Link: The Packaging Inks Market | inkworldmagazine.com
By Catherine Diamond, Associate Editor

The evolution of the packaging market is a boon for ink manufacturers.

The global market for packaging is more than $950 billion, according to a report by SmithersPira (“The Future of Global Packaging to 2018”). Asia is the largest consumer, with 36% of the market, followed by North America and Western Europe at 23% and 22%, respectively, and the market is growing. In particular, flexible packaging has picked up market share in recent years.

The packaging ink industry is also on the rise. Ink World estimates that sales for the North American packaging ink market is approximately $2 billion, with sales of flexo inks alone greater than $1 billion annually. Sheetfed inks for folding cartons and packaging gravure inks also have significant portions of the ink market. Digital inks are picking up some traction in the packaging ink segment, although inkjet is still early in the development cycle. Globally, gravure holds a more predominant share of the packaging market in Asia and Europe.

A Changing Market

Over the last several years, the packaging market has rebounded along with the global economy. According to Grant Shouldice, VP of marketing and technology at Flint Group, packaging ink markets are improving “in lock step” with flexible packaging, paper and board packaging, and labels.

“The flexible form factor is increasing in popularity for a number of reasons, including lightweight, excellent aesthetics and new functionality,” he said. “On the other hand, paper and board packaging for beverage and aseptic products are, by anyone’s measure, more innovative and convenient than ever. Over the last few years, ink manufacturers, for the most part, have accepted that quality service and price are now a given in the market place. Value drivers such as constant innovation, real process expertise, regulatory compliance navigation, and the ability to contribute to strategic change are frequently sought by our customers. At the same time, the packaging industry and especially the label segment are starting to see some real movement to dual platform converting where inkjet ink and toner-based processes are being employed to deal with the exponential growth of SKU numbers driven by huge number of choices offered to the consumer.”

For its part, Hubergroup divides its observations into two sectors: offset and liquid. Robert Doerffel, head of corporate communications Europe, said that in both sectors, there is a growth in requests for special effect inks in order to meet the demand for high quality packaging with increasing complexity in print design and appearance.

“On the other hand,” he said, “we are noticing pressure on pricing for standard packaging types. For offset printed packaging, a slow but constant shift from parts of the conventional inks business to UV inks is becoming obvious.”

Looking more specifically into the liquid inks sector, Doerffel said Hubergroup is observing a number of trends: a reduction of the number of ink series used by customers or in-house production from concentrates, in order to simplify the management of ink supply chain; an increase of definition in all printing processes; enhanced consistency as a prerequisite for growing standardization of production processes; more detailed terms of quality specification (specific tests with numeric data, terms of purchase, etc.); restrictions with ink constituents, related to various changing legislations, especially in Europe (national legislations on food packaging); and a growing sensitivity about the environmental footprint of packaging.

“For liquid inks, a growth of the different segments is strictly related to geographic areas,” Doerffel added. “Just an example: in Europe, flexographic inks are growing faster than gravure inks, while in Asia, gravure inks are growing a lot more than flexographic inks.”

Toyo Ink president and COO John Copeland said that the conveniences of modern society are exemplified in the packaging market. “These changes have required the technical aspects of the packaging inks to meet certain physical requirements. As companies become global through mergers and acquisitions, so do the printers and the customer requirements. Solvent-based and UV inks seem to be the fastest growing ink segments for packaging,” he said.

Today’s Packaging Trends

The global packaging market encompasses a variety of mediums to meet a vast array of consumer needs. According to Shouldice of Flint Group, the fastest-growing segments in packaging include label markets and shrink label in particular.

“The pouch segment, as well as the lamination inks segments, are growing nicely. The beverage and aseptic segments as well as specialty papers segment are growing faster than traditional folding carton and corrugated segments. We’ve also seen a dramatic increase in the use of low energy and LED type inks in both narrow web and sheetfed segments,” he said. Shouldice added that the largest growth area is in lamination inks as “emerging geographical segments articulate needs for longer shelf life to preserve the food contents and for special environments.” Additionally, Shouldice said that macro trends for this market include increased need for tangible sustainability and recyclability, improved aesthetics and economical specialty effects, improved functionality for consumers, innovating for efficiency and high speeds and regulatory compliance.

Copeland said that the major trends in packaging include solvent inks for flexible film, due largely to quality and speed versus water-based inks. “Pouch printing is another trend moving forward,” he said. In his experience, the global growth areas are Brazil, India and China.

Tony Renzi, Sun Chemical’s VP of product management packaging, North American Inks, said that his company is seeing an increased focus on the various regulatory legislations worldwide that are driven by large CPGs, such as Nestle and the Swiss Ordinance adoption. “For specific product lines, there is growing interest for water-based inks, especially with regard to high quality process printing for pre-print corrugated. The use of water-based systems continue to be of interest in an effort to reduce waste and emissions. We’re also seeing some renewed interest in water-based inks for high performance laminations and one part systems for outdoor applications,” he said.

“As printers continue to push toward higher press speeds, we’re also seeing increased interest in solvent-based inks to deliver high quality print results with improved speeds and efficiencies. There is increasing interest in specialty inks (metallic, color shifting) as well as the use of HD plate technology in order to create a high quality, differentiated package.

“We are seeing growing interest in our UV curing/energy curing offerings for the packaging market and applications, especially EC products where product resistance performance is a key criteria. There is also growing interest in EB lamination in combination with EC flexo printing inks,” he said.

Business remains steady and consistent with water- and solvent-based inks, according to Mark Hill, INX International Ink’s VP and technical director, liquid ink.

“People who choose water-based inks usually stay with water; the same philosophy works for solvent users. More of our customers continue to adopt energy curing where they have not done it in the past,” he said.

