The Power of Digital Procurement: The Olefin Furnace Tube Case Study
Recovering the maximum wealth from used alloy-based olefin furnace tubes created hurdles. In this case study, the seller engaged Requis’ innovative technologies and knowledgeable, result-focused professionals to execute an online sale and achieve financial KPI goals.
The seller needed a unique solution to liquidate over 143 metric tons (MT) of used specialty olefin furnace tubes and Paralloy’s high-integrity cast-alloy equipment. Due to material composition and high-precision manufacturing processes, the surplus equipment had an elevated initial cost and substantial resale value. To meet this seller’s internal requirements, the Requis Circularity team developed a unique outreach to find the right buyer and the highest return for the surplus inventory.
“The seller turned to Requis as its Investment Recovery vendor to market and engage with its global network of buyers to drive competition for these high value assets,” said Mahen Subramaniam, sales manager, APAC, Requis.
Highlights:
- Single buyer
- Bids surpassed reserve prices by 1.5 and 2.5 times the approved estimates
- The final sale exceeded USD 1.184 million
Results
Through Requis’ platform, Petronas Chemical Olefin Sdn Bhd (PCOSB) sold used olefin furnace tubes and the Paralloy equipment. Requis advised using two lots to maximize interest. In addition, PCOSB imposed reserve prices. The seller received thirteen sealed bids through an engaged direct contact program by Requis Sales Manager.
The highest bids for the furnace tubes and Paralloy items were USD 1.142 million and USD 86,868, respectively. Both offers were 1.5 times and 2.5 times above the approved reserve price. More importantly, the seller accepted the highest bid of USD 1.184 million (MYR 5.137 million) for both lots.
In this case, the bids were valid for one week after submission. In addition, prompt approval from the seller supported expediting the sale agreement and shipping of the materials from the site.
The Challenge
The seller had used olefin furnace tubes and Paralloy specialty equipment at its Kerteh, Malaysia, location. Instead of scrapping the equipment, PCOSB contacted Requis to explore other options to maximize the initial investment recovery.
Volatility in the metals marketplace influenced the resale value of the specialty alloy equipment and buyers’ interest and bids.
Shipping and logistics expenses were significant cost factors. For example, the furnace tube lot weighed approximately 132 MT, and the Paralloy equipment weighed 11 MT.
Other challenges encountered during this sale included:
- An extended period between the closing in January and issuing the sale agreement and invoice from the seller to the buyer in late February.
- More personal follow-ups were necessary with the seller during the post-sale process, including approval, sale agreement, and invoicing.
- The buyer requested a refund due to weight shortage after loading. The weight shortage was within the +/- 5% discrepancy clause for the lots; consequently, Requis and the seller rejected the claim.
The Solution
After reviewing inventory lists and photos, Requis suggested a seal-bid program and separating the surplus equipment into two lots. The estimated pricing was:
- Furnace tubes (35 Cr-45Ni-Nb material): USD 5,350/MT-USD 5,450/MT
- Paralloy items (25Ni-35Cr material): USD 2,950/MT-USD 3,060/MT.
Requis used its customer-centric services to simplify the bidding process. In addition, the project applied a target-buyer approach. More importantly, a Requis’ Sales Manager engaged in a personal contact program with calls and messaging to potential buyers.
The online auction produced significant responses:
- Over 33 target buyers participated in the online bidding.
- Interest buyers were from Canada, India, Malaysia, Oman, Qatar, Singapore, the United Arab Emirates, Vietnam, and the United States of America.
- Thirteen bids were obtained.
- The cumulative bids for both lots surpassed the seller’s reserve prices.
The Impact
In this case, the Requis solution combined reliable, pioneering platforms and high-energy personal customer service to oversee the bidding process through the final sales agreement and shipping details.
“Requis relationships with both the seller and buyer to see this high value sale get across the finish line was quite critical for all parties involved to achieve their objectives,” Mahen added.
Through its strategic partnerships, Requis gives enterprises better options to manage their surplus assets while providing them the power to access over 10,000 registered suppliers and a level of engagement that suits their needs.
For more about this case study and to discuss your specific needs, contact:
Nick Abueita: nick.abueita@requis.com
Mahen Subramaniam: mahen.subramaniam@requis.com