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 8,000 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 subject to regulations which govern storage, handling, and transportation.

Industry size & Structure

The average chemical distributor operates out of a single location, employs 17-18 workers, and generates about $14 million annually.

    • The chemical distribution industry consists of about 8,000 firms that employ about 140,900 workers and generate about $113 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 15, 2022 - Rail Strike Looms
                                  • Tens of thousands of rail workers may strike, causing the nation’s freight railroads to shut down unless Congress intervenes. The International Brotherhood of Boilermakers union, which represents a fraction of approximately 115,000 rail workers involved in the contract dispute with Union Pacific, BNSF, CSX, and other railroads, voted down the contract on Nov. 14. All 12 rail unions must approve their deals to avert a strike, although no strike is imminent because all the unions have agreed to keep negotiating even if their members vote no, until a deadline early in December. Congress is expected to block a strike and impose contract terms on both sides if they can't come to an agreement before the deadline. The stakes are high for the US economy with so many industries, including chemical distributors, relying on railroads to deliver their raw materials and finished products, the AP reports.
                                  • High natural gas prices in Europe have led German chemicals giant BASF to announce it will downsize permanently in Europe, kindling concerns that persistently high energy prices could lead to a deindustrialization of the continent, The Wall Street Journal reported in October 2022. Europe’s chemical industry has been particularly hard hit because it relies on gas to both generate power and as feedstock for products that make it into toothpaste, medicines and cars, according to WSJ. BASF said that in the first nine months of 2022, gas costs at its European sites were about €2.2 billion higher than in 2021. “The significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains,” BASF CEO Martin Brudermüller said. Regulations planned by the European Union are also weighing on Europe’s chemical industry, said Brudermüller.
                                  • The chemical industry increasingly is turning to drones to perform inspections and other functions at plants and storage facilities. Drones’ ease of use, advanced sensors, and 3D modeling capabilities are making them more attractive to chemical companies searching for safe, fast, and cost-effective inspection routines, Chemical Processing reported in October 2022. Applications include inspecting tank farms to collect data instead of having inspectors physically visiting the tanks; monitoring construction progress; and using caged drones to inspect large storage tanks from the inside, avoiding the need for internal scaffolding. Shell’s Autonomous Integrity Recognition Program (AIRP) combines drones and AI-based image analyses, to detect rates of corrosion and insulation — especially on top of piping bridges and columns. Drones’ increased use and acceptance means they’re no longer considered specialty tools for explicit tasks, but instead are being embedded into operations as the preferred way of working.
                                  • The US Environmental Protection Agency in August 2022 announced proposed changes to the Risk Management Plan (RMP) rule that requires facilities that use extremely hazardous substances to develop a plan to prevent and respond to chemical accidents. The rule requires facilities that use listed regulated Toxic or Flammable Substances for Accidental Release Prevention to develop a RMP and submit it to the EPA. Facilities holding more than a threshold quantity of a regulated substance are required to comply with EPA’s RMP regulations. Chemical distributors oppose the proposed changes to the RMP on the basis that they “would place new complex and burdensome regulatory requirements on businesses already in compliance with existing law,” according to industry trade association National Association of Chemical Distributors (NACD). The NACD said that now is an inopportune time for the EPA to place unnecessary regulatory burdens on an industry.
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