McIlvaine: Chemical Market Flat Now, to Recover in 2010

Power and municipal wastewater treatment are the two big markets for water treatment chemicals. These two markets will help the water and wastewater treatment chemicals suppliers maintain sales at the 2008 level in 2009, according to the latest analysis in "Water and Wastewater Treatment Chemicals" published by the McIlvaine Company.

The forecast reflects world 2009 revenues of $20.5 billion rather than the previously forecasted $21.3 billion.

The corrosion inhibitors category will maintain its lead as the largest revenue generator among all product categories. Organic flocculants will rank second with revenues of $3.5 billion.

The industries least impacted by the recession are the largest markets for water treatment chemicals.

Municipal wastewater plants around the world will be the largest purchasers. The power industry will account for slightly more sales than the municipal drinking water segment. Refineries will capture fourth place in 2009.

Chemicals makers in general fared well in 2008 despite increasing raw materials costs. Decreased volume and increased costs were offset by increased prices. In the first half of the year, the suppliers were trying to increase prices fast enough to keep up with increased costs. In the second half, they were able to benefit from these increases.

The water treatment chemicals business has been surprisingly fluid in that large players have been acquired or divested by even larger companies. The most recent acquisition in progress is that of Ciba by BASF. Nalco has been thriving as a divestiture. Betz is now under the GE umbrella and subject to the indirect consequences of the GE Capital problems, according to the McIlvaine report. There are thousands of chemical companies with regional and product niches. The industry will remain fragmented.

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