A market with an unquenchable thirst

12 September 2005 00:01  [Source: ICB Americas]

The water services industry in the US is mature and growing roughly in line with GDP, but the water treatment chemicals and services piece is a GDP-plus growth opportunity driven by the growing value of both water and energy, say industry participants. Service and distribution companies such as Nalco, GE Water and Ashland Drew are taking on a larger slice of their increasingly lean customers’ water treatment needs and developing new service models that draw on a wider portfolio in which chemistry, though essential, is but one tool.

A key consideration of these broader offerings is the linkage of water and energy in most industrial processes. “Water outfalls often contain energy,” notes Bill Roe, executive vice president and COO at Nalco. “They may have higher temperatures, and that energy is lost. Water is a more precious commodity in many cases, and so there is a lot of emphasis in industry right now to shut drains, stop outflows, consider advanced recycle technologies. Total water management is what we call it.”

Customers are increasingly concerned with water quality, as well, says Hal Moffat, vice president of marketing, Drew Industrial, a business group of Ashland Specialty Chemical. “There is a push in a lot of applications to increase the quality of the water being used because you use energy more efficiently and stop having some of the problems associated with poor quality water. There is a trend toward finding technologies, both chemical and non-chemical, that improve water quality inside an industrial facility.”

As a result, industrial consumers increasingly look for total solutions involving chemistry, process monitoring and dosing equipment and service, notes David Muldoon, vice president water treatment, Ciba Specialty Chemicals. “In addition, customers are more and more focused on total-process cost reductions rather than a reduction in just chemical costs. Suppliers with a broader product and service offering will be better positioned to compete in these markets in the future.”

Total solutions have been facilitated by a new conception of the plant. “In the past, people thought of industrial plants as a collection of unit operations,” says Roe. “You have boilers, cooling systems, wastewater plants, and they’re all run as unit operations, separate and distinct from the other processes. Now customers understand that there is a total water process, total water input and output to manage, and those unit operations all connect to each other. So this concept of total water management… resonates with customers right now. They understand it. They see the costs. They understand the cost benefits.”

The opportunity to offer such overarching services has increased with customer downsizing. “We’re assuming many more responsibilities for the industrial client, in some cases, actually physically taking over unit operation of water treatment and operating them for the client,” says Roe.

The success of all of this activity is ultimately determined by its cost-effectiveness, at least in the industrial sector. “As the technology evolves and we become more sophisticated in measuring water, the purity standards are being driven to lower and lower levels, but the fundamental need of the customer is the same—high quality water at lower delivered cost,” says Ian Barbour, general manager of Dow Liquid Separations and CEO of FilmTec.

Although chemicals remain an essential component of the water treatment solution, they are now part of a package by companies like Nalco. “Our chemical business is growing, but we are more and more bringing a comprehensive bundle to the customer that is comprised of a combination of chemistry, equipment and services,” says Roe.

The emergence of effective non-chemical technologies such as reverse osmosis membranes does alter somewhat the profit equation for companies that have long made their business the delivery of chemistry. “If you put a reverse osmosis unit onto a boiler, you could expect to see the consumption of boiler treatment chemistry go down,” Roe acknowledges. “If the most sustainable, cost-effective solution for the customer is to have a state of the art pretreatment package including RO, and that cannibalizes some of the internal treatment programs, you still want to go in that direction because it’s better for the customer and Nalco.” Mitigating such losses are gains in the service of equipment, which includes a chemical component, as well. “It’s been an actual plus for us, as we’ve brought a broader and better performing program.”

The municipal market, although it offers less scope for service, is driving rapid growth in chemicals consumption, which Ashland’s Moffat estimates at about 5 percent per year. “There’s a large class of chemicals associated with dewatering sludges [flocculants and coagulants], and that’s a growing marketplace from just a general application [standpoint] in the US, as more and more wastewater treatment plants are put in to meet clean water restrictions.”

Municipal water treatment is the primary consumer of flocculants and coagulants, says Matthias Halusa, marketing director water treatment at Ciba Specialty Chemicals. Ciba’s portfolio includes both organic flocculants (polyacrylamides) and coagulants (polyDADMACs, polyamines). Pulp and paper and chemicals are next, while the mining industy is gaining importance, he adds. “Growth rates are fairly similar across industries, but generally higher in the industrial markets and in particular in the food & beverage industry,” he says.

