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For 14 years, I have worked in one of the base chemicals' most cyclic markets, titanium dioxide ("TiO2"). The cycle between recessions and recovery was about 4 years. And this rollercoaster would oftentimes have a "sawtooth" shape, a rapid decline into recession and a long, slow recovery.
In a recession, sales people would hammer out several visits a day and usually be made waiting for an hour in reception. In times of product shortness, sales people would see fewer customers but had open doors everywhere. Especially, when the topic developed away from successive 200€ /t price increases to timed product allocations and, finally, reduced supply. Ah, sweet memories! If only this time around, I would not be in a buyer's position!
You see, titanium dioxide plants cannot operate in a wide range of occupacities. This is why large volume accounts (usually big paint companies), who provide the needed base load to fill the plants, typically have been the dearest customers in the TiO2 industry. In those times of shortness, countless fights are fought internally to the favour of respective customers with larger volume, higher prices, better geographic fit and more strategic alignment.
But this exactly is the ONLY thing TiO2 suppliers (or other industries) can do in a distributive market: A strategic remix of the customers, shifting to a more favourable and profitable mix. And of course, trying to tie in that new position for as long as possible. Suppliers can honour a good customer position in the recession with better supplies during product shortness. That of course also requires the same strategic long term vision on the customer side!
Strategic customer positioning will become even more important because of the ongoing consolidation in the sector (TRONOX / Cristal) and the still existing technology / IP gaps between the 5 tier 1 suppliers and import players.
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