15 August 2008 17:09 [Source: ICIS news]
By Doris de Guzman
NEW YORK (ICIS news)--It’s sink or swim in the water treatment business, and chemical players are overcoming the higher raw material costs challenging the industry mostly through price increases, industry sources said on Friday.
“Raw material pricing and the availability of key raw materials is a challenge,” said Nalco chairman, president and CEO Erik Fyrwald. “We’ve seen Nalco and most of our competitors all facing this and the ability to deal with these issues will determine who’ll be the winners in water treatment.”
US-based Nalco said it implemented an across-the-board price increase for its Europe, Africa, Asia-Pacific, and ?xml:namespace>
Some price increases are even more than 30%, according to the company. Nalco also raised its paper water treatment product prices in
Nalco’s advantages, Fyrwald said, are in its technology, global reach, and value-added services.
“These helped us recover those costs in pricing and as a result made Nalco less vulnerable than others in the water treatment and chemical spaces,” he added.
Water treatment chemicals are largely based on petrochemical downstream products, noted Douglas Timothy Chamberlin, head of Switzerland-based Ciba Specialty Chemicals’ Water Solutions business.
A key challenge, Chamberlin said, is for chemical suppliers to pass on the unprecedented cost increases through pricing initiatives.
“Chemical suppliers must be able to maintain adequate margins to allow continued investments in water treatment technology and capital to keep up with demand,” he added.
The same sentiment was echoed by Hank Waters, president of Ashland Water Technologies and Ashland Performance Materials.
In a market with increasing energy and raw material costs, Waters said, the industry’s major challenge is the ability to stay competitive.
“It is a challenge to effectively price products while accounting for these increases across a range of customer geographic locations,” he said. “In addition, we must remain aware of changing regulations and the competition in the global water industry.”
“With our proposed acquisition of Hercules,
Nalco, Hercules and Ciba are major suppliers in the global water treatment chemical markets, according to Citi Investment Research’s report on global water treatment market that was published in March.
The report estimated Nalco’s 2006 market share in the fragmented global water chemical and treatment market at 16.8%, the largest among its peers. Hercules and Ciba each occupied 4.6% of the market.
The market in 2006 was estimated at around $18bn, according to the report.
($1 = €0.67)
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