David Wawer is the Executive Director of the Color Pigments Manufacturers Association (CPMA). Prior to this, he was CEO of the Massachusetts Chemistry Technology Alliance for almost 12 years. He has experience in Government Relations as part of the American Chemistry Council. We were very fortunate to have the opportunity to speak with David about his thoughts and opinions on the future of the pigments market. What follows is a synopsis of the discussion.
What trends are you seeing in the pigments market?
There have been significant disruptions in the pigments market due to the global pandemic, and several trends have emerged since.
People are spending more time at home and are spending money on home improvements, including re-painting their homes. Companies that manufacture pigments for paints found that there was an increase in demand for various home improvement materials last year, including paints. That market took off last April and continues into the first quarter of 2021.
Conversely, the automotive finishes market took a nosedive. Last Spring, automotive sales declined significantly, which affected upstream suppliers of raw materials, pigments and more. Companies that were able to switch production to service the home markets (i.e. Decorative paint) were able to do well despite the economic disruption. However, we are seeing a rebound in the automotive market in 2021 and I believe we will see an increased demand over this year.
Another area where we have seen a drop-off in sales has been in industrial coatings (for commercial buildings) because maintenance and repairs have not been a focus for the last year with so many people working from home. We cannot be sure of whether this industry will climb back this year and will certainly affect companies producing raw materials for industrial coatings.
Printing inks manufacturers are seeing growth in their market due to an increase in shipments to residential locations – whether that be food delivery or online shopping. Because of the trend towards more food delivery services, food grade packaging is increasing in demand as well. More FDA compliant pigments are needed to meet this demand. On the other side of this spectrum are magazines and newspapers that have continued to decline over the last 15 years.
On a related note, there is a continued sharp increase in demand for plastics products for packaging, as well as in place of steel. I suspect we will continue to see this increasing trend, at least in North America.
We are also seeing a continual disruption of raw materials. As the Chinese government ramps up its control on pollution reduction, we will see more of a desire to source raw materials from other countries, causing a shift in the supply chain.
How has COVID impacted the pigments market?
VID-19 has changed consumer behavior drastically. The way people shop and what they spend money on has changed. As aforementioned, the shift has caused more packaging to be required for online deliveries and there is more money spent on decorative paint within people’s homes. Certain companies are benefiting from this shift, while other industries have almost been destroyed – hospitality (hotels & restaurants), transportation (airplanes). However, with the population being slowly vaccinated, I think we will see an increase in travel and eventual rebound. However, businesses are still being cautious, as they must make decisions considering all potential liabilities. Companies that have re-opened facilities to suppliers are doing it on an appointment-type basis and travelling to see customers by automobile only.
Building relationships and establishing new relationships typically happens at trade shows and conferences. New relationship building has generally been put on hold and maintaining relationships has been the priority. Many companies have been able to maintain business relationships and orders for customers. On the research and development spectrum, it probably has been deferred or delayed as you have to be hands-on in a lab or in a customers’ facility to talk about chemistry characteristics and work on “pigments innovations”. I believe that has been slowed down because of the inability to work except via Zoom calls. Many businesses will likely reduce the need to conduct all meetings in person. Likely there will be a preliminary videoconference which leads to an ultimate face-to-face engagement.
What are the areas of opportunity in the pigments market?
Transparency in labeling a product has become imperative for many downstream customers and end-consumers. Everyone is questioning what goes into their food, drinks, cosmetics, and more! For example, there has been a drive towards ‘natural’ or ‘GMO-free’ foods. There are increasingly more regulations associated with what can go into paints, especially for certain applications.
Color pigments will always be needed for coloring coatings, plastics, and ink applications. The opportunity lies in the way pigment manufacturers develop new pigments (reformulating current products or formulating new products), and the way they are labeled (and ingredients disclosed). Many companies in the supply chain have already made standard pronouncements about not using a certain type of resin in their product. There could be some niche opportunities, which will likely have a high price, high quality, and high performance.
What factors might affect the growth of the pigments market?
Trade barriers! I keep hearing of all the delays in shipment of raw materials, delays at the port where shipments are sitting there for months! Some container shipments have over 10-day delays to get into the harbor to offload. Unfortunately, I believe this challenge will persist through 2021.
Also, last year the US trade agreement was signed by the 3 countries (USA, Canada, Mexico), and there are distinct advantages in terms of avoiding tariffs for companies that product organics for paints, coatings, and printing inks markets in North America. The 25% Chinese tariff can be avoided if a coatings company buys a domestically sourced. This should spur the manufacturing of goods in North America and create a distinct advantage for those manufacturing and selling within North America as well as to other countries.
What do you enjoy most about working in the pigments industry?
I love the people! Everyone likes what they do and they know the role of the pigments industry is in the world of commerce. It was great when we had tradeshows and you could meet people from various countries and cultures. Everyone shares an inherent knowledge of color pigments chemistry and how it applies to many downstream areas.
The industry produces something that makes everyday life more cheerful. We know what it is, but our industry is not fully understood, which is part of the challenge of what I like to do - educate other organizations about the role of pigments in a global society, writing about it, and being interviewed about it! This is an industry that has a good story to tell and I am always looking for an opportunity to market the pigment manufacturers and the markets they serve!
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