Asian Opportunity: Chemicals Priced 58% below US Benchmarks
by Brian J. McCormick, guest columnist
This month, we have broadened our scope to take in Asia and – as illustrated in Chart 1 below – discovered that Asian sources of supply currently offer prices that are on average 58% lower than the lowest US prices in 6 of the 10 commodities that make up the monthly Datamyne US Best Price Benchmark (available on the Datamyne homepage).
An important caveat: there are no guarantees for actual savings. Note, too, the key assumptions on which these findings are based:
- These are unconstrained, largely theoretical estimates only.
- Ethanol, ethylene, styrene and soda ash are excluded from the above analysis since these are lowest cost imports or local US supplies.
- Respective savings figures for glycerine and manganese dioxide are based on limited available Asian trade volume.
- FOB and CIF differences are negated.
The demand-dependent Asian opportunity currently ranges from $14MM to $95MM/year: If your need for these commodities is moderate – on the order of 10,000mt/year scale per material, for instance – then potential cost savings from Asian supply sources approach $14MM. If your need is much larger – say, 100,000mt/year scale per material – your cost savings would approach $95MM.
In brief, “the new cheap” for US chemical customers is Asia. Keep in mind, however, that Asia is not only China. You will find Asian-lowest cost chemicals from BRICS-members India and China, from the developed markets of South Korea, Taiwan and Thailand, and from emerging markets such as Myanmar.
Specific sources for the lowest Asian prices are listed in chart 2.
Copyright © 2013 Chemcost Interactive, LLC
About Brian J. McCormick
Brian J. McCormick was instrumental in developing procurement costing and quality assurance for P&G over a 34-year career. He is the founder and managing director of Chemcost Interactive* LLC (CI), a company offering research and analysis to support cost-efficient supply chain management.
Chemcost can assist Datamyne’s customers in identifying lower price opportunities through consulting and training. Chemcost also offers annual subscriptions to global and regional price bulletins on 225 commodities across 8 major chemical spend classes. Learn more and contact Chemcost at www.chemcostinteractive.com
The opinions expressed in this article are those of its author and do not purport to reflect the opinions or views or Descartes Datamyne. In addition, this article is for general information purposes only and it’s not intended to provide legal advice or opinions of any kind and my not be used for professional or commercial purposes. No one should act, or refrain from acting, based solely on this article without first seeking appropriate legal or other professional advice.
* Chemcost Interactive and The New Cheap are trademarks of Chemcost Interactive LLC
Date posted: November 18, 2013