Price and market trends: Brenntag sees growth opportunities in North America

14 April 2014 00:00 Source:ICIS Chemical Business

Global chemical distributor Brenntag sees great potential for growth in North America through organic means and acquisitions.

“We see opportunity for organic growth in industries such as food, water, and oil and gas,” said Steven Pozzi, executive vice president and chief operating officer for Brenntag North America. He and North America division president and CEO Markus Klaehn made their comments on the sidelines of the American Fuel & Petrochemical Manufacturers’ (AFPM) International Petrochemical Conference (IPC), held 30 March-1 April in San Antonio, Texas.

Markus Klaehn

“As new production facilities come online all over the world, current supply flows will change over time”

Markus Klaehn
CEO - Brenntag North America
 

Germany-based Brenntag enjoys a leadership position in distribution in Europe, Latin America and Asia but has not yet reached the leading market position in North America. The company did experience top-line growth of more than 6% in 2013 on the continent and expects growth to persist, Klaehn said.

“We expect to continue to perform above the level of market growth due to our unparalleled commitment to safe handling of our products, the quality of our market-focused and customer-oriented teams, our full-line product portfolio and world-class plant locations,” Klaehn said. “Our global reach and local presence drives our continued growth, particularly in national and global accounts.”

OIL, GAS SECTOR DEMAND

Despite North America being a fairly mature chemical market, the shale boom has given Brenntag an enhanced opportunity to improve its footprint. “We can play a big role in that,” Klaehn said.

Demand from the oil and gas sector in the US continues to be strong, Pozzi said, particularly in the shale plays in Texas, the Dakotas and Wyoming thanks to investments in infrastructure in those areas to deliver chemicals and services to customers.

“We partner with major oil and gas players in the upstream, midstream and downstream markets and are well-positioned to participate in the expected continued growth in this industry sector,” he said.

Growth is also coming from Brenntag’s specialty chemical distribution, Pozzi said, as the company continues to look at adding value for customers and improving its technical offerings. Brenntag recently added application labs in Arizona and New Jersey to support its partners’ R&D efforts.

“Customers with specialty chemicals requirements can count on the expertise of our highly-trained specialty sales force to come up with tailor-made solutions such as special value-added products and custom blends, simplifying their manufacturing process,” Pozzi said.

Steven Pozzi

“We see opportunity for organic growth in industries such as food, water, and oil and gas”

Steven Pozzi
Executive vice president & COO - Brenntag North America

While Brenntag deems its coverage of the North American market as very good, the company does say that it has some gaps – notably in the northeast US and the southern Rocky Mountains, two areas it does see as prospects for greenfield investments or acquisitions. It is also constantly looking to add to its product lines, to expand its logistical and infrastructure capabilities and to provide suppliers with a safe and reliable low-cost channel to the market, Klaehn said.

“At Brenntag, we see potential opportunities to further improve the supply chain for very small local customers and huge global accounts,” he said. “This diversification provides a consistent performance that is resilient in any type of market.” As a whole, the company views North America as a substantial opportunity for it to expand its business in light of the changes to chemical industry being brought about by the shale revolution and the region’s recovering economy, Klaehn said.

“As new production facilities come online all over the world, current supply flows will change over time,” he said. “Being an integrated, global chemical distribution company, we have a unique ability to facilitate the changes in global supply chains. These changes will, arguably, be most significant in North America over the next five to seven years as we develop the full potential of our new energy production platforms. This transformation will provide a low-cost manufacturing environment for chemical production, and Brenntag’s role is to continue to provide the supply chain logistics to capture the capabilities.”

“In the meantime, the North American economy is consistently recovering at a relatively slow pace,” Klaehn added. “Chemical distribution will continue to outgrow industrial production, and chemical distributors with a focus on safety, reliability and partnership are in a good position to do well.”

By Jeremy Pafford