The signs are pointing up for the printing and ink industries in the region.
Latin America is a diverse region, encompassing major economies such as Brazil and Mexico as well as Central America, South America and the Caribbean. As such, it is not a homogenous region, but really a wide range of different governments and philosophies, cultures and economies. Overall, though, the signs are pointing up for the printing and ink industries in the region.
Adrian Maguitman, VP strategy and business development, Packaging & Graphics Latin America for Sun Chemical, said that over the past year, Sun Chemical has seen a contraction in the ink and printing markets across the Latin American markets, mainly in the second half of the year.
“During the supply chain crisis that followed the COVID-19 pandemic, most converters that increased inventories to mitigate the risk of supply disruptions are now going back to normal inventory levels,” added Maguitman.
“In addition, the increase in the inflation rates across the region had two main impacts: the first was that consumers had less disposable income, and the second was that the rise of interest rates to curb inflation made borrowing money more expensive, limiting spending,” Maguitman observed. “This generated a contraction in consumption that consequently reduced demand for inks. While inflation is a global issue, countries across Latin America have seen higher interest rates than many other parts of the world as central banks try to avoid a strong devaluation of their currencies.
“Though we saw the wrap-up of the post-pandemic economic rebound in the first half of 2022, in the second half, the economy presented some difficulties in terms of lower demand and consequent excess capacity, which has stunted growth overall,” Maguitman said. “However, at Sun Chemical, we are seeing significant interest from customers in Latin America, evident most recently at Interpack 2023. The event gave Sun Chemical the opportunity to showcase sustainable solutions like barrier coatings, compostable inks and productivity tools across the flexible, paper, folding carton, labels and metal deco industries. High levels of emerging interest from new customers are a testament to the industry’s capacity to grow.”
Richard Möller, managing director of hubergroup Brasil, noted that the ink and printing industry in Latin and South America, which was already suffering from the effects of the post-pandemic, was additionally impacted by the effects of the Russia-Ukraine conflict.
“Raw material costs and a shortage of transport capacity were major issues and kept the market under severe cost and price pressure,” Möller noted. “We did not observe any ‘strong growth’ in any country in our region last year.”
Guilherme Ribeiro, VP of South American operations for INX International Ink Co., said that INX had a “reasonable” year in 2022. “Sales in Brazil corresponded to nearly half of the South American market for printing ink volume,” added Ribeiro. “It has been a challenging year so far as no important markets are experiencing strong growth in our industry. Sales shrunk 2% in Brazil for the first half of 2023, and the same seems to be happening in other countries. On the bright side, we do expect to see some sales volume recovery in the second half.”
“The larger economies in the continent do not present strong growth for this year,” said Ribeiro. “The last 2023 GDP growth forecast for Latin America is only 1.3%, with countries like Colombia and Costa Rica doing slightly better than average.”
Headquartered in Mexico City, Sanchez SA de CV, the largest ink manufacturer in Mexico and Central America. The company has a major presence in Latin America, with subsidiaries in Colombia (Grupo Sanchez Colombia), Costa Rica (Grupo Sanchez Artes Graficas), El Salvador (Sanchez Centroamerica), Guatemala (Tintas Sanchez Guatemala), Peru (Grupo Sanchez Peru), as well as Ecuador (Grupo Sanchez Ecuador).
“Despite some challenges we managed to grow, with better than expected results in markets like sheetfed inks, lamination adhesives, and solvent-based inks for flexo and gravure,” said Ernesto J. Sanchez, managing director of Sanchez SA de CV. “The present year, 2023, shows some healthy growth, as the country is focusing more and more in next year’s presidential election.
“The Sánchez subsidiaries in Latin America had good performances during 2022, helping the solidification of our group in this important region,” he added. “It is still part of our plan to grow in those countries.”
A Flint Group executive reported that the printing markets throughout Latin America are facing a complex economic and political situation, as packaging and label markets are under pressure due to inflation and economic slowdowns. Meanwhile, the paste ink markets continue to decline, and packaging markets are experiencing softer than normal volumes.
“Currently, minimal economic growth has been impacted by significant currency variation and reduced cost of commodities across the region,” they added. “We do not expect to see any countries in Latin America to see significant growth in the near future. However, we expect small to moderate growth across labels and packaging in Mexico and Brazil.”
Packaging Printing in Latin America
Not surprisingly, packaging printing has been the strongest segment for ink manufacturers, and it will continue to be so in the foreseeable future.
