The European pigments market is witnessing major restructuring due to two leading European players Clariant and BASF who have are planning the divestment of their pigment business. This has led to a huge consolidation in the global pigments market. However, it is expected to be confined to distributors and producers who deal with high volumes of pigments.
Both companies are closely integrated with activities in coatings dispersion and additives and have superior-performance pigments portfolios. Due to the divestment, there will be few international companies with raw material operations and integrated coatings. When it comes to value, BASF has a combined sales of $6 billion and is one of the largest global suppliers of dispersions and pigments.
Out of the three product groups that include additives, dispersions, and pigments, BASF and Clariant have regarded pigments as the least potential in terms of innovation-driven profitability and sales growth. Any major technological advancement, except in niche sectors, seems to be unlikely. Reason being, the majority of pigments have been invented in the last century.
Multiple Europe-based pigments manufacturers are anticipated to face fierce competition from producers from India and China. Moreover, due to the pigments shortage, European producers are struggling with inflating raw material costs. Meanwhile, the production capacity of pigments in China has been slowed down due to stern Chinese environmental regulations. China has been a major source of pigments for European coatings producers. The Chinese authorities strict regulations have impacted the suppliers of intermediates and base chemicals.
Explaining the BASF’s pigment divestment, Martin Brudermueller, BASF’S chairman said, “There is a lot of competition from Asian producers and the pigments sector is growing slowly”. A spokesperson from Clariant confirmed that even though they are selling their pigment business, their dispersion and additives operation will continue to remain with the company.
Nonetheless, Europe’s pigments industry is anticipated to head towards higher value, customer-targeted pigments. Clariant’s and BASF’s R&D plans for the colors market show for specialty products are being credited for this growth. For example, BASF is in partnership with Landa Labs in Israel and providing pigments with easy dispersibility and color depth for the automotive coatings industry.
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