InterviewHigh oil squeezes distributor margins

03 January 2008 20:38  [Source: ICIS news]

By Al Greenwood

HOUSTON (ICIS news)--Record oil prices could squeeze margins for some chemical distributors, the president of a trade group said on Thursday.

"Our guys are pretty efficient," said Chris Jahn, president of the National Association of Chemical Distributors. "It's very difficult for them to pass along those costs to customers."

Already, distributors have contended with rising fuel costs for much of 2007, Jahn said.

Moreover, the new year started with oil prices hitting the psychologically important barrier of $100/bbl.

Commodity markets will likely be more resistant to price increases sought by distributors - especially for those markets that are exposed to the US housing industry, he said. "That is really a pretty strong one-two punch."

Specialty markets, however, could be more open to price pass-throughs, Jahn said.

Most members of Jahn's group distribute within North America via road and rail.

By: Al Greenwood
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