WATER-SOLUBLE POLYMERS MARKET TO NEAR $5 BILLION BY 1999, SPURRED BY ENVIRONMENTAL CONCERNS.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Spurred by demand for environmentally friendlier processes in a variety of industries, the U.S. market for water-soluble polymers will grow from $3.4 billion in 1993 to $4.9 billion in 1999 at a 6 percent compound annual rate, projects a new study just released by Frost & Sullivan.

Nearly 86 percent of market revenues are accounted for by starches, 4 percent natural hydrocolloids, 3 percent each by polyvinyl alcohol and other synthetic polymers, 2.4 percent polyacrylamide and 2 percent cellulose ethers, says the report, U.S. WATER-SOLUBLE POLYMERS: "GREEN" THINKING MEANS GROWTH DESPITE OVERCAPACITY.

Though a relatively small part of the market, polyacrylamide demand will grow most rapidly, at a 7 percent CAGR, propelled by growth in municipal water treatment applications.

Within the dominant starch segment, derivitivized products like cationic and hydroxyethylated starches will outperform the market.

There will be increasing emphasis on quality control and uniformity of product grade as most markets become increasingly competitive. Customer service will become more important as manufacturers try to develop closer working relationships with end- users.

Environmental legislation and the increasing popularity of "green," environmental attitudes in the U.S. public, as well as the proliferation of non- and low-fat foods using polymers, will be major market drivers.

End-users in the paints, adhesives and cosmetics industries have been forced to increasingly adopt water systems to replace solvent- borne adhesives, paints and cosmetics containing environmentally suspect volatile oxygen compounds (VOCs).This growth in aqueous systems had led to growth for water-soluble polymers which act as stabilizing agents, rheology modifiers, lubricancy additives and moisturizing agents.

Meanwhile, state legislation banning phosphates in detergents has brought growth to the alternative of synthetic water-soluble polymers.Regulation controlling waste-water treatment and industrial water contamination has brought growth in polymer usage in de- watering and other water treatment applications.Trends in processed food and changing paper- making technology have increased demand for water-soluble polymers, as have changes in the pharmaceutical sector. Competition between the various water-soluble technologies will increase as manufacturers look for new applications to increase capacity utilization. Many polymer companies will need to reorganize and become more market- rather than technology-driven as end-user service expectations increase.

Prices will remain fairly steady for most technologies through the 1990s due to competitive pressures.Revenue growth will be fueled to some degree by a shift towards higher derivitivized and customized product, which will be able to command higher prices.

The water-soluble polymer market has become increasingly competitive due to overcapacity in many segments, combined with the threat of new entrants as the industry grows more global.Major global expansions in capacity anticipated market growth that has slowed with the global economic downturn.

At the same time gelatin makers face competition from cheaper material from South America, traditional casein importers face the threat of cheap product from eastern Europe, and carageenan manufacturers face competition from less costly Phillipine natural grade product.

Consolidation and globalization in end-user industries and development of new processing technology is forcing water-soluble polymer manufacturers to work more closely with end users on product development and process design. Consolidation has cut end-user R&D budgets and meant fewer personnel doing more work.Materials suppliers are expected to work more closely with end-users in new product development, and more technical assistance is required, particularly with newer water-soluble polymers. Consolidation is also giving end- users more buying power and makes it harder for vendors to pass on the cost of increased service.

Frost & Sullivan is an international high-technology research firm. All Frost & Sullivan reports are based on extensive interviews with marketing and technical experts from selected companies in each market segment. Primary research is validated by thorough analysis of available secondary research. Frost & Sullivan is the leading publisher worldwide of high-technology research reports.

Code: 5016-40 Publication Date: 1994 Price: $2,950

Total Water Soluble Polymer Market:

Unit Shipment and Revenue Forecasts (U.S.),

1989-1999

Revenue

Units Revenues Growth Rate

Year (LBs Million)($ Million) (%)

1989 7,054.8 2,873.7 ---

1990 7,203.2 2,921.2 1.7

1991 7,355.7 3,033.3 3.8

1992 7,587.8 3,199.3 5.5

1993 7,835.3 3,384.8 5.8

1994 8,101.6 3,568.2 5.4

1995 8,392.7 3,773.4 5.8

1996 8,703.1 4,004.2 6.1

1997 9,030.7 4,266.5 6.6

1998 9,380.4 4,558.4 6.8

1999 9,746.7 4,884.4 7.2

Compound Annual Growth Rate (1992-1999): 6.2%

Note: All figures are rounded. Source: Frost & Sullivan, Inc.

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