How to do chemical trading?

1. Assemble the right team. You will need a diverse group comprising skilled sales professionals, chemical technical support, and individuals who are knowledgeable or willing to learn the nuances of export and import documentation.

With a competitive price range and timely delivery, TJCY industrial chemical earnestly aims to be your supplier and partner.

2. Conduct your research. It's crucial to do your homework before jumping into trading since many buyers already have established contracts (making it not just about offering the lowest price). Other buyers may have fixed supply chains with significant multinational corporations, making it challenging to enter the market. Therefore, approach your chosen market strategically.

Many new traders opt to focus on base chemicals due to their broad applications, which translates to a larger customer base.

While you can venture into specialty chemicals, they require a more profound understanding of the market and the products involved. Additionally, they may require specific licenses and documentation that can be complicated to navigate for newcomers.

3. Familiarize yourself with chemicals trading terminology. As Low Jia Wee of Trade Asia International Ltd points out, “Be well-versed in terms such as incoterms, payment conditions, port of loading, and port of discharge.” Incoterms like FOB (Freight on Board), CIF (Cost Insurance Freight), and CFR (Cost and Freight) are fundamental. Payment options such as DP (Direct Payment) and TT (Telegraphic Transfer) are also important to know.

4. Analyze your financials. Profit margins can be very slim—often as small as 5%. Therefore, grasping your logistics framework is essential. Efficient packing and strategic trade routes are crucial. As a chemicals trader, it's vital to continually consider your TLC (total landed cost).

5. Identify the best suppliers. This will involve one or more of the following strategies:

• Online networking. Engage in various trade discussion groups on platforms like LinkedIn to connect with industry peers and gain insights.
• Traditional networking. Attend conferences organized by groups such as ICIS (the Independent Chemical Information Service), the Royal Society of Chemistry (RSC), and the American Chemistry Society (ACS). There are also numerous trade directories listing potential clients, partners, and competitors.
• The efficient method involves using an online chemical marketplace or matching service, where you can browse available offers, similar to E-bay. Some platforms allow you to post purchase requests and wait for sellers to contact you. While these services are relatively new to the chemicals trade, they can significantly reduce time and effort, letting you search for specific products at any convenient time from your office or home. Popular websites include panjiva.com, kemcore.com, spotchemi.eu, and Alibaba.

6. Look East. Recent decades have seen a considerable shift in where chemicals are regularly sourced and traded due to stagnation in traditional markets like Europe and North America.

The chemicals industry is increasingly centered around the Asia-Pacific region. To thrive in this field, you will likely need connections in these areas. As Calisto Radithipa, co-founder of the chemicals trading firm Kemcore, states, “Consider importing chemicals from China, as it is now among the top three producers of base chemicals, with some chemicals being produced exclusively there.”

7. Evaluate sourcing from multiple producers. By adopting this strategy, you can blend different chemicals into innovative products. Broadening your product range may also allow you to explore specialty chemicals, but be mindful that customers in this segment may require considerable technical support. Enhanced product knowledge and familiarity with necessary documentation will be crucial if you choose this path.

8. Maintain flexibility in your business strategy. Understanding risk management techniques is also valuable, as chemical prices can vary significantly. Are you prepared for a sudden drop in commodity prices? How will you respond to such changes?

If you're interested in exploring more about industrial chemical traders, feel free to contact us today to arrange an expert consultation!

This checklist is by no means exhaustive, as many foundational business strategies must also be incorporated. Timely product delivery and adherence to contracts are crucial since many contracts inflict penalties for delays. Product quality is paramount as well, forming a core element in building lasting business relationships.