A Focus on Low Migration

Given the attention paid to food packaging safety today, it may not come as a surprise that the market for low migration packaging is gaining momentum. Don Duncan, director of research at Wikoff Color Corporation, said that it is the “biggest topic in packaging printing.”  “Although there has been no recent change in either U.S. nor European laws on the subject, customer requirements have pushed the issue further and faster than any regulatory body can act,” he said.

INX’s Hill said that low migration inks have increased in popularity, particularly on the UV/EB side. “Migration continues to be an industry hot button,” he said. “With conventional inks, there have been some interest and inquiries regarding migration but typically conventional raw materials have been accepted over the years as being safe. Of course, the guidelines seem to be constantly changing these days so what’s acceptable today may not be in the future.”

Hubergroup’s Doerffel said that during the last 10 years, his company has seen a sizeable increase in low migration offset ink demand, which he said is “obviously triggered by the public discussion about mineral oil components (MOSH/MOAH) or photoinitiators when it comes to UV curing systems.

“Especially in central Europe, the majority of the food packaging is nowadays printed with low migration offset inks. Starting from the 1970s, liquid inks in Europe already have that long tradition of possessing low migration properties. Therefore, we see only different adaptations to a much more structured approach in that regards. Other parts of the world seem to be adopting the European approach step by step,” Doerffel said.

In 2014 and 2015, Flint Group has seen what Shouldice called a “dramatic increase” in the migration testing service the company offers its customers.

While many companies are focused on low migration inks, Sun Chemical’s Renzi said that many customers are now focused wholly on low migration packaging. “This means that all the materials in the packaging construction and process contribute to a low migration package. Sun Chemical continues to work with our customers in contributing an ink that will help the package meet the low migration packaging requirements,” he said. “In order to comply with the various regulations in the marketplace, many European converters are especially interested in our wide range of low migration solutions. We have also seen increased interest in North America and South America, but at a slower rate than in Europe.”

Raw Material Costs

Typically, the extreme fluctuations of raw material costs have been the primary concern for suppliers. However, in today’s relatively stable economy, ink suppliers are having a harder time adjusting to what is now considered “average” cost.

Hill, of INX, put it this way: “Raw material prices began stabilizing two years ago but remain at much higher levels than they were only a few years ago.”

Ken Klug, director of purchasing at Wikoff, said that there has been price relief on a few specific materials as a result of increased crude oil production. “The laws of supply and demand have reiterated the influence producers have on our industry,” he said. “While the demand continues to be great for ink and coating consumption and therefore raw materials, the costs remain tied to their availability.”

Shouldice, of Flint Group, said that when it comes to unpredictable raw material prices, sometimes the best offense is a good defense.

“Raw material availability and the Asian supply chain for a large number of components used in packaging inks is a concern but any risk has largely been mitigated by expert tactics in our industry,” he said. “The packaging segments are largely unaffected by the massive volatility we have seen in crude oil in recent times and any movements may or may not be offset by currency exchange depending on the raw material source region. Consolidation of TiO2 manufacturing should be the main concern of those participants in the packaging value chain that use white pigment.”

Jan Paul van der Velde, Flint Group’s SVP of procurement, sustainability, IT and regulatory, added: “The volatility of markets supplying into our industry has increased significantly in the last few years. This is the case for many aspects. For example, the mining boom did increase the costs of TiO2 quite significantly; however the TiO2 industry itself could not always pass through their increased costs, forcing huge consolidation now, driving a more tense supply market. The solvents markets have seen major swings up and down, some swings being counter intuitive versus base drivers like crude oil. Pigments have seen the impact of more and more strict regulations. And regulations as such, through initiatives as REACH and other regulations, drive major cost into the industry.

“Last but not least, market demand has been more volatile than ever. BRIC countries were the key growth areas; suddenly they are the most difficult regions to deal with. And on top of that, as a global company, currencies are having a major impact on costs,” he said.

According to Ed Pruitt, chief procurement officer at Sun Chemical, the raw materials market has had mixed results. “On the one hand, we have experienced sharp inflation in some resins, intermediates and solvents. On the other hand, we have also experienced relative stability in a number of other key raw materials. In general, raw material prices have remained well above the levels that were in place as recently as three years ago,” he said.

“We have seen a number of raw materials under sharp cost pressure that we’re keeping our eye on. Rosin resin is one, due to concerted efforts by the Chinese market to extract higher values for gum rosin. We have also seen a dramatic rise in azo pigment intermediates costs due to operational issues as well as continued pressure on environmental compliance in China. The cost of ethyl acetate has also sharply escalated this year due to supply tightness in the European market.

“Undoubtedly there will be some unexpected pressures that emerge due to supply issues we are not aware of today. However, key raw materials are in generally good supply, global growth continues to be at a modest pace and new oil production should help keep the oil and feedstock costs in line,” Pruitt concluded.

Adjusting to what is considered a “new normal” in terms of raw material and overall prices can prove to be a challenge for global ink companies.

“The effect of rising raw material costs for inks and decreasing sales prices is becoming a serious issue for ink makers,” Doerffel of Hubergroup said. “Costs, availability and consistency of raw materials have surely had an essential influence on the development of current ink technology on a global scale and across all ink systems.

“Another important driving element is related to the compliance to different legislations related to the chemical industry (in Europe REACH, in other countries comparable health and safety regulations and chemical inventories),” he added. “Qualifying raw materials, e.g. according to REACH, is labor intensive and expensive. Also, the qualification and choice of more enhanced raw materials for food packaging inks is creating cost. The current ink prices do not cover for all the extra expenses and the recent years have been characterized by austerity measures and streamlining of various internal processes. This situation is – as far as we can judge it – valid for all the ink making industry across-the-board.”