Pigments and Colorants Market Intelligence

Industry Outlook & Drivers

Global Market Overview on Colorants 

• China is the single largest consumer and producer of Colorants with a mounting demand share of 42 percent. India is the second largest consumer in industry
• Environmental issues in China is expected to increase the supply risk of colorants in the future
• Global Dyes, Pigments and Colorants industry is expected to witness a strong growth 5.5 percent (CAGR) until 2021. The growth in industry is expected to be driven primarily by construction, plastics and auto sectorCost Drivers – Natural Colors

Cost Drivers – Natural Colors

• Total raw material cost for oleoresins produced using SCF method accounts for around 66-68 percent in the total cost
• In the SCF method, around 94-95 percent of the raw material cost is driven by the vegetal crop (Capsicum Annuum L /Turmeric). During the peak season, the price of crops tend to decline which would bring down the cost of oleoresins as well. However, during off-season the prices will increase and large suppliers will set the prices which will be partially or fully followed by small players
• Total raw material cost for oleoresins produced using Org. Sol. method accounts for 75 percent in the total cost
• In Org. Sol. method, solvents plays a major role in boosting the total raw material cost. It accounts for around 55-60 percent. On the other hand, vegetal crops also have a significant impact on total raw material cost by accounting for 41-45 percent
• Meanwhile, due to environmental constraints suppliers are expected to use bio-ethanol instead of petroleum based ethanol Therefore, any change in the usage of solvent might have a significant impact on the total raw material cost, thereby affecting the total cost

• Dyes, colorants and pigments market size is estimated to grow at CAGR of 5.5 percent to reach $46 billion in 2021
• Stringent environmental regulations is expected to have significant impact on the pigments industry, however due to the lack of commercialized alternatives, synthetic pigments are expected to stay relevant in the market
• Increased consumer spend on automobile and construction sectors can be attributed as the major reason for the demand growth in APAC. In the US and Europe, the markets are nearly mature with lesser growth potential compared to APAC economies
• With the global GDP expected to grow at the rate of 3.6–4.0 percent until 2021, Pigments and colorants industry is most likely expected to follow the same pace

Regulatory Landscape: Colorants

      Permissible limits of Metals and Metalloids

• Resolution AP (89) 1 applies to the use of colorants in plastic materials and articles coming into contact with food. The resolution defines purity requirements for pigments including concentration limits for extractable heavy metals, primary aromatic amines (PAA) and polychlorinated biphenyls (PCB).

       Upcoming Regulation

• Environmental safety under REACH Regulations: The REACH registration process is ongoing for many of the dyes/pigments, and it is expected to be completed by May 2018. Once the REACH registration is complete, all the ingredients used in the dye should adhere the REACH regulation

Economic and Political Regulations: Colorants

• In order to control pollution, the Chinese government has enacted strict regulation to environmental safety. The Chinese government's focus until now was on air pollution, and China's environmental policy is starting to intensify on water cleanliness, and new amendments are effective from October 15, 2017
• There is a risk to supply shortage, as the government shutdown plants do not comply to the environmental safety standards, and the supplier reduces the operating levels to adhere to the minimum emission levels
• The impact to cosmetic and personal care dyes industry, due to the Chinese government policies, is less, as China's dye industry is predominantly textile and agrochemical based compared to India. Many of the raw materials for Indian cosmetic and personal care dye industry, such as iron oxide, are sourced from China, and hence, there is a medium impact to the cost of production of dyes

Trends in the Industry: Colorants

       Shift in Production to Asia

• A steady shift in the production base from Europe to Asia is being witnessed for the past one decade
• Major producers, such as BASF, Clariant, and few others, have discontinued their operations in Europe and have entered into the Asian markets, either through JV's or Greenfield projects
• The shift was focused mainly on few countries, such as India, China, South Asia, and few other low cost countries
• Rapid increase in demand in end-use applications, competitive manufacturing costs, and high economic growth rates are propelling the cosmetic pigments market in APAC
• These factors are attracting companies to adopt expansions and R&D strategies in the region. Market players are focusing on APAC to gain high market share