Shortages in the Specialty Chemical Industry Chris Kawaja, Principal.
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Transcript of Shortages in the Specialty Chemical Industry Chris Kawaja, Principal.
Shortages in the Specialty Chemical Industry
Shortages in the Specialty Chemical Industry
Chris Kawaja, PrincipalChris Kawaja, Principal
ShortagesShortages PART 1: Why?
US vs. other countries 2008 and plans for new plants We use by-products A bit about peak oil
PART 2: What to do? Strategy Sales Procurement
PART 1: Why? US vs. other countries 2008 and plans for new plants We use by-products A bit about peak oil
PART 2: What to do? Strategy Sales Procurement
Oil Consumption by CountryOil Consumption by Country
1960 US %, 2010 US %, Growth/newness 1960 US %, 2010 US %, Growth/newness
2008 – Forget the new plant
2008 – Forget the new plant Conditions awful
Is there going to be an economy? Global meltdown Cash first, investments later Is oil $40, $120, or something else? How can I plan for
that? Long planning horizon
Acrylic plant: 2-4 years Ethylene plant: 4 years Polymer plant: 1.5 years Compounding of issues – won’t build unless I can get
material and make money
Conditions awful Is there going to be an economy? Global meltdown Cash first, investments later Is oil $40, $120, or something else? How can I plan for
that? Long planning horizon
Acrylic plant: 2-4 years Ethylene plant: 4 years Polymer plant: 1.5 years Compounding of issues – won’t build unless I can get
material and make money
Controversial, but certainly price is going UP(Source: propertyinvesting.net)
Spotlight: ButadieneYou are using by-products
Spotlight: ButadieneYou are using by-products
Butadiene is building block of products like SBR latex, SBS rubber, etc.
A by-product of steam cracking process used to produce ethylene. Quantity is related to type of feed (light vs. heavy)
2003: New Olefin cracking process gets rolled out.
Higher oil prices means more valuable to recapture most valuable feedstocks, NOT Butadiene.
Butadiene is building block of products like SBR latex, SBS rubber, etc.
A by-product of steam cracking process used to produce ethylene. Quantity is related to type of feed (light vs. heavy)
2003: New Olefin cracking process gets rolled out.
Higher oil prices means more valuable to recapture most valuable feedstocks, NOT Butadiene.
ShortagesShortages Part ONE: Why?
US vs. other countries 2008 and plans for new plants We use by-products A bit about peak oil
Part TWO: What to do? Strategy Sales Procurement
Part ONE: Why? US vs. other countries 2008 and plans for new plants We use by-products A bit about peak oil
Part TWO: What to do? Strategy Sales Procurement
How does this impact you?How does this impact you?
New strategy questions Should and can I grow my business? How do I deal with potential supply shocks? Customer and product line priority – you may
have to choose Do I need to be in a certain region to grow?
New strategy questions Should and can I grow my business? How do I deal with potential supply shocks? Customer and product line priority – you may
have to choose Do I need to be in a certain region to grow?
How does this impact you?How does this impact you? New sales questions
Can we support this new business? Why are customers going to pick us over a foreign
vendor? Customer forecasting and lead times Should I qualify multiple products of different
chemistries? How much should I educate my customer about this? How do I maintain a good relationship when all we talk
about is price?
New sales questions Can we support this new business? Why are customers going to pick us over a foreign
vendor? Customer forecasting and lead times Should I qualify multiple products of different
chemistries? How much should I educate my customer about this? How do I maintain a good relationship when all we talk
about is price?
How does this impact you?How does this impact you? New procurement questions
Not only price Negotiation Synergy Contracts for price Appropriate inventory What is so critical that it will shut down my plant, or my most
critical customers How do I get ahead of the information curve Inventory How many vendors per item? Premium for additional vendors
New procurement questions Not only price Negotiation Synergy Contracts for price Appropriate inventory What is so critical that it will shut down my plant, or my most
critical customers How do I get ahead of the information curve Inventory How many vendors per item? Premium for additional vendors
In SummaryIn Summary Prices: UP Availability: DOWN Outlook: NEGATIVE This is way more important than you think Bad or good? Depends on how you manage BUT – you MUST rethink how you go about your
business – your jobs are getting more complicated and you must change to win
What will you do differently tomorrow?
Prices: UP Availability: DOWN Outlook: NEGATIVE This is way more important than you think Bad or good? Depends on how you manage BUT – you MUST rethink how you go about your
business – your jobs are getting more complicated and you must change to win
What will you do differently tomorrow?
Ona PolymersOna Polymers Manufacturer of acrylics and styrene acrylic
polymers based in Garland, TX
“Supplier of last resort” in 2010 Found out early, acted fast, paid more Strategic customer selection Educated customers on what and why Plant had capacity Global sourcing capability using Premlinx
Manufacturer of acrylics and styrene acrylic polymers based in Garland, TX
“Supplier of last resort” in 2010 Found out early, acted fast, paid more Strategic customer selection Educated customers on what and why Plant had capacity Global sourcing capability using Premlinx
Contacts to help youContacts to help you ONA
Chris Kawaja, [email protected] Todd Wilson, [email protected], 916-
770-7683
Other resources Moiz (Mo-eez) Sherwani,
610-421-4222 ICIS Pricing and News
www.icispricing.com
ONA Chris Kawaja, [email protected] Todd Wilson, [email protected], 916-
770-7683
Other resources Moiz (Mo-eez) Sherwani,
610-421-4222 ICIS Pricing and News
www.icispricing.com
