By David Savastano, Ink World Editor | November 25, 2008
The development of new environmentally friendly technologies is helping suppliers offset higher raw material costs and the economic downturn.
For manufacturers of waxes, solvents and additives, 2008 was a mixed year. On the one hand, it was challenging, as the economic downturn combined with higher raw material costs pushed hard on the bottom line. However, on the positive side, the growing interest in “green” chemistries are offering new opportunities for growth.
“Lubrizol’s wax and additives lines have done well in 2008 and we expect another good year in 2009,” said Carol Durgan, regional marketing manager, graphic arts for Lubrizol Advanced Materials, Inc. “We are on track to reach our sales and volume goals.”
“Shamrock has been able to maintain its current market position despite the rapid changes in the raw material pricing and availability,” said Joon Choo, vice president of Shamrock Technologies. Chris Halvorsen, global marketing manager – commercial for Hexion Specialty Chemicals, said that Hexion enjoyed continued success with its wax and additives business.
“We see more opportunity to combine our resins, varnishes and complete line of wax and additives to bring more value to our customers,” Mr. Halvorsen noted.
Solomon Lemma, marketing manager, coatings, inks and adhesives for Air Products & Chemicals, said that in general, the additives industry enjoyed volume growth during the first months of the year and started to feel the economic slowdown as of mid-2008, depending on the region.
“From a profitability perspective, it was a challenging year due to soaring raw material and energy costs and highly volatile exchange rates,” Mr. Lemma added.
“Overall, we are facing a very challenging additive market,” said Michael Hoppe, product group manager – additives at Cognis Corporation. “Especially affected is the coatings market, as a result of global slowdown in residential housing and commercial construction in the U.S. and Western Europe. At the same time, higher growth rates in emerging markets, combined with a continued shift to waterborne technology, higher performance and sustainable products, strongly benefited Cognis.”
Raw Material Pricing and Supply
It should come as no surprise that higher raw material costs and supply issues are a major concern for waxes and additives manufacturers.
“Both supply and prices continue to be a concern for the entire industry,” Ms. Durgan said. “We are trying to keep up with raw material increases and secure ample raw materials to supply our customers.”
“Supply is currently tight as far as polyethylene goes, and we have been working as hard as everyone else to hold the line as far as pricing and costs go,” Mr. Choo said. “Customers have been understanding when presented with the facts of the increases, and we are working closer to look for alternative means of costs savings.”
“Virtually no sector has been immune, with unprecedented increases occurring in chemical feedstocks, basic materials, transportation and energy costs, especially mineral oil costs,” Mr. Hoppe noted. “Overall, we have been fairly successful in passing this through, but it is fair to say that we have experienced some push backs and were not able to pass on all of the higher costs across our entire product line.
“Although crude oil is dropping quickly in price, most derivatives have not yet shown signs of retreat,” Mr. Hoppe reported. “This is mainly driven by supply/demand situations existing in the market or ripple effects of the hurricanes impact in the gulf region.”
“The inflationary environment has taken its toll on our costs for raw materials, packaging, distribution and energy,” said Mr. Lemma. “Despite all efforts to absorb this pressure, it was necessary to increase prices for our wetting agents, defoamers and dispersants.”
Mr. Halvorsen noted that maintaining supply is of critical importance.
“We have experienced significant raw material increases which are never easy to pass along,” Mr. Halvorsen said. “While it has been difficult to keep up with the increases, most important is maintaining reliable sources of critical raw materials.”
The manufacturers of waxes, solvents and additives are facing plenty of challenges, beginning with managing cost and supply.
“Our biggest challenge is trying to maintain cost and supply of both raw materials and products to serve the industry,” Ms. Durgan said. “Lubrizol continues to increase our efficiency and try to control our raw material pricing and supply to maintain stable supply and pricing to the industry.”
Mr. Choo said major challenges include the anticipated softening of market demand due to the current economic crisis and uncertainty in prices and supply for raw materials in 2009. “We are continuing our efforts in broadening our supply lines as well as in end market applications,” Mr. Choo noted.
Mr. Hoppe noted that Cognis is taking a wide variety of steps to ensure its cost are competitive.
“Cognis continues working closely with its customers and also takes aggressive actions to increase operating efficiencies throughout our entire organization as well as leveraging our global organization to ensure our costs are competitive,” Mr. Hoppe said.
Mr. Lemma noted that the maturation of North American and European markets, managing costs as well as addressing regulations like REACH, VOC limitations or the EuPIA initiative to establish a public inventory list comprising packaging ink raw materials, are among the areas that Air Products & Chemicals is working on.
“Air Products strives to uncover our customers’ unspoken needs and continues to develop new solutions such as our ZetaSperse dispersant product line that bring value to our customers,” Mr. Lemma added. “An optimized use of surfactants helps to reduce cost-in-use and improve the overall performance of the inks. All recently introduced ZetaSperse grades are free from APEs, solvents, glycols and HAPS.”
Expectations for the Coming Year
Although waxes, solvents and additives manufacturers are concerned about the slumping economy, they believe that the new products will key growth in 2009.
“The prospects of business slowing in 2009, especially the first half of 2009, will be challenging,” Mr. Hoppe said. “At the same time, we believe that despite potential economic challenges, the ‘green movement is real’ and here to stay with continued increasing demand for eco-friendly, low/zero-VOC additives.”
“We are heading into very uncertain economic times and will likely see a general decline in consumption in the additives industry, including surfactants,” Mr. Lemma said. “Air Products will continue to stay focused on the development, production and supply of high-quality products and technical solutions to improve the competitiveness of our customers. New products, such as our ZetaSperse dispersant product line, continue to add value to our customers’ products while reducing costs.”
“A post-election environment will hopefully stabilize consumer expectations and confidence, with resulting stability in the financial markets and potentially a recovery towards the end of 2009,” Mr. Choo said.
“Lubrizol is very excited looking to 2009 with our graphic arts marketing focus,” Ms. Durgan concluded. “In 2009, we will focus on our specialty products and applications in the graphic arts market and maintaining our focus on quality and differentiating technology that will meet and exceed our customers’ needs.”
Shamrock Technologies, Inc.
• Hydrocer 795
Comments: Hydrocer 795 is a stable high loading aqueous wax dispersion over 50% active to impart excellent scuff resistance and low co-efficient of friction to water-based flexographic and gravure inks.
• UltraMATTE 76, 76A and 76S
Comments: UltraMATTE 76, 76A and 76S are modified urethane polymers for improved matting and a smooth, warm feel in all liquid coatings.
• S-252 N1
Comments: S-252 N1 is an easily dispersible functional wax formulated to impart the best slip and rub properties in both pigments and clear systems, with minimal impact on gloss in clears.
• AquaFLON 91
Comments: Offering “high rub for dark colors,” AquaFLON 91 is a new economical 60% aqueous PTFE dispersion developed for dark colors.