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 7,500 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 $23 million annually.
- The chemical distribution industry consists of about 7,500 firms that employ about 150,500 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 multinational companies include Univar, Brenntag, Prinova, and Tricon Energy.
- 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
Jul 20, 2024 - Low Demand, Destocking Sap Pricing Power
- According to the latest US Bureau of Labor Statistics data, producer prices for chemicals and allied products merchant wholesalers fell 2.1% in May compared to a year ago after falling 5.1% in the previous annual comparison. Employment by chemical distributors grew 1.5% in May year over year, while average industry wages rose 5.4% over the same period to $34.49 per hour. Rising payrolls amid falling sales for chemical distributors due to low demand and industry destocking puts pressure on margins.
- Legislation introduced in Congress in July would enhance safety requirements for trains transporting hazardous materials, according to a press release from the Alliance for Chemical Distribution (ACD), which supports the bill. HR 8996 would incorporate aspects of freight-rail safety legislation introduced in the Senate in 2023 but also set federal limits on freight train lengths. The proposed legislation also would raise standards on tank cars carrying hazardous materials, mandate two-person train crews, and set standards for rail-car maintenance, track maintenance, and wayside defect detectors. Freight railroads moved 2.3 million carloads of plastics, fertilizers, and other chemicals in 2022, or about 20% of chemicals used in the US. The 2023 derailment of a Norfolk Southern Railway train in East Palestine, Ohio, carrying several types of chemicals that caught fire, spotlighted rail safety.
- Chemical distributors looking to electrify their fleets will want to take note of a new analysis from Ryder showing that operating expenses of low-emissions rigs are far higher than those for diesel trucks, The Wall Street Journal reported in May. The truck leasing company found that as trucks get heavier, the difference in operating costs between battery-electric vehicles and diesel trucks grows more pronounced, with annual costs of operating battery-electric big rigs about twice as expensive as diesel trucks, per Ryder’s analysis. Because battery-electric trucks are heavier than diesel trucks and require several hours to recharge, companies need more vehicles and drivers to haul the same freight volume as a diesel truck. The Ryder analysis estimated that a company would need nearly two battery-electric big rigs and more than two drivers to equal the output of a single heavy-duty diesel truck, WSJ reports.
- US output of basic chemicals fell 2.5% in 2023, with declines in petrochemicals and organic intermediates, synthetic rubber, and manufactured fibers output, according to the American Chemistry Council’s Year-End Situation & Outlook. The council expects a “modest recovery” across all chemical segments in 2024, with overall chemistry output expected to increase by 1.5%, after an “unprecedented” destocking cycle that began in the third quarter of 2022 and continued throughout much of 2023, curbing production. Longer-term, the outlook for the US chemicals industry is positive, with the natural gas liquids feedstock advantage continuing to favor domestic production for the foreseeable future. Moreover, capacity expansions in customer industries will support the industry going forward, ACC maintains. “Because of the chemical industry’s early position in the supply chain, we would expect to see a turnaround in chemicals before improvement in the broader economy,” said ACC chief economist Martha Gilchrist Moore.
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