Eleven leading chemical companies will band together to form an electronic marketplace where they say chemicals can be bought and shipped efficiently. The unnamed Web site, due to launch by the end of the year, will target the purchase of specialty and fine chemicals. The chemical-company founders estimate the size of the market at $400 billion in annual sales.
The neutral site will not compete against another Web-based portal announced in April that specifically targets injection molders. That site — which includes some of the same chemical companies — will sell and distribute thermoplastics in a catalog offering.
The new site, announced May 17, will cut waste in supply-chain activities for chemicals sold through contractual sales, said David Kepler, vice president of electronic business with Midland, Mich.-based Dow Chemical Co.
"This is a different model than for injection molding," Kepler said. "The [site] focuses on broader chemical products. We think with the number of customers and fragmentation of the market, we can improve efficient services."
Services offered by the site will include a "catalog superstore" of chemical listings, electronic negotiations, a credit service, packaging, data transfer, invoicing and order fulfillment.
To start, the members are investing $150 million in the company, with plans to sign a definitive agreement in July.
Members include Atofina, BASF AG, Bayer AG, BP Amoco plc, Dow, DuPont, Mitsui Chemicals Inc., Mitsubishi Chemicals Corp., Rhodia SA, Rohm & Haas Co., Sumitomo Chemical Co. and Netherlands-based distributor Van Waters & Rogers.
The companies plan to hire a chief executive officer and other officials to run the company and will seek a technology provider.
The chemical-consortium site offers a different model than that used by independent companies, including CheMatch.com Inc. and ChemConnect Inc., Kepler said.
Those companies sell by auction or spot exchanges for a single price, while the new site will offer a variety of catalogued chemicals and prices, he said.
"It's the difference between an eBay and Amazon.com," Kepler said. "You can buy over both."
Outside producers, including those trading on the site, will be offered an equity stake in the new company, said Bill Howard, director of electronic commerce for BASF's chemicals division.
The new company will consider an initial public offering to raise funds after it goes online, according to Andy DuPont, Dow director of electronic market channels.