Regs grow but suppliers are ready
By Staff -- Purchasing, 12/10/1998
Industrial water treatment may be a much smaller part of the business compared to municipal applications, but it is the industrial area that is shifting the direction of the market. Industrial buyers of water treatment are looking to consolidate the number of suppliers they use and raise supplier accountability in terms of performance. As a result, suppliers are both increasing the specialized products they provide and adding more comprehensive services.Industrial water treatment will exhibit strong growth in the coming years, because industry tends to require more specialized and therefore more expensive products. Environmental and performance considerations continue to prompt companies to pursue better water treatment. The result is that most U.S. growth for water treatment chemicals is shifting away from commodity products toward specialty or proprietary chemicals. These products are often used in lower volumes, but carry higher price tags.
Certain areas boom
What are the booming areas of water treatment? There are as many different answers as there are varied water treatment chemicals on the market.
Lonza, for example, offers biocides that control the growth of micro-organisms and prevent corrosion associated with micro-organisms. These products include halohydantoins, isothiazolinones, and quaternary ammoniums. Lonza also offers phosponates for scale and corrosion inhibition and surfactants for defoaming applications. "We've been seeing growth rates in the U.S. of around 3%-4%/yr for these products," says Chris Hill, marketing manager for Lonza. "And we expect to sustain those rates into the near future."
General Chemical is the major supplier of the old standby aluminum sulfate. "It is the side of the business that is sort of 'old-tech,' but it will continue to be used in high volumes," says Karla Doremus-Tranfield, marketing manager for the water chemicals group at General Chemical. General expects flat growth for aluminum sulfate, but "Polyalumium chloride should show near 25%/yr growth," she says.
"Demand is continuing to increase across the board due to regulations," says Tranfield. There was the disinfectant by-products rule (d/dbp) rule promulgated in November, which affected people using chlorine for disinfection, and coagulant suppliers. "It was mainly geared toward municipalities, but industrial regulations are strengthening as well."
New products and product improvements continue to be created in this competitive market. In October, Dow Chemical announced a new family of macroporous uniform particle-size ion exchange resins for industrial water demineralization. It is an improvement to the line of Dowex products.
BetzDearborn recently introduced another product. The CorTrol series of products provide volatile oxygen scavenging, metal passivation, and corrosion protection through pre-boiler, boiler, and post-boiler areas of steam-generating systems.
A growing option--gases
Praxair is one industrial gas supplier making inroads into the water treatment market. "We offer a number of gas solutions for industrial wastewater; carbon dioxide for pH control, oxygen with our Praxair In-Situ Oxygenator for minimization of VOCs, and ozone for the oxidation of complex organic material," says Bob Schmader, national industrial wastewater market manager at Praxair. "Both air and water regulations have created an opportunity for the use of these industrial gases."
What's ahead? "We see growth rates of 10%-15%/yr ahead, because air and wastewater regulations are going to continue to come into play in addition to better, lower cost solutions," says Schmader. Major industries such as refinery, chemical, pharmaceuticals, and food processing, are markets where Praxair expects to see strong growth. There are other benefits too. "Using the proper industrial gases can minimize wastewater sludge, and reduce toxic organic contaminants."
Areas to watch
Key areas of growth will likely be influent and effluent control, and companies with stiff discharge requirements will shift to more specialized products. The growing concept of industrial water recycling could be another flashpoint. If more companies do try to use recycled water, keeping contaminants out will be the top concern--and corrosion inhibitors, chelating agents, and biocides would all see significant increases in demand.
Still, oxidizers and biocides represent the largest share of the market. For biocides, the shift is away from chlorine-based products to environmentally acceptable products. More non-chlorine derivative products are on the way, but hydrogen peroxide and bromine-based products are early beneficiaries of this change.
Prices for water treatment chemicals should remain steady for much of 1999. "We expect prices to remain flat," says Hill at Lonza, "There is increased demand, but producers all want to keep their volumes high." General Chemical agrees. "We don't really expect much big movement in prices ahead, although an earlier price increase is affecting 1999 contracts," says Tranfield. General Chemical raised tags for standard and low-iron grades of aluminum sulfate in July, boosting them by $15/NT.
Full service reigns
As the price of services account for nearly half the cost of buying water treatment, many suppliers are pushing to become full-service providers. At one time, suppliers may have offered either the chemicals and/or services. They now make available entire water treatment systems including chemicals, technical solutions, and control products.
Over 100 companies supply water treatment chemicals and services, but it is an ever-shrinking core group that controls nearly half the market: BetzDearborn (which has been acquired by Hercules), Calgon, Ashland Chemical's Drew Industrial Div., General Chemical, and Nalco Chemical. The feeding frenzy of recent years, where giants and semi-giants in the industry acquired each other, has paused. However, earlier this year Rohm & Hass did buy Elf Atochem's 50% interest in NorsoHaas, supplier of custom-designed products for and other markets.
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