Chemical Distributors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 7,600 chemical distributors in the US resell chemicals; plastic materials, forms, and shapes; and related products. Firms may perform custom blending or packaging services. Some distributors may manufacture chemical products. Large downstream industries include consumer products, rubber and plastic products, health care, agriculture, semiconductors and electronics, construction, paper products, motor vehicles and parts, mining, fabricated metal products, textiles and fabrics, and food products.
Competition from Manufacturers
Chemical distributors compete with both domestic and foreign manufacturers, which typically have direct relationships with large customers.
Regulation of Hazardous Materials
Many chemicals are considered toxic or hazardous and are subject to regulations that govern storage, handling, and transportation.
Industry size & Structure
The average chemical distributor operates out of a single location, employs 21 workers, and generates about $22.8 million annually.
- The chemical distribution industry consists of about 7,600 firms that employ about 145,300 workers and generate about $173 billion annually.
- The chemical distribution industry is somewhat fragmented; the top 50 companies account for about 58% of industry revenue.
- Large multi-national companies include Univar, Brenntag, and Prinova.
- The chemical industry is global - large manufacturers, distributors, and customers often have international operations. Some large chemical manufacturers are vertically integrated.
Industry Forecast
Chemical Distributors Industry Growth
Recent Developments
Nov 20, 2023 - Falling Sales and Prices
- Seasonally-adjusted sales for chemical distributors fell in September compared to a year ago and were down sharply versus August. Distributors continued to reduce inventories in September from their peak in August of 2022. Producer prices for chemical distributors fell in October amid rising labor costs. Industry employment increased in September versus a year ago and average industry wages were up year over year to a near all-time high.
- The US Gulf Coast has become a magnet for fertilizer companies looking to produce climate-friendly blue ammonia thanks to generous federal subsidies and its existing export structure, Reuters reports. So-called blue ammonia is a low-emissions compound consisting of hydrogen and nitrogen used to make fertilizer. Facilities under construction include a 1.1 million metric ton per year plant at Beaumont, Texas built by Dutch fertilizer producer OCI. The OCI plant, slated to open in 2025, would be the world's first new commercial facility to capture and sequester 95% of the emissions produced by making ammonia. Norway’s Yara is looking to invest in a blue ammonia plant in Ingleside, Texas that would capture about 95% of the carbon emissions. Other companies looking to build low-emissions ammonia projects along the Gulf Coast include Exxon Mobil, BASF, and LOTTE Chemical, Mitsubishi and RWE, according to Reuters.
- The tank truck industry – a vital link in the chemical supply chain – is facing increasing operating challenges, according to the National Association of Chemical Distributors (NACD). While many of the problems chemical distributors face predate the pandemic, they’ve become more complex in recent years. ”The tank truck industry has experienced issues with driver and technician shortages, inflationary pressures, and changing regulatory landscapes,” Dan Furth of Heniff Transportation Systems, a leading hauler of chemicals, told NACD in August. Technology, including electronic logging devices and improved tracking systems, is helping to improve real-time load visibility for customers, communications, and efficiency throughout the supply chain. Moreover, haulers of hazardous chemicals may struggle to keep up with the ever-evolving regulatory environment which can make it difficult to stay in compliance. “Constant innovation is one of the keys to success in the tank truck industry,” according to Furth.
- Widespread drought is creating winners and losers in the US agricultural sector, The Wall Street Journal reports. Makers of agricultural chemicals, specifically makers of pesticides and insecticides, will be among the winners as dry conditions bring new pests and diseases that require additional farm chemical purchases. Joe Sinclair, president of the farm retailer Quality Ag Services in Iowa, said insecticide sales will be on the rise this year as the dry weather brings pests like two-spotted spider mites into farmers’ fields. As of June 27, about two-thirds (67%) of the Midwest was in a moderate drought or worse, the broadest area in a decade, according to the US Drought Monitor. The Agriculture Department said 70% of the country’s corn production area and 63% of soybeans were affected by drought, WSJ reports.
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