Online chemical exchanges aim to sign industry giants
By Staff -- Purchasing, 3/23/2000 2:00:00 AM
Global chemical exchanges are opening their virtual doors at a rapid pace, and they're all trying to win the business of industry giants.
Some of the major chemical trading and auction sites on the Web today include Chemdex, CheMatch, e-Chemicals and ChemConnect, a company that recently signed a major deal with Dow Chemical.
ChemConnect is a global Internet exchange for buyers and suppliers of petrochemicals, plastics and polymers, fine and specialty chemicals, pharmaceuticals and agrochemicals. Under terms of its deal with Dow, ChemConnect has become the exclusive third-party exchange for Dow's Internet-based global purchases of chemicals and plastics raw materials.
Gary Veurlink, Dow's vice president of global purchasing, says the company chose to sign with ChemConnect--and to make a sizable equity investment in the company--because it was impressed with the size and scope of the online marketplace.
"We looked at a number of places to go with our e-commerce activity," says Veurlink. "We felt they were the most capable, had the broadest offering and were equipped with the [right] technology."
Veurlink says that initially his company will use the marketplace for spot purchases of raw materials. In time, as buyers get to know the system, Dow also intends to use the service's private online trading rooms to give select suppliers opportunities to compete for long-term business.
Dow's move is part of its overall strategy to reduce prices and transaction costs through e-commerce, says Veurlink. In December, the company signed a similar deal with SciQuest. com, making the company its exclusive third-party supplier of laboratory products.
In recent months ChemConnect has signed several agreements with major companies, including deals with BP Amoco and The Westlake Group.
BP Amoco Chemicals has chosen ChemConnect's World Chemical Exchange as its preferred third-party platform for online chemical trading. The Westlake Group, an integrated manufacturer of petrochemicals, polymers and fabricated products, chose the exchange to conduct its online chemical sales and purchases of raw materials. Westlake and BP Amoco join several companies that have made an equity investment in ChemConnect, including Eastman Chemical Co., Rohm and Haas, Andersen Consulting and cmai.
CheMatch, one of the other major online trading exchanges serving the chemical industry, has been cutting several of its own deals, including a recent alliance with Stolt-Nielsen S.A.
Stolt-Nielsen, a provider of an Internet-based logistics system called ChemLink.com, has joined forces with CheMatch in order to combine their offerings. ChemLink's service will be integrated into the CheMatch marketplace, allowing shippers to track and manage bulk shipments throughout the supply chain.
In related news, CheMatch recently announced that it has added bulk plastics to its exchange and has already facilitated its first bulk plastic trade. Participants on the site may now trade 15 commodity grades of polyethylene, polypropylene, polystyrene and PVC. The company is also developing auction and tender capabilities to cover additional trading needs for the plastics market. In related news, CheMatch announced that it had signed an agreement with TownsendTarnell Inc. to promote the trading of commodity plastic resins on the Internet. Under that agreement, TownsendTarnell will use its plastics industry databases to notify buyers of bulk commodity plastics about the availability of appropriate plastics grades on CheMatch.com.
In addition, CheMatch also announced last month a new alliance with GE Plastics, a business unit of the General Electric Company. GE Plastics has chosen CheMatch as its exclusive third-party platform for the purchase of bulk commodity petrochemicals such as phenol, cumene, butadiene and acrylonitrile. GE Plastics also made an equity investment in CheMatch.
CheMatch reported record trading in January. During that month the company says it facilitated 33,600 metric tons of chemicals worth more than $13.5 million. The company also reported record European trading including its first hosted deal in German, 1,000 metric tons of benzene. "Our activity for January outpaces previous monthly records set in November and December," says Carl McCutcheon, Chairman, president and CEO of CheMatch.com.
New specialty exchange
The Midwest Research Institute recently announced the availability of ChemSource Services Inc., a new business-to-business online exchange service designed to substantially cut the time and costs involved in buying and selling custom fine chemicals. Located at www.ChemSource.com, the exchange debuted at the Informex 2000 exhibition in New Orleans last month, a trade show run by the Synthetic Organic Chemical Manufacturers Association (SCOMA).
The company says that by using ChemSource to source custom fine chemicals, buyers can expect to save more than 30% in procurement costs while expanding their reach globally.
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