Chinese environmental regulations are set to impact the global chemical market

Chinese Environmental Regulations Set to Impact Chemical Market

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As China goes to figurative war with its pollution and smog issues they long have been known for, the chemical industry is preparing for the inevitable fallout from the implementations of the new regulations. Beginning January 1, 2018, China is set to enforce its’ new nationwide fees, in the form of taxes, on production facilities and businesses that violate the new pollution thresholds1.

Taxes will vary by the pollution type, location, and severity under the new legal thresholds. Air pollution fees will run 1.2 yuan ($.18 US) to 12 yuan ($1.81 US) per pollutant equivalent value, while noise pollution will run from 350 yuan ($52.69 US) up to 11,200 yuan ($1,686.04 US) per decibel in excess, depending on location and severity1.

In an actual product-based example, businesses will be levied a tax of 1.2 to 12 yuan per .95kg of nitrogen oxide or sulfur dioxide they release to the atmosphere, measured either by an instrument the businesses can choose to self-install, or measurements taken by government officials regularly1.

The impact to the chemical production industry will be especially seen. The major polyethylene and polypropylene market across China has especially been affected as hundreds of downstream companies, producers and production has been shutdown due to the new regulations3. Coal-based chemicals are especially targeted by environmental inspectors, due to the natural high levels of pollution expelled by these types of production lines3. An estimated 10% of China’s ethylene, and 11% of their propylene capacity is coal-based3.

China received an estimated 211.6 billion yuan ($31.85 billion US) in pollution fees under much less strict regulations across a 12 year period, from 2003-2015. According to an official study, China is positioned to collect upwards of 50 billion yuan ($7.53 billion US) per year moving forward1.

The current pollution management system in China, known as the “pollution discharge fee”, had been in place since 1982. Officials say the new regulations will bear more financial weight on companies, and allow for more specific regulating guidelines to effectively manage its long-running pollution concern1.

Today, the pollution issues across China are the cause of 1.6 million deaths annually, a number that’s steady risen over time. And while the impact of these regulations being implemented and managed over the course of these next few months, and even years, may be high from a business and supply chain standpoint, the positive long-term economy, atmosphere and business growth model will be exponential.

In business, securing your supply chain has never been more of a concern. The Chemical Company is committed to our customers and our business partners to have the most robust, diversified and strategic supply chain relationships in the world, providing supply and support when the market is at it’s toughest times. The Chemical Company is committed to partnering not only with sourcing the best products in the world, at the most competitive pricing, but committing to our customers to maintain security of supply.

Sources:

  1. http://www.scmp.com/business/china-business/article/2113650/new-environment-tax-will-hit-businesses-china-hard-say
  2. https://www.bna.com/china-pollution-inspections-n57982088091/
  3. https://www.icis.com/resources/news/2017/09/28/10147554/china-s-green-revolution-disrupts-chemical-supply-chains/

Media Contact:
Ben Sawicki
bsawicki@thechemco.com
(401) 360-2872

Trucking, Logistics Remains Tight Throughout the U.S. in Hurricane Aftermath

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The trucking and freight market continues to tighten in the wake of Hurricane Harvey, Irma and other natural disasters that have hit the U.S. Gulf and country as a whole over the past few weeks. With trucks, equipment, drivers and resources being pulled to the gulf and southeastern US to aid in relief efforts, albeit for good reason, the trucking industry elsewhere in the US has been strained even further than it was prior to Harvey making landfall.

Multiple logistics companies and distribution firms are urging customers and clients to provide ample lead times, significantly more than usual to ensure trucking availability to meet deadlines and due dates for the foreseeable future.

For more information on the state of trucking and freight services, send us a message.

Trucking in the US continues to tighten due to multiple factors

Hurricane Harvey Prepped to Tear Through Texas

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Throughout the day Thursday, Tropical Storm Harvey intensified into Hurricane Harvey, and is prepared to wreak havoc on the middle Texas coastline. More than a day before landfall, winds reached 80mph (129kph), according to a Washington Post article, with forecasters preparing for the storm to turn into a “major hurricane”, involving winds over 110mph.

