Specialty chemicals customer base

Prices. The price of commodity chemicals is based on cost of production, capital needs for expansion, and the ratio of supply to demand. Profit margins can drop under changing conditions, and unit price tends to be low. Specialty chemical prices vary widely. They are based on the value of a product or system to the customer. Profit margins can usuaHy be maintained, and unit price is higher than for commodity chemicals. 

Pricing of specialty chemicals and specialty chemical systems is, as noted, based on value to the customer. The elements of taw matetial and production cost enter into the producer s calculations, but extra emphasis must be given to appHcations research and service costs with minimal attention in most cases to capital costs. 

In custom manufacturing, supply contracts are product-based (unit price in /kg), whereas in contract research agreements they are service-based (FTEs in /scientist-year). The two types of contract are discussed in more detail below Agreeing on the price for a fine chemical is only one, albeit essential, element of a custom manufacturing deal between the supplier (fine-chemical company) and the customer (specialty-chemical company). The supply... 

Specialty chemicals producers must find an answer to the exodus of customers to emerging markets, which not only threatens to break up established supplier-customer relationships, but has the potential to destabilize entire segments. This is particularly true for formulation-based segments such as admixture chemicals for the concrete industry, which depend on close interaction with customers. What happened to textile dyes in Europe is just one particularly striking example the migration of the European textile industry to Asia and subsequent emergence... 

Today, producers of specialty chemicals like Degussa are increasingly challenged on home markets as well as abroad by competitors who offer the same chemicals of comparable quality at prices that are - in some cases - even lower than their own production cost. This issue cannot be solved by cost reduction alone. The only valid answer to price-based competition is to move the discussion toward something that is more valuable to the customer than a low price. This is the core of the Solutions to Customers (STC) concept. Its major components are as follows ... 

Dirring the last decade, the customer base of specialty chemical companies has corrsolidated. From their increased position of strength, the automotive, petrolerrm, paper, and electronic industries reduced the number of vendors serving their facilities and put extreme pricing pressure on supphers. 

VARISOFT 110 concentrate is a specially produced, novel, cationic softener particularly suited for the textile industry. Supplied at 75% concentration, it is readily diluted and formulated by the textile chemical specialty house to become a base for a variety of custom softeners. VARISOFT 110 has been found to have superior qualities ... 

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