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Business

Good Outlook For Fine Chemicals

November 6, 2006 | APPEARED IN VOLUME 84, ISSUE 45

Fine chemicals producers are finally gaining confidence in the health of their industry after several rough years, according to the Synthetic Organic Chemical Manufacturers Association's fourth annual business outlook survey, presented last week at the trade group's Corporate Excellence Conference in Miami. Among the 35% of SOCMA members who responded to the survey, most are expecting a net increase in sales this year compared with 2005; almost a third forecast sales growth of more than 20%. Companies say new business strategies and technologies have had a strong impact on sales. To this end, average spending on R&D has risen steadily from 5.4% of sales in 2004 to 8.0% in 2006. Companies continue to rate energy prices and competition from emerging countries as the biggest challenges for the fine chemicals industry this year. Suppliers from emerging countries have captured, on average, a 22.2% share of the markets covered by the surveyed companies, compared with 19.5% in 2004. By next year, their penetration is expected to rise to 28.2%. Despite significant inroads by Chinese and Indian producers, Western suppliers are still not convinced of their capabilities. The percentage of respondents rating quality of goods from emerging-country suppliers as "not as good as established market suppliers" grew to 60% this year from 53% in 2005.

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