Multiple production facilities in the area are already announcing closings, per PetroChem Wire and other outlets, including Formosa in Point Comfort, Equistar at Corpus Christi, OxyChem at Ingleside, DuPont and Equistar at Ingleside, Dow at Seadrift, and more. Citgo and Flint Hills Resources have also shut down the Corpus Christi refineries.

Harvey further complicates the already tight markets across multiple chemical product lines, as well as the tight transportation issues already seen in the trucking and rail logistics markets. The storm further emphasizes the importance of planning ahead, securing supply and logistics lines and availability and implementing business continuity plans.

The storm is projected to officially make landfall around 1:00am Saturday night, according to the map supplied by PetroChem Wire.

Sustainability Along The Supply Chain

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Recently, The Chemical Company’s (TCC) President, Robb Roach as well as TCC’s Vice President of Business Development, Ray Altenburger were interviewed by ICIS (Independent Chemical Information Service), a business unit of Reed Business Information.

Roach and Altenburger were chosen to discuss TCC’s core business practices, industry influence and our environmentally conscious protocol.

Click here to view the official article in PDF form or read the official article re-posted below:

Sustainability Along The Supply Chain

Growing pressure from consumers for ethical suppliers and sustainable products has chemical sellers and purchasers looking for ways to ensure they can communicate sustainable performance to the wider market.

Building in ideas and actions on sustainability across the board is helping create a green supply chain for the US chemical industry.

The concept of sustainability continues to grow in prominence in the public’s mind. Industry – especially the chem- ical industry – is having to step up its response in reply.

Buyers of consumer goods are asking ques- tions around sustainable sourcing of raw materials, labour issues, product safety and recycling. They are likely these days to base purchasing decisions on how sustainable they perceive the product to be, and indeed the company that supplies it.

The trend is a key one and has huge implica- tions for sourcing and purchasing along the chemical supply chain and the way chemical producers, distributors and users approach the way they do business and develop products. It also has huge implications for the transparent ow of information along the supply chain, and is leading to increasing use of sustainabili- ty questionnaires and even requests for audits.

“Green issues and sustainability have become mainstream today,” says Suzanne Shelton, CEO and president of Shelton Group, a specialist market consultancy in the sector. “They are no longer considered niche and are now incorporated into the very fabric of a business,” she told ICIS recently.

Shelton added that consumer surveys show that the reaction to sustainability is generally positive and that it has become an important part of corporate self-image. An increasing number of consumers are basing their purchasing decisions on perceived notions of a product and the producer’s green credentials, she affirms. A green image can thus be good for product sales growth. However, Shelton notes that companies need to ensure that they are indeed green and sustainable, and that they communicate an authentic message to this effect.

DISTRIBUTORS HAVE A KEY ROLE

It is not just chemical producers that need to be aware of sustainability arguments. The concept is just as relevant in the chemical distribution sector. Indeed, given that distributors are a key link in the supply chain between principals and many thousands of smaller customers, they have an important role to play in ensuring the sustainability message is passed on through to the consumer. They also, of course, need to ensure their own operations meet sustainability goals, for their own long-term survival.

For Robb Roach, president of US-headquartered international distributor The Chemical Company (TCC), sustainability or a long-term approach has been the basis of doing business since the company was founded.

 

“I’m not a fan of trendy buzzwords, but there is no doubt that sustainability is the blood that courses through the veins of TCC. We’ve always been a sustainable organization.”

He views it as an essential component of the way TCC builds long-term relationships with suppliers and customers, how it runs its financial affairs, and operates its logistics and technical service and back-up systems. “We look at every aspect of the way we operate – it is all founded on 100% sustainability,” he adds.

Roach believes the focus on sustainability has to be the responsibility of everyone in the business. “We are a family-owned business that is focused on long-term relationships with customers and producing partners. We do all of our business based on a history of delivering on our word without fail.”

This idea of sustainability at TCC is also found in the career sustainability it provides its employees. “These range from those just starting out their careers to seasoned industry veterans that have been with TCC for decades,” Roach says, “many after spending the majority of their careers with a large producer or deciding to forgo retirement and continue a career with us.” The company prides itself on building a diverse team to build and learn from each other. This allows it to offer better service to customers and build a positive environment in which employees can choose to further develop them- selves and dedicate their careers to TCC.

“We really like to emphasize that sustainability in the supply chain ranges from the products to the long-term work force support- ing the industry’s success,” says Roach.

