08 May 2008 21:09 [Source: ICIS news]
By Feliza Mirasol
NEW YORK (ICIS news)--Rising demand for agricultural chemicals is driving more agrochem firms to outsource production, a WeylChem executive said on Thursday.
“We're seeing demand go up for almost all of our products, and not just agrochemicals. The demand is increasing in active ingredients, but also for select intermediates - pretty much the entire production chain,” said John Wetzel, vice president of marketing for the German company.
The drive for corn-produced ethanol is a significant factor in the rising demand for agrochemicals, he said.
Increased corn planting diverts acreage from other crops. As a result, the value of crops in general is increasing, funding a wider use of crop-protection chemicals, Wetzel said.
Big agchem firms, in turn, are outsourcing manufacturing to contract fine chemical firms such as WeylChem.
“Outsourcing appears to be rampant. Our customers simply don't have the internal capacity to cope with skyrocketing forecasts,” Wetzel said.
“The big agrochemical companies do not want to add capacity,” he said.
“They spent the last few years shedding hardware - they're reluctant to turn around and start adding capital," Wetzel said. "They just won't embrace this anymore, not for a long time, anyway.”
WeylChem has found itself in similar circumstances with its customers. The company has had to outsource some of its own projects in order to maintain strategic focus, Wetzel said.
WeylChem expects to optimise its current capacities in all of its manufacturing plants. The company is also considering adding capacity.
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