Halusa sees the market shifting its preference from inorganic chemistry to organic, such that organic flocculants are growing more quickly than inorganic coagulants. “Organic polymers are more effective than inorganic coagulants such as alum and are therefore increasingly favored due to stricter regulations.” Moffat also notes the trend, remarking, “In the old days, if you wanted to get the mud out of river water, you might have used 1000 pounds of alum, ferric salt and caustic, and now can do the same things with five or fifty pounds of basically an engineered molecule.” Halusa says that Ciba is busily strengthening its flocculant and coagulant offering in their various forms (inverse emulsions, liquid dispersions, beads and granules) by focusing on solutions that work over a wider range of applications, specifically better tolerance to varying sludge characteristics. 

Unfortunately, organic compounds are directly affected by the cost of oil and natural gas, Moffat points out. “A lot of the polymers and other products that are used have seen 30 or 40 percent cost increases over the last 12 to 24 months,” he says. “That’s assuredly one of the key trends in this industry, things are just costing more, because we are tied somewhat closely to the cost of oil.”

“The raw material markets to the water treatment chemical producers have become increasingly tight and in some cases dominated by very few players only,” notes Ciba’s Muldoon.

Within biocides, the trend is likewise toward the use of more environmentally benign alternatives. “There is a shift away from especially chlorine commodity biocides to more specialty biocides with a more friendly environmental profile,” says Per Westin, global marketing manager for Dow Biocides and Angus Chemical Company, a wholly owned subsidiary of the Dow Chemical Company. He points to two Dow products that have been attracting growing interest, Ucarcide glutaraldehyde-based biocides and Dow Antimicrobial 7287. Glutaraldehyde is readily biodegradable, he notes, while DBNPA—the basis of AM-7287—being biodegradable, decomposes to harmless compounds. “These two biocides have been around some time,” he notes. “They are a good example of how application development can be brought into the picture. Products that have been out there, proven effective, can be used against new problems quite successfully.”

Such an approach is particularly relevant in the biocide area because of the regulatory hurdles confronted by each new product, which add up to high developmental costs.“The likelihood of finding something new that satisfies all these criteria—being effective and being environmentally acceptable and acceptable from a human toxicity point of view and handling point of view—it’s difficult,” Westin says.

Non-chemical technologies such as Ashland’s Sonoxide, which uses ultrasound to counter microbiological fouling, offer an alternative means of reducing environmental impact. Introduced two years ago, Sonoxide has taken off in the last 12 months, says Moffat, who has tallied over 200 individual applications and installations. “When you combine that with some of the other technologies that we have developed in the last couple of years around biodegradable cooling water treatments that also have a very low environmental profile, then you’re moving toward the best possible solution from a regulatory viewpoint,” he comments.

Looking forward, concerns surrounding airborne pathogens could become a major driver for biocides application. “Recently there’s been recognition that cooling systems, particularly closed-loop cooling systems, not only harbor microbes that can damage the exchangers and cause problems, but also pathogens, the most notable being Legionella,” says Nalco’s Roe. Europe has been especially sensitive to the issue, while legislation on the matter has lagged in the US. “But it’s coming, I think. Whereby anyone who operates a cooling system—and that could range from a big cooling tower in a public utility down to an AC unit in a hotel—if regulation follows in the US as it has in Europe and Asia, they will be mandated to do analytics, schedule certain maintenance and cleaning, monitoring, and have risk management plans in place.

“We have built a whole business on that at Nalco, primarily catering to clients who had these obligations in Europe,” Roe continues. “But there is a healthy appetite for this in the US, in a non-regulated sense, for brand protection. A major hotel chain doesn’t want the newspapers talking about a legionnaires disease outbreak in one of their hotels. Biocides are a critical part of a total pathogen risk management program in water circuits.”