The chemical industry’s drive to greater sustainability does indeed involve actions across a broad front – from adoption of alternative and renewable feedstocks and ingredients to reduced energy and water usage and hence lower carbon footprint. Smarter logistics, increased recyclability and recycling, and safer and better working conditions also play a role.

GLOBAL INITIATIVES

The good news is that the industry is respond- ing to the sustainability agenda, spurred on not just by growing consumer demands but by global initiatives such as the UN’s Sustain- able Development Goals (SDGs) for 2030, agreed late last year, and the EU’s comprehensive Circular Economy Package, which seeks to address issues surrounding waste by promoting resource efficiency and recycling.

The chemical industry views its long-term espousal of the voluntary Responsible Care initiative as a key part of its response to sustainability, focused as it is on continuous improvement of health, safety and environ- mental, and now security, performance. But there is a realization that the industry has to go further and meet the ambitions of the United Nation’s Global Compact and the Global Product Strategy under the umbrella of the United Nations Environment Program (UNEP). One recent development that is gaining traction is a consortium of chemical producers and suppliers that has come together to assess and improve sustainability performance along the supply chain.

RUNNING ON A COMMON PLATFORM

Together for Sustainability (TfS) aims to drive improvements in supply chain sustainability and currently brings together 19 players in the chemical sector. These have agreed to adopt a harmonized set of assessment and audit processes, running on a common platform “to achieve significant, measurable CSR [corporate social responsibility] performance improvements in our supply chains” and “to move towards sustainable sourcing”.

TfS was launched in 2011 by the chief procurement officers of six multinational chemical companies: Bayer, BASF, Henkel, Evonik, Lanxess and Solvay. Today, its members have an annual spend of €200bn and have so far assessed 4,500 suppliers. It notes that 70% of these suppliers have improved their sustain- ability scores after evaluation.

The strategy is to develop and implement a global supplier engagement program to assess and improve sustainability practices within the supply chain of companies from the chemical sector. The program covers the areas of management, environment, health and safety, labour and human rights, ethics and governance.

TfS uses EcoVadis to carry out sustainability audits. Since 2011, 460 have been per- formed. Re-assessments have been conducted in Europe, Asia and the US and improvement has been recognized in all regions, says TfS.

“More than 70% of the suppliers that are assessed more than once by EcoVadis improve overall, showing a positive evolution in either one or more than one of the CSR themes considered (environment, labour practices, fair business practices and sustain- able procurement). This illustrates the potential of TfS to drive supply chain sustainability in the chemical industry.”

Although TfS members originate from the chemical business, suppliers in scope are not limited to chemical supply chains, but cover all industries relevant to the chemical indus- try, including wholesalers and logistics service providers.

Two-thirds of the assessed suppliers are small and medium-sized companies, which often scored better than large-scale enterprises. While the supply base is covered across all categories, it is at the same time covered glob- ally – TfS aims to assess and audit suppliers in all regions.

Recognizing the growing importance of sustainability as an issue overall and the develop- ing trend towards assessments, TCC decided last year to join the National Association of Chemical Distributors (NACD) to access the benefits of accreditation through its well-regard- ed Responsible Distribution (RD) program.

Ray Altenburger, vice president for new business at TCC, comments that the third- party audit of its facilities and their policies and procedures was another step in TCC’s progression to become more professional and meet the requirement of its partners. “Today, suppliers want greater trace- ability, for instance, and [having RD accreditation] we have a high- er level of comfort when doing business.”

Robb Roach echoes this, noting that levels of reporting up and down the supply chain have increased substantially in recent years as sustainability has risen up the agenda.

“Transparency is a key aspect of the business right now and most producers and customers are aware of the importance [of sustainability] in the world and are leading the charge – we are champions in many ways.”

Internally at TCC, Roach points to many initiatives, from using fuel-efficient vehicles for sales people, encouraging effective travel planning and ensuring the trucks it uses meet all standards and regulations, right down to installing a water fountain in the head office to cut down on bottled water consumption.

“Today, suppliers want greater traceability… [to] have a higher level of comfort when doing business”

RAY ALTENBURGER
Vice president for new business, The Chemical Company

“We have also made a huge effort to be fully compliant on labelling and documentation and a large investment in EHS, and make every effort to support growing companies especially in hard-pressed economies,” adds Roach.

