Talks with the founders of Singaporean-born traders
Local going global
Kelvin Sim, CEO, Absotech
Could you introduce Absotech? Founded in 2002, Absotech is an established player with 20 employees and a diversified business model focused on value-addition. Like most traders, our traditional business has been to buy and sell in bulk, making modest margins. In this part of the business, we leverage our know-how, our inventories, and long-term relationships with regular customers to offer them more stability of supply, especially when prices shoot up. However, this model is often unsustainable, as the collapse of giants like Hin Leong Trading and Ocean Tankers, once two of Asia’s largest oil trading and shipping firms, proved.
How has Absotech diversified? Back in 2008, I began developing the business in solvent trading: We buy butyl cellosolve or butyl glycol, as well as their by-products to do a proprietary blend formulation, which we ship into different industries, including O&G, construction and agriculture. Because the prices are stable and the contracts are typically at less than three months, this business is quite balanced, with substantial margins to cover periods of inflation. The proprietary blend business represents a substantial amount of our revenue today and is a central focus for our business going forward. In Singapore, Absotech is among the more reliable companies offering this service, and the entry barriers for potential competitors are very high, which gives us an element of exclusivity.
What is your geographic focus? Our priority is Asia Pacific simply because this territory is the most efficient in terms of our supply chain. We would like to expand with a second operation outside of Singapore, because, ironically, once we will grow by 30-50% in Singapore, our compliance costs will grow, which will actually hinder our growth.
What is your vision for the company? My vision for Absotech is to be sustainable in the long-term and evolve with new developments every five to 10 years as we have done, first by introducing the solvent trading distribution, then the proprietary blend, and, hopefully, further supplementing our growth with small-scale LNG.
Nikunj Parekh, Founder and CEO, Kempar Energy
Can you introduce Kempar? Kempar Energy was born 12 years ago out of a vision to start an independent trading company specialized in large-scale chemical commodities. Among the big trading players from China, Korea, Thailand, Japan and Europe that were mostly focused on polymers, agrochemicals, and specialty chemicals, we found a gap for a niche, SME trader in the bulk liquid Indian market. At that point in time, Indian demand was met by large international traders, but over the years, these gradually focused more on upstream, big volume trading of crude, naphtha, benzene and paraxylene. This created a vacuum for lower-volume trading in aromatics and solvents, a space we successfully occupied. Today, we are working together rather than in competition with big trading houses like Trafigura or Reliance, who are either clients or suppliers.
Could you elaborate on your portfolio? Kempar’s presence is Asian-centric. We buy liquid petrochemicals from Singapore, Malaysia, Thailand, Korea, China, Taiwan and Japan (and sometimes also from India, the US and Europe), and sell mostly in India – 70% of our volumes go to the Indian market, and the remaining to Southeast Asia and the Middle East. Product-wise, we have a well-defined portfolio of up to 10 commodities, including toluene, xylene, benzenes and benzene derivatives, as well as gasoline components like Pygas. Trading at a capacity of 600,000 t/y, we closed 2021 with a revenue of US$350 million and we expect to reach up to US$400 million this year. Last year we increased our trading volumes from 400,000 t/y (in 2020) to 600,000 t/y, which coincided with a top line of US$350 million. While on track to becoming a half a million (USD) company, we maintain a lean cost structure and agile decision-making.
What's your growth strategy? We are not rushing; we want to grow steadily as we have done so far by sustainably increasing our volumes and building our relationships with stakeholders. As the company grows organically, we want to expand our footprint to new regions like Vietnam, and recruit the right people.