of the inkjets market is relatively mature, the company sees further opportunities in industrial inkjet applications.

Ciba Specialty Chemicals is also targeting the inkjet markets, and recently launched a new line of water-soluble dyes for ink-jet printing to extend its activities in the graphics sector of that market. The new line provides a high level of image permanence in outdoor conditions, making it suitable for use in large-format advertising posters, according to Ciba. The introduction of the new line follows the formation by Ciba of a marketing and research and development team to target the ink-jet graphics sector. Until this move, Ciba's ink-jet products had concentrated mainly on textile printing.

Ciba also plans to expand capacity at Monthey, Switzerland, for high performance diketo-pyrrolo-pyrrole pigments, which are used in automotive coatings, inks, plastics and electronic applications. It will be open next year.

In the textile sector, Ciba has developed a high-speed inkjet printing system in a partnership with Reggiani Macchine, an Italian machine manufacturer, and Aprion Digital, an Israeli manufacturer of printheads.

Avecia, a supplier of inks for manufacturers of ink-jet printers for the office and home markets, is targeting ink-jet materials for the manufacture of printed circuit boards (PCBs). In March, Avecia launched its Jetrack technology, which is used to make commercial quantities of a polymeric fluid that is applied through ink-jets as etch resists and solder masks on PCBs. Avecia is teaming with New System SRL, Gorizia, Italy, which recently started marketing its own ink-jet equipment for making circuit boards. With Avecia's launch, New System simultaneously launched dedicated, stand-alone ink jet printers for the Jetrack technology-based etch resist and soldermask fluids. Screen-printing and photo lithography have been the predominant methods of imaging in the PCBmanufacturing process.

Avecia estimates the global materials markets for etch resists and solder masks for PCBs at $500 million each. About half of each sector is potentially accessible to ink-jet technology. Avecia hopes to use this opportunity to gain a majority market share in this new ink-jet sector. Avecia's electronic materials sales dropped by 5 percent to £64 million ($102 million) in 2002 mainly because of customer destocking of ink-jet products earlier in the year following a decline in PC printer sales.

In another OEM partnership, Avecia signed a strategic market development agreement with Lebanon, N.H.-based Spectra, a printhead developer and supplier, last June. The agreement covers the use of Avecia inks in Spectra piezoelectric printheads.

Other Technology

Energy curables are a key change to printing technology, says Chemark's Mr. Phillips. "UV and EB curing offers extremely accelerated line production speeds versus conventional heat-curing methods. UV has limits on its ability to cure highly pigmented systems, but EB does not. With the cost of capital equipment to EB cure coming down to about one-third of its original price, EB can now compete" he says.

Last month, Elk Grove Village, Ill.-based Inx International Ink Company, introduced several new products for UV printing: LithoCure, a vegetable oil-based product for hybrid printers; InxCure UVXcel, an energy curable ink; InxCure UV WebXcel for UV Web printers; and InxCure UVXcel Universal Base System, a color matching system for energy-curable offset press.

Last month, Ciba Specialty Chemicals demonstrated new graphic arts applications for photoinitiators and other products at the European Coatings Show in Nuremberg. "The growing success of UV technology is due to the very wide range of special properties that can be achieved with UV coatings. UV radiation-curing inks and varnishes are becoming increasingly popular for graphic arts applications," says Sebastien Villeneuve, marketing manager for inks and graphic arts in Ciba Specialty Chemicals' coating effects segment.

Some key offerings are Ciba Irga-cure 369, which can be used in combination with other photoinitiators to overcome oxygen inhibition, in particular in UV inkjet formulations. The product can also be used with products based on alpha-hydroxy-ketone, such as Irgacure 184 and Irgacure 2959 in offset, flexo and screen printing applications. Ciba is developing CGI 113, a new, high-performance alpha-amino-ketone photoinitiator with high solubility in UV binders. CGI 113 is designed to expand development of UV inks in packaging applications. Irgacure 250 is a new iodonium salt for cationic curing of epoxy, oxetane, and vinyl ether formulations for white-base coatings, flexo and screen inks, inkjet printing inks, adhesives and overprint varnishes.

The security area also spells opportunity for raw material suppliers. Honey-well Specialty Materials points to growth in its Lumilux business, which supplies luminescent pigments. Richard Einhorn, Lumilux's global business manager, cites safety applications and brand security and authentication as markets likely to provide major growth for luminescent pigments and related value-added services. Honeywell manufactures Lumilux pigments in Seelze, Germany, and is working to expand the color palette of luminescent pigments in numerous applications.