Altenburger also points to the fact that TCC has been handling recycled, green and biobased chemicals for many years from sev- eral of its suppliers. He believes this trend will continue to grow as customers look for sustainable options and solutions.

As Roach concludes, “The key thing is that sustainability is not a new thing for TCC – it’s just the natural thing to do.”

That’s hard to argue against of course. Virtu- ally all chemical and chemical distribution companies these days will have an eye on the sustainability argument and trends. What is shifting fundamentally now perhaps is the focus on individual company performance as in the past, to supply chain performance today.

This is going to take a lot of cooperation and communication, but in the end, those companies that get involved will secure those customers that all players in the chain need to thrive – those at the end of the value chain. And the ones, as we saw at the top of this article, that are increasingly basing purchasing decisions on their perceptions of the prod- ucts’ and producers’ green credentials.

TCC—An Environmentally Conscious Company

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The concept of being environmentally responsible has permeated the public’s consciousness and has influenced several industries to become more aware of their responsibilities. For some companies and industries, becoming environmentally responsible requires major decisions and adjustments, equating to years for changes to take effect. The chemical industry is no exception. The Chemical Company (TCC) is proud of its decades of encouraging an environmentally conscious protocol and continues to be part of the industry’s movement.

In reflection, we have found that many of our efforts follow this mindset. As our President, Robb Roach recently discussed in an interview with ICIS, that our environmentally friendly achievements had surpassed this trend. Our environmental accomplishments reach back to years of sub-conscious striving to be a well-run company.

Traveltcc-enviro-concious

Travel is a necessary part of doing business for many organizations. Our team travels daily to local and distant destinations to speak directly with customers and producing partners. We encourage planning trips with less flying and longer stays to do our part in reducing emissions from frequent flights. Many of our sales team members enjoy discovering new locations while meeting with several different companies during a trip.

Other environmentally friendly considerations during travel

  • Provide fuel-efficient vehicles for our sales team
  • Work with reputable shipping companies whose trucks meet all standards and regulations
  • Encourage carpooling – Some of our team members have carpooled to our office headquarters for years to save on gas and reduce emissions while adding some pre-work team bonding to their commute.

Products

TCC offers over a dozen different product lines to meet our customer’s needs. We focus on several industries and specifically provide options to source recycled or bio-based products in our array of offerings.

We value having a variety of products in our portfolio to provide our customers with multiple options to fulfill their requirements. A few examples of products we offer that are recycled or are used to develop environmentally friendly products are below:

  • Sustanol
  • Bio-based derived from malaises
  • Bio content in the bottles
  • BIO PG
  • Propylene Glycol derived from glycerin
  • Bio-succinic acid
  • Citric Acid – fermentation process (corn production mid-west)

 

The Small Details

As a large company, we understand that little details add up to a big impact. The small efforts of many drive the difference. At our yearly convention, and monthly during team updates from our principals, we remind our teams from across the country to take small, efficient steps.

  • A filtered water fountain in the head office reduces bottled water consumption
  • Printing and paper are limited to vital documents, opting to use a shared drive to access important documents and files.
  • We plan carefully for events and tradeshows. Our marketing team considers promotional product options, booth construction, and other details to opt for a lean approach to show preparation.

This article sparked further discussion amongst our team at headquarters, and we heard a great story to share.

Our Marketing Manager, Jessica Baker, noted that while attending the IFT trade show in Chicago, Illinois, she opted for public transportation instead of taking an Uber or renting a car for the week.

“I enjoy functioning as a local when I visit a new city. In Chicago, the O’Hare International Airport is about an hour drive from downtown Chicago, especially during high traffic times. For $5, I took the “L” blue line, similar to Boston’s subway system, although above ground. It was faster, and I enjoyed seeing more of the city this way.”

We are proud to have a team that endeavors to be environmentally conscious whether that be with small daily efforts or looking to source new bio-based products for our customers.

Three Advantages of Choosing a Mid-Size Distributor

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A current trend throughout the business arena is to consolidate small to mid-size distributors to form large conglomerates and publicly held companies with massive buying power. The chemical industry is being affected by this dramatic change. Big distributors are emerging that use the appeal of large orders to squeeze manufacturers and suppliers to lower their prices. This raises a few questions. Are strong-arm tactics designed to save customers a few dollars with no regard for the future of the industry, good for business? Is the risky business of fast lane growth worth sacrificing long established personal relationships due to automation? These things happen when public companies are fulfilling their obligations to stockholders.

