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Surplus Inventory for the Industrial Chemical Community
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Vol 1 No. 2 Online Edition July 30, 1999
Welcome to Volume 1 Number 2 of our World Wide Web based newsletter. Please feel free to e-mail us with your comments, suggestions, submissions for this newsletter, offers of items for sale and requests for items wanted.
Low Foam surfactants
Alkyl naphthalene sulfonates
Methanol - up to 5% water
THF and NMP - small amounts of water and Gardner 5 color acceptable
CHEMICAL INDUSTRY NEWS
E-commerce in the chemicals industry continues to expand - Forrester Research reports that 100% of large companies in the US have Internet connections and reports that US business-to-business trade of hard goods over the Internet hit $43 billion in 1998 and is forecast to reach $1.3 trillion by 2003. That is an annual growth rate of 99%. Most chemical companies sites are often little more than "brochureware" - an amalgam of company and product information somewhere between technical sales literature and an annual report. Chemical Industry Data Exchange reports that most customers want from Corporate Internet sites (in order of preference) Order status, MSDS, Logistics, Certificates of Analysis, Planning/Forecasting, Inventory, Catalogs, Invoicing and last, Payment. We suppose speeding up payment doesn't add as much customer value in the relationship as the other functions. Chemical & Engineering News, July 12, 1999, pgs. 11-14.
Something to think about. - "If your e-commerce strategy does not give your customers anything more than you can give them with a fax machine and an 800 number, you're probably not thinking about it right." Marcus Rabil, Corporate e-commerce manager, DuPont. Chemical & Engineering News, July 12, 1999, p. 14
Ethylene Market Stretched Thin - Spot market prices of ethylene have risen from 10 cents per pound in January to 25 cents per pound in June, with inventory levels below 1 billion lbs, or less than 6 days inventory. Estimates on capacity utilization needed to achieve a more comfortable 2 billion lbs of inventory are 95% to 97% of nameplate capacity through the rest of the year. Summertime is usually used for overhauls and maintenance, or in the industry vernacular "turnarounds". This is the ideal time for this work because the heat exchangers and cooling systems needed to run these plants are less efficient during the heat of summer. Historically, when these market conditions exist turnarounds are delayed and ethylene plants are run flat-out as producers seek to take advantage of better margins. Sooner or later a catastrophic failure at one or more plants occurs or a hurricane wanders into the gulf coast (where most of these plants a located) forcing a shutdown, and an already tight market becomes tighter. Please, let's all knock on wood! Although most ethylene (50%) is consumed in the manufacture of various types of polyethylene, Ethylene glycol, linear alcohols, alpha-olefins and ethylene oxide (and derivatives) are also affected by the cost run-up and/or shortages. Expect rising prices for plastics and ethylene derivatives until new capacity comes on stream in mid-2000, especially if a plant or two fails or a hurricane hits the gulf coast. Over-capacity is expected by late 2000 or early 2001 as new plants come on stream. Chemical & Engineering News, July 5, 1999, pps. 20 - 22 and Chemical Marketing Reporter, July 19, 1999, pgs 5 and 12.
Fred Rullo is at it again - Great Lakes Chemical is selling it's fural and derivatives (mainly THF and PTMEG) business to Penn Specialty Chemicals. Penn is headed by Fred Rullo, former chairman and CEO of Freedom Chemicals. Last year Fred Rullo sold Freedom to BF Goodrich. Mr. Rullo has indicated that Penn will explore entering the urethanes business with small acquisitions. Chemical & Engineering News, July 12, 1999, p. 8.
