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Datamyne Blog

Covering trade & transport, with tips on using import-export data to advantage

Chemicals Price-Setter: South Korea

On the trail of “The New Cheap*” Chemcost finds an opportunity to save on precipitated silica | by Brian J. McCormick, guest columnist.

Chemicals buyers – in whatever country they are based – can economically benefit from discontinuous price opportunities, wherever they are to be found.

Last month, we examined Chinese cross-border commerce in the basket of chemicals commodities used in the monthly Datamyne US Best Price Benchmark (on Datamyne’s homepage) in our quest for what Chemcost calls “The New Cheap” – the lowest transaction prices recorded in the latest import-export trade data.

This month our focus turns to South Korea, where we expect shifts in pricing trends (and, hence, opportunities for savings) in the wake of the US-South Korea free trade agreement that entered into force in March 2012.

Chemcost’s survey of this year’s lowest prices in South Korean and US trade to-date for the basket of 10 commodities used in the Datamyne US Best Price Benchmark is summarized in Chart 1, with the sources for the best prices highlighted.

Chemcost Chart 1 Chemicals Price Benchmarks SoKorea, US 2013If you are shopping for inorganic chemicals or metals – with the exception of soda ash – Asian sources still offer prices favorable for cost savings. For the 10 commodities surveyed, imports are the source for 8 out of 10 of the lowest prices.

Note that China is not the only place US customers can find “the New Cheap.” (Note, too, the importance of Datamyne’s multi-national trade databases. If we had used US-centric trade data only to identify price opportunities in the US, we would have missed 6 of the 10 lowest price benchmarks from Asia.)

A second survey of the data supports the premise that, given an open trade environment, purchasers of the largest volumes on long-term bases should be getting the best prices. Chart 2 summarizes 2013 trade volumes in kilotons (kt), with the volumes that fetched the best prices highlighted.

Chemcost Chart 2 Chemicals Trade Volumes SoKorea, US 2013If the trade playing field of volumes and lower prices were a virtual baseball game, this scorecard shows that US chemical purchasers might be headed for a loss in 2013 – unless they have access to best global prices such as are presented here.

Finally, here’s a closer look at commercial sodium silicates. Sodium silicates are chemically converted with caustic soda to produce precipitated silicas at production sites in South Korea, China, the US and other countries. Chart 3 provides the figures for South Korea and US trade in this commodity:

Chemcost Chart 3 SoKorea, US Trade in Sodium SilicatesFor sodium silicates, prices and higher volumes shipped are all about what is going in Asia – including Chinese imports, where average prices are $502/mt less or 71% lower! More observations:

  • Lower prices in South Korea might indicate that local producers can produce and export various precipitated silica grades at up to a $502 feedstock price/mt advantage over comparable US average prices to customers.
  • The $502/mt advantage is likely a factor in South Korean imports from China 3X the volume of US exports.
  • Relevant to the US, Chemcost confirms ongoing US imports of typical dental and tire grade precipitated silicas from South Korea in 2013.
  • Data suggest global current price basis for commercial sodium silicate is $203/mt CIF from China. (This should be of interest to precipitated silica customers in the US and international tire and dentifrice industries.)
  • Note that the best US price benchmark for sodium silicates of $226/mt approached but did not reach the average $203/mt Korean average import CIF price.

Copyright © 2013 Chemcost Interactive, LLC

About Brian J. McCormick

Brian J. McCormick, ChemcostBrian 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: September 6, 2013

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