1. The Privately Held Mid-Size Distributor

Doing business with a mid-size distributor definitely has its advantages. Many are privately held, allowing customers to develop personal relationships with their distributor built on trust and transparency. Relationships with no hidden agendas or stakeholders influencing supply.team-collaboration

Employees in mid-size, privately held companies have more decision power when working with customers, e.g., TCC functions as a flat organization. No wall structured management system exists to stifle communication between sales, employees, and the key principals. Pricing and supply is transparent and openly communicated between everyone involved in all business transactions.

TCC is also committed to staying privately held. In this market of acquisition, many customers are fearful of a disruption in their supply chain. If their distributor is consolidated, their fears are justified, i.e., If a needed item is in short supply, the companies with the biggest orders are filled first when buying from a big distributor. Others have to communicate with voice mail and email to find out why they were back ordered and when they can expect delivery. Electronic voices and automated systems can be frustrating when answers are needed right away. 

 

2. Offering more than just products, Mid-Size continues to offer better Customer Service

As companies grow by acquisition, so does the difficulty to reach sales contacts and customer service representatives. Whether it’s due to fast lane expansion or lack of infrastructure, many companies have outsourced customer service and/or eliminated telephone operators. During normal day-to-day activities, this may not be a factor. However, in times of immediate need, the strain will be felt. Again, transfers from voicemail upon voicemail through an automated system or recording can be discouraging. 

Many mid-sized companies like TCC believe in the appeal of personal customer service. People like to talk to people when communicating by telephone. At TCC, we provide a 24/7-phone service. Monday through Friday 8-5 PM EST, live customer service representatives answer calls. During non-business hours, callers are directed to an answering machine that is immediately forwarded to the head of customer service as well as to our president. A live representative will return emergency calls within the hour and all other calls the next business day. Many mid-size distributors like TCC offer multi-lingual representatives so customers can converse in their native languages, and do business comfortably.

Our sales employees go beyond the needs of customers and potential customers. We believe in helping people and answering inquiries even if they don’t generate sales.

 

A great example of this policy comes from one of our sales VPs, A.J. Petrarca: “We often receive call inquires regarding small quantities. In some cases, we can customize our options to service needs, although occasionally, the quantity is too small. I always take the call, listen to the company, and make my best recommendation to where they can source their product. In my opinion, it’s just being a person helping another person. It’s not always about the sale.”

That small extra step, to help someone in need, has paid dividends that are beyond measure. At TCC, we keep old school calling as a primary option to contact us. We will never be so large that we compromise personal service.

tcc-customer-service

3. Fulfilling an array of product needs met by distributors trusted relationships with multiple suppliers

Mid-size distributors like TCC are always open to adding more products and services. That’s why developing trusted relationships with multiple suppliers is so important. We can communicate customer needs to manufacturers so they can work on developing new innovations that will improve the industry.

Some publicly traded companies attempt to strong-arm suppliers by holding large volume orders over their heads, while mid-size distributors develop strong relationships with their producing partners. Negotiations and discussions are not based on the quantity the distributor will purchase if they don’t agree to a specific price. Instead, the focus is on finding a middle ground so that both companies benefit. A lower price in the short term appears great, although it’s very difficult to start from scratch if a supplier goes under. At TCC, we believe that a business deal is only good if it is good for everyone involved.

Our goal is to fulfill our customer’s needs while insuring the growth and stability of our suppliers and the industry.

CompositesPlasticsChemical

October Has Arrived!

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Propylene Pricing Update

After long discussions, the US September propylene contract is on the verge of agreeing to a price increase of 6¢/lb. ($132/t). The agreement advances the price of polymer grade propylene to 43.0¢/lb. ($948/t) and the chem grade to 41.5¢/lb. ($915/t). As noted in the monthly report, supplies remain tight and producers have moved very little from their original stance. Propylene contract pricing has increased 11.5¢/lb. ($254/t) since the beginning of the year, with over one-half of the increase occurring this month.