Consolidation in our industry continues at a rapid pace - Elf Aquitaine announced a tender offer (cash and stock) for TotalFina. Elf's offer was in response to TotalFina's recent unsolicited bid for Elf, otherwise known as the "Pac-Man" defense against hostile takeovers. If this merger is finalized (regardless of who acquires who) it will create another European chemical giant. The combined firm would be the World's 4th largest Oil and Gas company and the World's 5th largest Chemicals company. Both giants have been under pressure to increase their size due to other mergers in the oil sector such as BP Amoco's bid for Atlantic Richfield and the merger of Exxon and Mobil. AP Newswire, July 19, 1999, 2:07 EDT
For the most up to the minute chemical industry financial news - If you're here you are at least able to connect to the Internet, and if you're alive then you have heard of Yahoo!, the Internet business phenom. We'll reserve comment at this time regarding the realism of their stock price in relation to the usual standards of financial analysis. Nonetheless, they have a good thing going, and their chemical industry news page is the best on the 'net right now. You can visit them at http://biz.yahoo.com/news/chemicals.html . Another good Yahoo! site is their Biz page specific for Chemicals. You can visit it at http://dir.yahoo.com/Business_and_Economy/Companies/Chemicals/
Cycles, Cycles,Cycles - The chemicals business is definitely a cyclical one. Recent moves in the stock market indicate a flight of investor capital from tech stocks back into cyclicals, including chemicals. Many chemical firms are reporting higher earnings, a sure sign of cyclical rebound in the sector. Investing in cyclical stocks sure isn't "sexy" like tech stocks, but profit is profit and that's what makes the capitalist world go around. The steady earnings of cyclicals is much more secure than the great unknown of many tech stocks, especially some of the Internet stocks. Let's hope this is a long-term improvement in business conditions for chemicals.
Another Kennedy gone - Sadly, the nation mourns the loss of John Jr., his wife and his sister-in-law. What was surprising was the amount of media coverage, especially in the electronic media. There were retrospectives on all the networks and cable news channels. Despite his position as publisher of George (not to mention a Kennedy), John Jr. was not a national figure on the grand scale of his father or uncles. Maybe we're just too cynical, but could this extensive coverage have been an effort by the media to boost ratings during the news doldrums of summer?. The media should let the family grieve in private
The US Federal Reserve chairman Allan Greenspan testified on Capitol Hill last week as required twice each year by the Humphry-Hawkins Act. His comments were the in usual opaque and hedging vernacular favored by economists, bankers and politicians. To our amusement, he did warn congress and the executive branch by saying the current economic status quo would be disrupted by either tax cuts or new spending programs. Apparently, Mr. Greenspan thinks a portion of the expansion is due to the improving financial condition (lower national deficit and debt) of the Federal Government and thinks spending this "surplus" is not in the national interest. We agree; let's pay down the deficit first. Nonetheless, Mr. Greenspan and the Fed has managed the money supply so that an economic downturn has been avoided, and steady growth has been maintained for a record number of years. Unemployment is still very low and inflation is in check and being watched closely at the Fed. The stock markets responded to the testimony with general indifference, though the indexes were slightly lower. Our guess is that the market has already discounted for the expected rise in the fed funds rate of another 0.25 a point after the Open Market Committee meeting in August.
What does this mean over the short-term for your business? The recent Fed move of a quarter of a point (and the expected move of another quarter of a point) was, in part, to stem rising inflation early in order to maintain steady growth. Certainly, working capital loan rates must rise due to the Fed rate move. You can reduce your working capital loan costs by reducing your dead inventory, overstock and surplus, turning the inventory into cash. This will reduce your loan requirements and interest burdens and increase cash flow. Remember, that surplus inventory on the floor is consuming your cash flow. Call us or visit our web site at Available and send us a description of your list of dead, surplus or obsolete inventory.
In an environment of soft prices and rising materials costs it is even more important to save money on raw materials. Remember, the most leveraged area to save on costs, and thus increase profit, is on the materials purchased side of operations. Even spot buys of small quantities can add to the bottom line. We have in stock many materials in good to excellent condition, often in sealed drums, ready to ship to meet your requirements. Many of these materials are on-spec, but simply are aged or labeled with the name of a company which has been acquired, was in warehouse stock at the time of the change and/or was packaged with the acquired company's color scheme. Chem-Find can be relied upon to provide quality surplus chemicals priced as low as pennies on a dollar! See our current mailer at Wanted and our current physical inventory list at www.thechemfinder.com to see what we have in our current offerings.
THE LIGHTER SIDE
Owed Two a Spell Chequer
Eye halve a spelling chequer;
It came with my pea sea; It plainly marques for my revue
Miss steaks eye kin knot sea.
Eye strike a key and type a word
And weight four it to say
Weather eye am wrong oar write-
It shows me strait a weigh.
As soon as a mist ache is maid
It nose bee fore two long,
And eye can put the error rite
Its rare lea ever wrong.
Eye have run this poem threw it;
I am shore your pleased two no
Its letter perfect awl the weigh,
My chequer tolled me sew.
(Today's Chemist at Work, June 1999, p 72)