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Chemical giants to form online marketplace

A collection of international chemical companies agree to build an online marketplace in a move that may threaten existing start-ups in the industry.

A collection of international chemical companies have agreed to build an online marketplace in a move that may threaten existing Internet start-ups in the industry.

The big-name firms--including DuPont, Dow Chemical, Rohm & Haas, BASF and Mitsubishi Chemical--plan to spend $150 million over two years to build the site, aiming to open for business by the end of the year.

The venture will allow companies to buy and sell basic chemical raw materials as well as specialized chemicals used in food, drugs and cosmetics, the companies said in a joint statement. Companies will also be able to arrange logistics like financing and transportation using the exchange.

The potential size of the marketplace and the heavyweights backing it pose a threat to smaller chemical marketplaces, said Tom Harwick, an analyst at Giga Information Group.

"In order for the smaller, existing marketplaces out there to survive, they are going to have to find ways to differentiate themselves or interconnect with the larger marketplace."

The chemical market is already served by a number of exchanges and marketplaces, such as ChemConnect and e-Chemicals. The companies said the new venture will be an independent company, launched in July, with its own management team and board of directors.

The consortium said the new venture, which hasn't been named yet, will address inefficiencies in the supply purchasing and selling process.