In Europe, the October contract price discussions continue. Although talk of increases of €30/t and €40/t have allegedly been agreed, an apparent resolution has yet to be reached. This would indicate either €720/t ($806/t) or €730/t ($818/t) could be the result. Obviously, this is well below the US settlement for September.

In Asia, the Shell cracker in Singapore is rumored to be down this week. While speculation in the marketplace regarding timing for restart is abundant, no official timeline has been given. At this point, there has been no real reaction in the spot propylene market, which is actually a bit lower than 10 days ago when it was around $850-870/t CFR.

Upcoming Events

September provided a great start for the TCC fall season, and October is off to another busy month. Our team will travel both domestically and internationally as they journey to a number of exciting locations and events this October:

Earlier This Month: Price Alert

  • Propylene
  • Methanol
  • DPHP
  • DOP
  • DOTP
  • TOTM
  • DOA
  • Trimellitates

Please contact your TCC Sales Representative for more information.

Last Month: Specialty & Agro Chemicals America

AJ Petraca, General Sales Manager, Ray Altenburger, Vice President Business Development, and salesmen, (TITLE and NAMES) attended the Specialty & Agro Chemicals America exhibition from September 7 to 9 in Charleston, South Carolina. The team filled their free time meeting with both customers and suppliers at the event. While at the booth, they met with companies in need of a variety of products for a wide range of end uses. After the event, reviews from the team proved invaluable. TCC will definitely be attending next year’s show.

What’s happening at TCC?

24th Annual Gemini Golf Tournament

 The Chemical Company attended the 24th Annual Gemini Golf Tournament on September 11, 2016. Regional Marketing Manager, Cory Mullins, proudly represented TCC and brought Titleist golf balls as well as TCC markers and golf tees as gifts for the tournament players.

Event highlights

New Mexico TripNM Photo

Robb Roach, TCC President, and Nick Roach, CEO, headed to New Mexico this September, to spend time in the great outdoors. They took their yearly hunt to Vermejo Ranch, located in northern New Mexico and southern Colorado. The ranch, spanning over 585,000 acres, allowed them to take home memorable elk. This annual adventure gives the men an opportunity to bond as well as plan for the company’s future.

More Photos Available Here

Price Increases Fall 2016

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cargo container ship in mediterranean coast

Customers should anticipate delivery delays & freight price increases from products sourced in Southeast Asia.

Hanjin Shipping Company filed for bankruptcy on August 31, 2016 causing major back-ups on imports from China.
More Information on the topic available here.

China’s National Day holiday is rapidly approaching. Production will slow or cease completely during this time. The holiday extends from October 1-7, 2016. More Information

Price Increase Alert For:

  • Propylene
  • Methanol
  • DPHP
  • DOP
  • DOTP
  • TOTM
  • DOA
  • Trimellitates

As always at TCC, we are open and transparent regarding price changes. Please reach out to us with any questions or inquires. 

TCC has an event filled fall this year!

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Stop By Booth #709 at the Agro Show!

Specialty & Agro Chemicals America
The TCC team is once again hosting a tabletop exhibit at the Specialty & Agro Chemicals America trade show in Charleston, SC. The Agro Show sheds light on the significance of the American chemical industry and focuses on specialty and agrochemical manufacturing. The specialty and agrochemical industry encompasses a wide range of end uses—from adhesives, sealants, and resins, to oilfields and fuels, plastics and composites, as well as crop protection and water treatment. With hundreds of products sourced to suit your specialty and agro requirements, the TCC booth is well worth visiting.

Will we see you in Dusseldorf?

The Chemical Company (TCC) is hosting its first exhibit at a world-renowned European trade show. TCC is a participant at the K Show in Germany this October. Our representatives are eager to highlight our comprehensive line of polymers and polymer additives at this highly regarded international platform. TCC will be in the U.S. Pavilion, Hall 5, of the Messe Dusseldorf at Booth C08-1. Please contact khagan@thechemco.com to schedule a meeting with our team.

K Show – The World’s No. 1 Trade Fair for Plastics and Rubber
October 19 – 26 in Dusseldorf, Germany

Drumroll, please…

This fall we have debuted our new website, which has undergone a complete makeover! We hope you enjoy our expanded product pages, company information, and video channel. 

 

TCC Website Screens