PCI recently interviewed several additives suppliers regarding the current market, industry drivers and challenges that customers face. Participants in our interview included Chris Henkee, Specialty Global Marketing Manager, Additives, at Air Products and Chemicals Inc., Allentown, PA; Dr. Stefan Moessmer, Head of Business Line Paint Additives, BYK Additives & Instruments, Wesel, Germany; Te Hsin (Josh) Liu, CEO, R&D Director, Doxa Chemical, Taipei, Taiwan; and David Brown, Director of Coatings Americas, Elementis Specialties, East Windsor, NJ.
PCI: How has the global additives market performed in the first quarter of 2015? Are you seeing growth over recent years?
Henkee: When we look at the additives business from a global perspective, we definitely see the U.S. business significantly stronger this year compared to recent years, whereas we see growth in Asia and Europe on par with years past. In the United States, the growth has been driven by both stronger manufacturing and a more positive construction situation.
Moessmer: After a record year in 2014, we have also seen a moderate increase this year in the first quarter of 2015, which has been mainly driven by NAFTA and business in Southeast Asia. Even in the highly saturated European market we have been able to increase our sales.
Demand for additives, the way I see it, is driven by two factors: what I call “formulation demand” (the demand that stems from existing formulations) and technological requirements. Formulation demand is determined by old products, while demand driven by technical requirements comes from innovative or new products. Additionally, geography is a huge factor that affects demand. For example, we see China as one of the few markets that is still growing, though the rate of growth is certainly not as robust as it was 10 years ago.
As for demand in other parts of the world, it’s difficult to say; growth varies greatly from region to region. However, we can say with confidence that in the near future, the demand for innovative products will increase in response to stricter environmental regulations. Thus, anything that helps reduce VOCs is sure to have a future.
Brown: Global additive volume demand has seen robust growth over the last several years. North American demand has been growing steadily since the recession. Latin America was growing strongly until 2014 when many of the major economies struggled. Europe’s growth has been modest. Finally, Asia continues to see growth much of the rest of the world would be envious of, but recently its growth has been moderating.
For the first quarter of 2015, North America and Asia have shown solid growth while Europe and Latin America have slowed. The exchange rates have been a major headwind for most regions from a U.S. dollar basis.
PCI: What are some of the most common customer requests for additive technology?
Henkee: It is a very exciting time to be in the additives business in North America. Whereas during and immediately after the recession many of our customers concentrated on cost optimization, we now see a renewed emphasis on new and innovative product development.
In the current development cycle, there is a subtle shift in the United States from regulatory-driven to innovative product development. (In Europe, the coatings manufacturers have been active in this mode for a few years now.) In particular, there is emphasis on using new pigments or enhancing the performance of existing pigments. There is also an interest to find wetting agents that allow coatings to perform consistently across a variety of substrate platforms.
Moessmer: In particular, customers are extremely interested in the solutions we provide in the field of rheology modifiers. Alongside this more general demand, customers are requesting our technical expertise when it comes to additive compliance with modern legislation issues such as Swiss Ordinance, low VOC and zero emissions.
Liu: Our customers are only interested in how they can meet the demands of their own customers. They are only interested in our products inasmuch as those products can help their own customers achieve their respective goals. Thus, they are generally not interested in the specifics of the technology we are using, and fancy-sounding technology may not best serve their interests.
For example, technology like “controlled polymerization” doesn’t always provide better products, and so as fancy as it sounds, the fact that a product might utilize this technology is irrelevant to customers. On the other hand, conventional condensation polymerization isn’t so “random” when it comes to molecular weight distribution. There is a method to ensure a fine distribution in that category as well. How important is controlled polymerization technology to dispersing agents? So far we have not seen evidence to convince us of its superiority over conventional methods.
Overall, our customers aren’t interested in products that utilize specific technologies. Rather, they are interested in how our products can solve their specific problems and the value that our products can provide to their business.
Brown: The basic request is to improve the cost performance of additives in almost any application. In some applications, customers need higher performance at a reasonable cost. When one can demonstrate a product is more efficient, customers are willing to pay more for it. The second leading issue is how to improve the environmental friendliness of additives by developing VOC-free or APE-free additives. Finally, in no-VOC coatings, customers need additives that help the coating perform more like higher-VOC-containing coatings.
PCI: When developing new products, what steps do you take? Do you mostly listen to requests from coatings formulators, or do you also look farther downstream to what the retailers and end users are looking for?
