Chemicals Price Comparisons

What is the Importance of Chemicals Price Comparisons?

In today’s competitive chemicals industry, where margins are tight and market conditions are constantly changing, procurement professionals are always looking for ways to cut costs and maximise value. One of the most effective strategies to achieve this is by thoroughly understanding chemical price comparisons. By analysing the price differences between similar chemicals or different grades of the same chemical, companies can make smarter purchasing decisions, optimise their supply chains, and plan strategically for the future.

But why is it so crucial to have a firm grasp on chemical price comparisons? The answer lies in the multiple benefits it offers:

1. Cost Optimisation: Businesses compare chemical prices primarily to optimise costs. By understanding the price differences between similar chemicals or different grades, businesses can make informed purchasing decisions that save money without compromising quality.
2. Supply Chain Efficiency: Knowing the most cost-effective options can help streamline the supply chain. For example, if a chemical’s price is lower in a particular region, companies can adjust their supply chain logistics to source from that region, reducing transportation costs and delivery times.
3. Strategic Planning: Access to comprehensive data on price forecasts and trends allows businesses to strategically plan their purchases. This might involve buying in bulk during periods of low prices or diversifying suppliers to mitigate risks associated with price volatility.

Example: How to Cut Costs by Choosing the Right Form of Citric Acid

To illustrate the importance of price comparisons, let’s consider a comparison of Anhydrous Citric Acid and Citric Acid Monohydrate, based on Vesper’s pricing data. Both forms of citric acid are commonly used in the food and beverage industry as acidulants or preservatives. They are chemically identical except for their water content: Anhydrous Citric Acid is the water-free form, while Citric Acid Monohydrate contains water molecules.

Because they are essentially the same chemical, they can often be used interchangeably, provided the difference in water weight is accounted for. However, their pricing may differ due to factors such as production costs, supply availability, and market demand.

Suppose a beverage manufacturer needs a certain amount of citric acid for a new product line. They have the flexibility to use either Anhydrous Citric Acid or Citric Acid Monohydrate. By consulting Vesper’s platform, they find that Anhydrous Citric Acid is priced at EUR 1,465 per metric tonne, while Citric Acid Monohydrate is priced at EUR 1,450 per metric tonne, as shown in the figure below.

At first glance, Citric Acid Monohydrate appears to be the more economical choice. However, to make an informed decision, they must consider the water content difference. Anhydrous Citric Acid is 100% citric acid, whereas Citric Acid Monohydrate contains approximately 90% citric acid due to the water molecules.

Calculation for Cost Effectiveness:

• Anhydrous Citric Acid:
  • Price per tonne: EUR 1,465 for 1,000 kg of citric acid.
  • Effective cost per kg of citric acid: EUR 1,465 / 1,000 kg = EUR 1.465 per kg.
• Citric Acid Monohydrate:
  • Contains 90% citric acid (the remaining 10% is water).
  • Price per tonne: EUR 1,450 for 1,000 kg of Citric Acid Monohydrate, which contains 900 kg of citric acid.
  • Effective cost per kg of citric acid: EUR 1,450 / 900 kg = EUR 1.611 per kg.

Conclusion:

In this scenario, after adjusting for the water content, Anhydrous Citric Acid is the more cost-effective choice with an effective cost of EUR 1.465 per kg of citric acid, compared to EUR 1.611 per kg for Citric Acid Monohydrate. While Citric Acid Monohydrate appears slightly cheaper per metric tonne at first glance, the true cost of the citric acid content reveals that Anhydrous Citric Acid offers better value. This example highlights the importance of considering the active ingredient concentration when making procurement decisions to ensure the most cost-effective purchase. By using Vesper’s platform, buyers can easily access such comparative data, enabling them to make more informed choices and optimise their costs.

Where Can You Find Chemical Price Comparisons?

Comparing chemical prices effectively requires access to reliable and comprehensive market data. Here are several key platforms and resources where businesses and procurement professionals can compare chemical prices:

1. Vesper: Vesper is an online commodity intelligence platform that offers detailed, real-time data on chemical prices, including spot prices, historical pricing data, price forecasts, and market trends. It provides comparisons for different chemicals and grades, allowing users to make informed purchasing decisions. Vesper is particularly useful for its user-friendly interface and in-depth analysis, catering specifically to the needs of the chemicals industry.
2. ICIS (Independent Commodity Intelligence Services): ICIS is a leading global source of market intelligence for the chemical, energy, and fertilizer sectors. It provides price assessments, market analysis, news, and forecasts across various chemicals and regions. ICIS data is widely used by industry professionals to track market trends and compare prices effectively.
3. ChemAnalyst: ChemAnalyst offers detailed pricing data, market analysis, and forecasts for various chemicals. The platform provides information on price trends, supply-demand dynamics, production costs, and other market variables. ChemAnalyst’s comprehensive database allows users to compare prices across different regions and timeframes.
4. Platts by S&P Global Commodity Insights: Platts is a major provider of energy, petrochemical, and metal prices and news. It covers a wide range of chemical products and provides benchmark prices, analysis, and forecasts. Platts’ pricing assessments are widely recognized and used by industry stakeholders to understand market dynamics and compare prices.
5. IHS Markit (now part of S&P Global): IHS Markit provides market intelligence and data on various industries, including chemicals. It offers price data, forecasts, and in-depth market reports that help businesses compare prices and understand market trends. The platform is known for its detailed and reliable data, which supports strategic planning and procurement decisions.

Frequently Asked Questions (FAQs) on Chemicals Price Comparisonsz

1. Can I Use Price Comparison Data to Negotiate with Suppliers?
   Absolutely. Having access to up-to-date price comparison data provides leverage in negotiations with suppliers. Businesses can use this information to negotiate better terms, discounts, or flexible payment options.
2. How Frequently Should I Review Chemical Prices?
   It’s advisable to review chemical prices regularly, especially for frequently purchased commodities or when preparing for significant procurement events. Regular reviews help businesses stay informed about market trends and price fluctuations, allowing for timely decision-making.
3. How Can Understanding Chemical Price Comparisons Benefit My Business?
   By understanding chemical price comparisons, businesses can optimise costs, enhance supply chain efficiency, and develop strategic purchasing plans. This can lead to significant cost savings and improved operational efficiency.