Electronic-commerce survivor ChemConnect Inc. is opening a trading pit to negotiate the sale of plastic resin and targeting auctions to sell wide-spec material.
The Houston-based company is focusing more attention on polymers for its growth, said Tim Fetters, ChemConnect vice president of negotiation solutions, in a May 14 telephone interview. Six large resin suppliers, including Dow Chemical Co. of Midland, Mich., have started to use reverse auctions regularly at ChemConnect to sell wide- and off-spec resin, Fetters said.
Until now, the dot-com company has done more trading in feedstocks than it has in resins and plastic packaged goods, Fetters said. With the launch of the trading pit and a new commitment to polymer auctions, that is changing, he said.
``We've been pushing [reverse auctions] for the last two years at least, but we're finally getting significant traction in polymers,'' Fetters said. ``They tend to be repeatable, once an organization moves into the mode of selling materials this way. It runs on automatic.''
Wide-spec auctions have been held to sell major commodity resins, including polypropylene, polyethylene and PET, Fetters said.
About 40 percent of the company's auctions are done on the sell side, where suppliers find buyers for material, while the rest of the auctions are initiated by buyers.
The number of sell-side events is expected to grow to half of the company's auction business within a short time, he said. The company has conducted more than 75 managed auctions for resins, totaling more than 100 million pounds of material, Fetters said.
The trading pit allows online price negotiations between buyers and sellers in a bid/ask format, similar to how trading is conducted on the New York Stock Exchange, he said. That platform can be used to cement short-term contracts for resin, he added.
The company also is starting to auction off plastic packaging materials. Auctions have been held for shrink wrap, plastic drums, plastic pallets and other packaging products, he said.