It's top priority to keep you updated on any issues that may affect your bottom line.
ChemSpec realizes the importance of keeping our customers informed on issues in chemical distribution. Our Vice President of Operations, Jon Sias, is constantly working to keep apprised of any issues relating to product availability and deliveries.
China Sourcing Update - from Jon Sias
As of mid-October, the tight supply of certain chemicals from China continues. Following is a report from the ChemSpec sourcing team that details our view of the situation and future outlook:
The Chinese Government continues to send safety inspectors regularly to manufacturing plants. Manufacturers continue to be shut down or told production has to be limited as the country wide push for reducing pollution continues. Rubber raw material manufacturing continues to be a large culprit of water pollution, and there does not seem to be a clear path forward at this time. As a result, many raw material producers are limited, which in turn limits supply. The demand is greater, causing pricing to stay on the rise.
Most producers in Shandong and Hebei have been told to stop or limit production in the past month. Also, pollution has been reduced in anticipation of the 19th National Congress of the Communist Party of China (CPC) starting on Oct 18, 2017 in Beijing. A nearby area where production is limited due to this event is Tianjin, home to many major rubber chemical plants. It is hopeful that there may be come clarity into the future of China after this event, but we have not seen any direction yet. While many manufacturers are left in limbo of not knowing how much and how long they will stay open, the market will continue to be tight and uncertain. We think this will continue well into the first quarter of 2018. Many smaller players are or will be exiting production and a handful of larger manufacturers will remain.
ChemSpec will continue to carry larger safety stock beyond the normal 45-60 days we do for our customers for products which are impacted from China. The list of products is large as many downstream products have some raw material starting in China. Our recommendation is for customers to plan ahead and make sure they have stock secured. We continue to do our best negotiating pricing when applicable, but our main concern and priority right now is having stock for our customers that are counting on us.
For more specifics, products which we are seeing a shortage are common accelerators and antioxidants as follows:CBS, MBS, MBT , MBTS, DPG, DOTG, TMTD, 6PPD, IPPD, CTPI. The provinces in China that are experiencing these limits or stops in operations are: Shandong, Tianjin, Jiangsu, Henan, Zhejiang, Hebei, Jiangxi, and Sanxi.
ChemSpec works with excellent manufacturers in China. Our “eyes and ears” on the ground in China at all times, is Sichuan HuaFaMei. As our agent, they keep us continually updated and regularly visit the plants to stay on top of developing situations and outlooks.
We are also thankful to work exclusively with manufacturers like Jingzhou Jianghan Fine Chemical Co., Ltd. (JHSi), a large producer of silane coupling agents. JHSi does a wonderful job of keeping the US market supplied with product at a time when raw materials have become short and/or more expensive. They are experiencing increases in the raw materials which go into making these products, leading to cost increases for Q4 2017 and into 2018. JHSi has made a significant investment in their plant recently regarding safety and waste water, feeling very confident they will have no issues operating. Their most recent expansion has taken them to be one of the largest silane producers in the world.
Jon Sias, VP Operations Office: 330-896-0355
