Jul 25, 2011

Chemical Companies Pursuing Municipal Water, Wastewater Markets

Hundreds of companies are bidding 70 different chemical compounds

More than 150 companies are actively bidding 70 different chemical compounds to municipal water and wastewater utilities in Canada and the United States. The purchasers include 60,000 utilities in the U.S. and 6,000 in Canada. These statistics were derived from three continually updated McIlvaine Co. online services.

Most of the bids are for one year. The most popular contract period is January-December and the second is July-June. Some of the contracts are for two years and a few for five years. Most utilities standardize on a schedule, so one can predict the next bid date based on the contract let for the current year.

Individual bids may have as many as 20 companies offering quotations. On the larger bids there are many manufacturers offering quotations. The small utilities typically receive bids from regional chemical distributors. The purchased quantities vary 1000-to-1 between the largest and smallest utilities.

There are both bulk chemicals and specialty chemicals being purchased. The bulk chemicals are purchased based on a specification of a specific compound. Specialty chemicals are purchased based on their performance. Utilities may limit the bidders for specialty chemicals based on their previous experience or even on trials, which have identified certain products as having the needed performance characteristics.

Some chemicals classified as bulk are often treated as specialty chemicals. One recent water utility rejected a bid for pebble lime of $120 per ton based on previous problems with debris and purity. The winning bidder quoted $133 per ton.

Other suppliers offered bids as high as $200 per ton. Some of the price variations are a function of distance between the production plant and the purchaser. The difference in price per ton varies greatly from chemical to chemical as well as geographic location.