Niche and Higher Margin Esters to Counter Price Erosion and Commoditisation

29-Mar-2004

Commoditization coupled with consolidation in the end user and supplier segment is exerting downward pressure on price in the fatty esters market. Possibilities of price fluctuations can be considerably reduced through greater product innovation and focus on specialized and higher margin esters.

"Novel and specialized emollients in the personal care sector and niche esters in the nutraceutical foods segment are finding their own grooves in the saturated fatty esters market," state Technical Insights Industry Manager Girish Solanki.

Product sophistication in performance and value added features such as thickening, anti-irritation, pigment wetting, water solubility, and multi-functionality creates a more diverse and innovative product portfolio.

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Emulsifying, softening, and detergency characteristics of fatty esters provide advantages of high performance and custom design versatility, thereby making them popular in the lubricants end-user segment. Pharmaceuticals are also providing outlets to new fatty ester formulations to serve as non-reactive bases and carriers for active drug delivery.

Exciting applications in personal care, especially in Asia, are likely to fuel the use of monohydric alcohol esters in deodorants, antiperspirants, anti-wrinkle, and anti-aging lotions.

"Low-cost Asian products are intensifying price sensitivity due to liberalization policies implemented by the World Trade Organization, which has lowered tariff barriers and created a competitive global market," says Technical Insights Analyst Rajesh Kannan.

In order to survive in such a market, manufacturers in Europe are exporting certain esters such as glycerol and monohydric alcohol from their Asian plants.

Compounding the issue of price pressure are the stringent policies of regulatory agencies such as the U.S. Food and Drug Administration, the Environmental Protection Agency, and Occupational Safety and Health Administration that largely impact the fatty esters market.

"There have been a series of litigations against chemical companies suspected of releasing pollutants and potentially harmful compounds into river, streams, and underground dumps," explains Technical Insights Analyst Kasturi Nadkarny.

Fatty esters are more biodegradable and eco-compatible than petrochemical-based additives as they are organically derived from feedstocks that are low in toxicity and volatile organic compound levels.

"The gradual transition toward the use of natural products in Europe and North America is influencing growth of polyethylene glycol and sorbitan esters, particularly in personal care products such as conditioning and pearlized shampoos, deodorants, and skin lotions," adds Solanki.

https://www.chemeurope.com/en/news/36391/niche-and-higher-margin-esters-to-counter-price-erosion-and-commoditisation.html