Maguitman pointed out that during the COVID market, brand owners asked converters to increase inventories to account for supply chain issues as well as higher consumption. Now, the packaging value chain is focused on reducing costs and lowering working capital needs due to an increase in the cost of borrowing.
“There is also some consolidation of businesses and production sites in the area, especially as the region’s geopolitical instability has caused a more conservative market with temporarily lower consumption and investment,” added Maguitman. “The markets are seeing growth in terms of sustainability, a sector where Sun Chemical has specific expertise. Using our ‘5R’ approach, – Reuse, Reduce, Renew, Recycle and Redesign – Sun Chemical produces integrated solutions for the ink and printing markets which prioritize the environment without compromising on performance. Sun Chemical is leading the way in meeting consumers’ demands for sustainable products, which increases their relevance.”
“Packaging printing continues to be the most stable segment, compared to editorial and promotional printing, and shows resilience to geopolitical and economic adversities,” Möller observed. “Political and economic instabilities in Latin America, such as transitions of governments in several important countries, affected the population’s consumption power in this period, which is why growth was not significant in this area either.”
New Facilities in the Region
To meet increasing needs, ink manufacturers are adding new operations in Latin America. Möller noted that hubergroup is not adding new plants, but it is currently investing in processes and modernizing existing plants.
While there were no new plants in 2022, Maguitman reported that Sun Chemical has made significant investments in Latin America over the last several years and continues upgrading all the plants and labs with new equipment.
“As a strategically successful region for the company, Sun Chemical has a presence in nearly every country in the region through local operations and distributors to benefit the area,” added Maguitman.
Ribeiro noted that INX is busy with many new developments impacting four countries in Central and South America and in Mexico.
“We began operations in Queretaro, Mexico, in the fourth quarter of 2022 and have been very successful,” Ribeiro reported. “The 32,000 square-foot building has a fully equipped laboratory, 1.5 million pounds of storage space, and the capability for metal decorating production. It will be fully functional by the end of the year.
“We recently completed expansion of our manufacturing capabilities in Colombia and tripled our space by moving to a 41,000 square-foot facility. It now houses the production of metal decorating and solvent-based inks,” Ribeiro said.
“We have started construction on a new campus facility in the Jundiai region of Brazil that will house our corporate offices and solvent-based ink operations,” added Ribeiro. “It is part of our master plan to build plants for all our ink lines that serve the entire Latin American market as we become an important part of the global manufacturing process of Sakata INX. The facility is scheduled to be open in late 2004.
“We also opened new branches this year in Chile and Guatemala,” Ribeiro concluded. “INX Chile was established in January and supports our metal decorating and water-based operations. INX Guatemala came on board to begin the second half of the year. Our initial plan is for it to support the metal decorating business.”
Outlook for Latin American Ink Market
Ink executives anticipate growth in the region for the coming year.
“Throughout the remainder of 2023 and 2024, the market will be challenged due to several countries’ economic and political environments,” the Flint Group executive reported. “With some key elections at the forefront along with currency fluctuations, it’s hard to predict the next twelve months. Businesses throughout Latin and South America will need to be adaptive and able to change their strategies according to the reality of the market day by day, month by month. Awareness of new laws and regulations and a heightened focus on the environment and sustainability will be critical focal points for business growth.”
Sun Chemical’s Maguitman doesn’t expect the trends over the past year to change significantly in 2024.
“Interest rates are expected to remain at high levels for some time until global inflation is controlled, Maguitman observed. “This will continue impacting consumption and investment. The printing markets across Latin America have excess capacity, with converters fighting for volume. This could eventually lead to more consolidation in the market.
Maguitman added that there is a lot of pressure in the value chain and the market remains incredibly competitive.
“Even as the economic market remains unsure, the region maintains notable growth potential and Sun Chemical is committed to investing in Latin America,” Maguitman added. “The market has a strong interest in sustainable products and Sun Chemical is eager to showcase its various eco-friendly solutions to printers in the region. We offer technologies and integrated solutions that no competitor can do in terms of sustainability.”
“Our outlook is positive for some countries, such as Brazil, Mexico, and Paraguay,” said Möller. “In some other countries, a scenario of stability is expected, while in others, it will depend on the reactions of the respective economies, depending on which economic policies will be adopted.”
“After some very challenging years, things look promising for 2024,” Ribeiro concluded. “The supply chain disruptions we endured have faded, and the market is finally able to repass on the raw material price increases.”
Author: Ink World Magazine