I’ve been in the chemicals business for about 10 years. I export commodity mining chemicals from China,India, Philippines, S.Korea etc. Most multi-national companies have withdrawn from offering these commodities chemicals and as a result Chinese chemicals have found their way into the overseas market through distributors -from Africa to EU to Americas. Price varies from supplier to supplier. The same can be said of the profit margins. Basically the Chinese make profit margins of 2-8%. In some cases the profit margins are so thin- that its just enough to cover the DHL fee for sending commercial documents to the customer.
The chemical market is very large and segmented. Geographically and product application wise. At the same time the market can feel like it is a mess. There are so many companies and most of them are inter-linked and in joint ventures, sales agreements and making it hard for customers to understand the price dynamics and costs -that also makes it hard for new entrants. Chances are that multinational companies are already represented in most major markets Or are selling directly to End Users.
Here’s are some things to consider:
Tough Competition: Multinational are known to be heavily engaged in price fixing- either towards their customers or set low prices to discourage new entrants. Price-Fixing Investigations Sweep Chemical Industry
Profit Margins Around 5-8% . These are the most commonly traded chemicals.
Most “manufacturing End users” already have their supply chain figured out-or are locked in long term contracts with raw material producers- to replace an incumbent supplier you need to do more than just offer a lower price.
Technical service – You can differentiate yourself by offering technical service in the case of speciality chemicals.
Consider importing chemicals from China. China is now among the top 3 producers of base chemicals, in fact production of some chemicals is now exclusive to China only. That means many companies now depend on China. If you are not buying chemicals in China, you will, at some point in the future to stay competitive. I have written extensively about How To Import Chemicals From China and the challenges. To find out who’s buying chemicals from China use panjiva or similar services. Here’s an example of US importers of Caustic soda.
Logistics are important in chemicals. See my detailed post on Chemical Logistics From China: A matter of point A to point B? .
If buying chemicals from China- choose (and make sure) the right packaging is used- some suppliers use cheaper drums and you end with leaks during sea transportation. Picture below of hydrogen peroxide leakage lead to a $5000 fine. In our case the supplier paid it after our investigation, we found out that the drums* where not UN rated spec.
Chemical certification required in the country of importation. E.g EU- REACH Registration.
Anti Dumping- If you’re planning on importing chemicals better check this out as well. For example citric acid from China – there’s an Anti dumping policy (since 2009) against China thus it would be illegal to export/import it to the USA. ITA Says Dumping Likely If Citric Acid Duty Revoked – Law360
TLC- total landed cost- if you’re importing from anywhere- this should be your first step to make sure that you will infact make profit!
….and the lazy way- take advantage of our: Mining Chemicals | Grinding Media,Mining Services | Kemcore (disclosure- i am co-founder )