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London, United Kingdom, 2007/10/22 - New analysis from Frost & Sullivan, European Fatty Acid Market, estimates that the market has earned revenues of €1,062.2 million in 2007 and this will reach €1,464.0 million in 2014.
Rising prices, greater demand and higher customer awareness are supporting the expansion of the European fatty acid market. As market participants grapple with limited raw materials supply and intensifying competition, they are moving to develop effective pricing and raw materials purchasing strategies and are spending additional resources on research and development.
New analysis from Frost & Sullivan (materials.frost.com), European Fatty Acid Market, estimates that the market has earned revenues of €1,062.2 million in 2007 and this will reach €1,464.0 million in 2014.
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"Recent price increases have augmented revenue generation in the European fatty acid market," notes Frost and Sullivan Research Analyst Yana Charushkina. "Prices are expected to stabilise within the next year, with the market set to experience steady revenue growth at a CAGR of 4.7 per cent over the period 2007 to 2014."
The main factors influencing rising prices include hikes in raw material costs and oversupply in the glycerine market. The growing demand for fatty acids and low market concentration facilitated a significant revenue increase of 25.8 per cent in 2006. Revenue growth is projected to stabilise within the next year due to greater stability in the raw materials and glycerine markets as well as price pressure from end users.
A key challenge remains the limited availability of feedstock materials, natural oils and animal fats. This situation is hampering the supply of fatty acids to the market. Fatty acid manufacturers are competing for scarce raw materials and are spending additional amounts on purchasing suitable resources. In some cases, European local manufacturers are using raw material resources supplied by Asian manufacturers.
"The availability of raw materials is being limited by EU energy policy which promotes the use of biomass to generate energy and from competition from other users of natural resources," says Charushkina. "Also, fatty acid manufacturers are facing intense competition in their bid to purchase high quality raw materials at suitable prices, underlining the importance of finding suppliers that can offer the most effective raw materials solutions."
To succeed, fatty acid manufacturers will need to develop strategies centered on efficient pricing, raw materials purchasing and cost reduction. Diversification of product ranges will also be critical to gaining the competitive edge. Moreover, companies will need to spend more resources on research and development initiatives.
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