25 July 2013 17:55 [Source: ICIS news]
HOUSTON (ICIS)--Growth in the global chemical distribution market continues to outpace the chemical industry’s overall growth as producers keep outsourcing more of their distribution activities to third-party providers, Boston Consulting Group (BCG) said in report published on Thursday.
Between 2008 and 2012, the worldwide chemical distribution market grew about 9%/year, in nominal terms, to roughly €165bn ($217bn), outpacing the nominal 8%/year growth in chemical consumption worldwide over the same time period, BCG said.
"Chemical distributors are growing faster than the overall industry, mainly due to two factors: increased outsourcing among suppliers and greater value-added services offered by distributors," said Udo Jung, a BCG senior partner and co-author of the report.
"Both are driven by industry trends, and neither is likely to change for the foreseeable future," Jung said.
Stefan Scholz, a BCG project leader and co-author of the report, added: "While third-party distribution has grown, there is still considerable room for expansion, as roughly €165bn comprises just 10% percent of the overall chemical market."
Going forward, BCG expects the real growth rate in the chemical distribution market to slow to a stable 6%/year within the next five years, mainly due to weaker underlying economic conditions that will reduce chemical consumption, Scholz said.
In the report, BCG noted that many chemical producers are developing "preferred partnerships" with key distributors – an approach that allows producers to expand into new markets.
Among third-party distributors, Brenntag, Univar, and Nexeo Solutions were the three largest in 2011, with a combined global market share of 12.5%, according to BCG.
BCG’s report – titled "The Growing Opportunity for Chemical Distributors: Reducing Complexity for Producers Through Tailored Service Offerings" – was supported by a web survey and interviews of more than 150 key industry participants, including producers, distributors, and customers.
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