markets | European masterbatch
Figure 1: World masterbatch demand by region 2010
“A notable trend during the downturn was a move to
smaller order sizes,” Reynolds reported. “Our survey shows that this is becoming the norm with 44% of respondents saying that order sizes had remained the same over the previous 12 months and a further 25% reporting order sizes were getting smaller.” According to AMI’s survey only 19% of companies saw their average order size increase (12% did not respond). At the time of the conference, the industry was still positive about the outlook for sales over the coming 12 months with just over 60% expecting growth of between 0 and 10% in sales. A further 16% expected growth of more than 10%, while a similar number of companies were forecasting sales to remain the same. Only 7% of companies expected sales to decline in the coming 12 months. A particularly positive outcome from the AMI survey was that growth is expected across most sectors served by the masterbatch industry with particularly significant gains expected in medical and automotive applications. However, Reynolds reiterated the point that the
current business environment for the masterbatch industry is challenging, with the availability of material having become a major issue. This is leading to uncertainty about how best to run operations when companies don’t know where or when they are going to be able to source raw materials. The upshot is likely to be changing formulations along with changing relation- ships between customers and suppliers. The problems in supply have arisen because additive and pigment producers closed or cutback capacity during the downturn. Now demand has bounced back more strongly than the industry’s ability to reopen or build new capacity. This has particularly been the case for titanium dioxide (TiO2
), the supply of which was
discussed at the Masterbatch 2011 conference by Bernd Zimmermann of DuPont.
14 INjECTION WORlD | january/February 2012 The TiO2 industry is highly consolidated with just four
companies – DuPont, Cristal, Kronos and Tioxide – accounting for over half of world production. Because of poor profitability in the industry for many years there has been insufficient investment in replacement of depleted ore mines and it takes several years to start up a new mine. With some large ore deposits operating since the 1960s now coming to the end of their life, TiO2
is likely to remain in
short supply for a few years yet as companies such as DuPont accelerate capacity expansion
programmes which had been put on hold. Another problem for producers of plastic
products is that by far the largest market for TiO2 is
in paints and coatings, which is often easier for the titanium dioxide producers to supply because it does not require modification. The upshot for plastics is that product designers may
need to re-consider what is white and what is not. If there is no specific need to be white, then maybe it should change colour. The lesson appears to be that the days of using TiO2
as a low cost way of extending
masterbatch products have passed. A similar set of circumstances also applies to the
supply of many organic pigments. In addition, there has been a process of consolidation among the major players driven by growing concerns over environmental legislation and increased competition from low-cost Indian and Chinese producers. The merger of Ciba and BASF in 2009, for example, resulted in the closure of six plants worldwide as production was rationalised. Again, this may lead to the need for product reformulations.
Industry restructuring The masterbatch industry also used the downturn to rationalise production and undertake portfolio reposi- tioning. Strategies have tended to involve a combination of globalisation to follow the growth markets and specialisation in order to add value. Clariant has consolidated its production in Europe to
focus its plants on particular areas of processing, such as blow moulding or fibre applications, resulting in the closure of plants in France and the UK. Following the acquisition of Ciba’s pigments business, BASF rational- ised some of its production, closing plants in the Netherlands, Belgium and Spain and transferring production to Germany. Schulman and Ampacet have both sought to grow their activities in the small-volume colour masterbatch business, while Cabot has taken a different tack and has reverted back to being primarily a black masterbatch producer having, for a while, also supplied white grades in Europe. A plant in Italy was closed last year and,
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