Henkee: You have to do both. Looking farther downstream allows us to anticipate the “type” or “character” of additives that might be needed in the coming years (for example, biobased, low emissivity, etc.). However, how these needs are reduced to the actual performance parameters for the additive will often be defined by discussion with the coatings formulators. Whereas in the last few years the coatings formulators were asking for additives that helped them meet regulatory requirements, we now see coatings formulators asking for additives that will help them develop truly innovative and differentiated products for the market.
Moessmer: Since customer orientation and customer intimacy are our key assets, our technical experts listen carefully to the requests of coating formulators in order to transfer their demands into customer projects. On the other hand, we are also in close contact with end users and retailers to get first-hand information about market trends and technology shifts.
Liu: Our R&D direction by and large comes from the direction of the market. Our R&D staff is always seeking new and innovative chemical solutions, but our solutions and developments must always be aligned with market forces to stay relevant. We rely on immediate customers exclusively for direction, not downstream users, as they have the best understanding of their customers’ needs.
Brown: There are two main drivers used in developing new products. The first is customers’ needs and wants. They know their customers better than we could. We work collaboratively with our customers to focus on their needs. For example, zero-VOC architectural paints are typically difficult to thicken, resulting in the formulator having to use a lot more thickener to achieve preferred viscosity. There is an opportunity to improve the thickener’s efficiency while at the same time minimizing the impact on other paint and film properties.
The second driver is our ongoing efforts to improve our technology in terms of regulatory compliance trends both locally and globally. We look to see how new regulations will impact the use of our additives and work to develop products that meet the new regulations. This is not just important to our customers but is also important to our environment.
PCI: What do formulators need to know when choosing additives?
Henkee: As additives are a small part of the formulation but are often crucial in having the coating perform as intended, it is important to ensure an additive manufacturer is committed to quality and surety of supply. Formulators also need demonstrative data, as this provides a good indication of how to use a product and what one might expect.
Moessmer: Obviously they need to know how to incorporate them without negatively affecting the final paint properties such as drying speed, adhesion, color, etc. Suppliers’ highly skilled technical advisors and sales personnel can easily demonstrate the right way of handling high-performance additives.
Liu: I think a formulator will definitely benefit from finding out more proprietary information such as the product’s molecular weight, polymer type, functional groups, general polarity, etc. This information is not usually shown in the product data sheets, but knowing this information is how a formulator can most effectively control his/her formulation. I think it is important for a formulator to know not just if a certain additive works, but why it works. With that knowledge base, he/she can determine what additive to use in new projects and conditions. The formulator cannot gain that knowledge from the basic additive data sheet information.
Brown: There are many things a formulator needs to know, and/or consider, when choosing an additive. When formulating paint for a solvent system a formulator needs to understand what effect the additive will have, if it will interact with the solvent system (including water), and how it will interact with the resin and other additives. Finally, most customers want to know what the additive’s advantages and disadvantages are.
In formulating architectural coatings, formulators have paint and film property targets the coating should have. Using an additive that helps achieve these properties often helps differentiate it from others. For instance, a formulator looking to formulate an exterior paint will look to have early moisture resistance as a key paint property. An an additive that is more hydrophobic in nature will provide more water resistance than a more hydrophilic additive.
PCI: What is the future direction of the additives market? What trends will continue?
Henkee: Many of the trends in the additives market are dictated by new developments in resin and pigment technologies and so we expect to continue to find a number of problems and issues that can be addressed with innovative additives. We also see the need for multifunctional additives that can address several needs and thereby reduce the additive load, as well as reduce the likelihood of unanticipated additive-additive interactions.
Moessmer: The trend of providing additives that are environmentally friendly, i.e., solvent-free or waterborne but that are also economically beneficial, will continue. Examples would include VOC-free defoamers for universal use in many aqueous systems such as decorative coatings, or products that offer wide usability in solventborne, solvent-free and waterborne systems with a good price-performance ratio.
Liu: The demand will be more and more driven by environmental and safety concerns than conventional aesthetic ones. Europe has been setting the standard, and the trend will eventually spread to other countries. China has passed a VOC tax this year in an attempt to curb its massive air pollution problem. Raw materials for water-based and UV applications have moved to center stage there. I believe other Asian countries will follow suit in the years to come.
Brown: The future additives market will continue to evolve, but there are constant trends. The importance of meeting new environmental regulations will continue as well as improving the cost performance ratios of additives. Formulators will continue to want to formulate coatings with unique properties and will rely on additives to help differentiate their coatings over their competitor’s products.