Somewhere in every chemical procurement function there is a spreadsheet nobody wants to open. It reconciles what we budgeted against what we actually paid, and the variance column is where careers go to be explained.
I’ve spent 27 years on the buying side of that spreadsheet, and I’ve come to think the profession has a blind spot about price data. We treat subscribing to a price reporting agency as the end of the problem. In my experience it’s the beginning of a different one.
Let me be precise about what price benchmarking is worth first, because the case is real. It gives a negotiation a floor and a ceiling — and it’s worth remembering that the person across the table already has one. Their commercial team subscribes too. Information asymmetry is never neutral, and it has never once favoured me. It makes index-linked contracts possible, which is the only mechanism I know that stops a volatile input from becoming a quarterly argument. It lets me judge a supplier honestly: an 8% increase means nothing until I know the market moved 3%. And it finds leakage — almost never in the two commodities everyone watches, almost always in the eighty long-tail items nobody has priced in three years.
So I’m not arguing against benchmarking. I’m arguing that the benchmark most of us buy was built for someone else.
Assessments are built for traders, not buyers
The price reporting agencies — Platts, ICIS, Argus — are serious institutions, and I want to give them their due. Between them they publish over a hundred thousand assessments a week. Platts assessments are so embedded in the industry’s contractual fabric that even firms who criticise the methodology keep referencing them, and they’re right to: for settlement, there is no substitute. Argus was the first to apply IOSCO principles to its energy benchmarks, and when OPEC producers switched to its sour crude index for US sales, that was the market voting on methodology. ICIS runs a rolling public consultation on its methodologies that is, frankly, better governance than most of my own suppliers manage.
None of that is in question. What’s in question is who the output was designed for.
A benchmark exists to settle a contract. It needs to be defensible, liquid and singular. My job needs something different: it needs to be specific. And those two requirements pull in opposite directions.
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Three places the gap shows up
The region isn’t my market. I’ve watched a colleague in Jakarta try to negotiate against a CFR Southeast Asia assessment. Southeast Asia isn’t a market — it’s a shipping convenience. Indonesian, Thai, Vietnamese and Malaysian delivered prices diverge on duty, domestic capacity, port economics, currency and local demand, and they don’t diverge by a constant you can carry in your head. He was negotiating against the average of markets he wasn’t in. His supplier knew exactly what the material landed at in Jakarta. That’s not a fair fight.
This isn’t a failure of rigour — it’s the consequence of it. Assessments cluster where trade is liquid enough to defend a number. Where it isn’t, the region stands in for the country. Methodologically sound. Commercially useless to whoever is raising the PO.
“We cover methanol” isn’t one number. It’s a matrix — grades, purities, incoterms, ports. The agencies assess the cells that anchor contracts. I buy the cells that feed my plant. Those overlap less often than the coverage list implies, and the gap is invisible until you go looking for your exact specification and find a neighbouring one.
The question I don’t ask. Last year I wanted methanol across India, China, the US, Saudi Arabia and Germany — an ordinary question. It was five extractions, a spreadsheet and most of an afternoon, and two of the five countries weren’t assessed at all, so the afternoon bought me a gap. Here’s what nobody puts in a business case: questions that cost an afternoon stop being asked. Across a category team, that unasked-question tax dwarfs whatever you’re paying for the subscription.
What I run now
A stack, not a supplier.
The incumbent stays where the contract demands it. If naphtha settles against Platts, it settles against Platts — that entrenchment is a feature and I’m not paying to fight it.
For everything else — the long tail, the country-level view, the comparison I want to run before a call rather than after it — I’ve moved to platform-native coverage. ChemAnalyst is the one I use: it prices at country level rather than regional aggregate across a substantially wider commodity set, carries the demand-supply and trade data next to the price so a move comes with its cause attached, and answers the five-country question in a dropdown instead of an afternoon.
And I’ll be straight about the trade-off, because I’d want someone to be straight with me. A newer platform doesn’t carry three decades of contractual entrenchment. You won’t settle a term contract against it because the market hasn’t agreed to, and that inertia is real. What it does is cover the ninety-plus percent of my spend that no benchmark was ever going to settle anyway.
What I’d tell a CPO taking over a category tomorrow
Fix the reference at contracting, not during the dispute. Track your delta to the benchmark, not the price. And before you renew any data subscription, run one honest audit: list the countries you actually take delivery in and the grades you actually run, then check how many of them your provider assesses.
Most people are surprised. I was.
Author: Chris White is chief procurement officer at . PriceBu. Email him at chris.white@pricebu.com or call him at 1-403-680-4116. Address: 419 Lexington Avenue, New York, USA.