Another segment in transition is ion exchange resins, which has contended with the emergence of reverse osmosis membranes, a competing technology. “The way I look at it today, the two technologies are complementary,” says Carol Eicher, vice president, business director, process chemicals, Rohm & Haas. “Yes, there are things that people used to do with ion exchange that today they do with reverse osmosis membranes, and there are some applications where one ion exchange media is superior to reverse osmosis, and vice versa. But in a lot of the places where I see our media used, it’s used in conjunction with other technologies.”

Eicher believes two major opportunities lie ahead for ion exchange. “We are thinking out five or ten years ahead, asking what would the next technologies need to be, and we think that selective ion removal is going to be very key, and low- to zero-waste systems,” she says. “In the developed world we see more concern from the public about safe drinking water, more about contaminated wells. We believe that [ion exchange] media is more efficient in targeting those kinds of contamination, where you’re trying to remove something very specific.”

Zero-waste technology addresses the waste stream created by ion exchange resins or membranes when they separate contaminants from water. “You’ve still got the contaminant, concentrated on some solid material like media or into another stream, but there’s still disposal,” Eicher points out. “Where could that go? How do you destroy a contaminant, by reducing it to its simple ionic form—carbon, nitrogen, oxygen—if that can be done? We are doing some things to look at that kind of technology.”

Ian Barbour, general manager of Dow Liquid Separations and CEO of FilmTec, calls selective ion remediation “a bright spot” for ion exchange, noting the EPA’s tightening of arsenic standards and the ongoing perchlorate issue. Overall, however, he sees ion exchange resins growing at about 2 percent per year, with the water markets flat or declining, bolstered mainly by more specialized applications such as mining and pharmaceuticals. He estimates the global market value, including all applications, at about $700 million. “In some of the traditional water applications, ion exchange is being displaced by things like reverse osmosis,” he says, noting that Dow Liquid Separations is the only producer of both ion exchange resins and RO membranes.

RO membranes, by contrast, are growing at 15 percent annually, says Barbour, who estimates the global market value at about $400 million. Growth in North America is in double digits, he says, driven in part by awareness of water conservation and reuse, but also by improved technology. “It’s become quite cost effective over time,” he says. “The membranes available today sell for less than half the price they did ten years ago, and they make three times as much water.”

Desalination with RO membranes has also become much cheaper, says Barbour. Ten years ago it might have cost about $6 per 1000 gallons to produce pure water from sea water, but today the cost is closer to $2. “So membranes are more cost effective across the board. Membranes are becoming very competitive with more traditional water purification methods—sand filtration, flocculation—as membrane costs come down.”

Barbour does not expect a rival technology to render membranes obsolete within the next 10 years. “There’s still a lot of room within membrane technology itself to innovate and continue to drive to a lower cost of water.”

Major Producers of Water Treatment Chemicals

Corrosion & Scale Inhibitors	Biocides & Disinfectants	Coagulants & Flocculants	Activated Carbon	Anti-Foaming Agents & Defoamers	pH Adjusters, Water Softeners & other Inorganic Commodities
Solutia	Dow	SNF Floerger	Calgon Carbon	Lubrizol	Dow
Rhodia	Biolab	Ciba	Norti America	Degussa	Solvay
Rohm & Haas	Occidental	Cytec	Active Carbon - Florida	Baker-Petrolite	FMC
Biolab	Rohm & Haas	Degussa	West States Carbon	Dow Corning	General Chemicals
Garrat Callahan		Nalco		BASF	Atofina
Source: Frost & Sullivan

 

US Water Treatment Chemicals Market

	Corrosion & Scale Inhibitors	Biocides & Disinfectants	Coagulants & Flocculants	Activated Carbon	Anti-Foaming Agents & Defoamers	pH Adjusters, Water Softeners & other Inorganic Commodities
Value (2003)	$875 million	$615 million	$1637.5 million	$436.2 million	$270 million	$450.6 million
CAGR (2004 - 2010)	1.70%	4.20%	3.60%	2.30%	2.50%	2.80%
Source: Frost & Sullivan

 

Major Players in ION Exchange Resins

Rohm & Haas

Dow Liquid Separations

Lanxess

Puralite

Mitsubishi

Source: CMR

Major Players in Reverse Osmosis Membranes

FileTech

Hydranautics

Toray

GE

Koch

Source: CMR

By: Clay Boswell
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