Epoxy
January 13, 2021
Truck Orders Surge
December Class 8 Truck Orders Are The Fourth Highest In History
by Tyler DurdenWednesday, Jan 13, 2021 – 5:35
Class 8 truck net new orders in December were the fourth highest in history at 50,900 units, down 2% MoM but up 153% YoY. Seasonally adjusted orders in the month came in at 39,500 units (474,000 SAAR), down 18% MoM. Orders were up 139% YoY to 142,000 units in Q4 (the second best quarter on record) and up 54% to 278,400 units in 2020.
As Alan Adler at Freightwaves writes, the surge in bookings reflects continued demand for consumer goods, an awakening of the manufacturing sector and robust fleet profits from tight freight capacity. A driver shortage is worsened by closed driving schools. Other drivers are sidelined because they failed drug tests. All of these factor into higher per-mile freight rates.
“As we at ACT [Research] can often be heard saying, ‘When carriers make money, they buy trucks,’” ACT President and senior analyst Kenny Vieth told FreightWaves.
The order strength in the last four months of the year made up for a stagnant order book in April and May, when the first wave of the coronavirus shuttered truck manufacturing plants and disrupted supply chains. But a V-shaped recovery took hold in late summer and plants laid on overtime to make up for delayed orders.
“Looking to 2021, with freight-intensive economic sectors like manufacturing coming on strong, and driver recruitment continuing to lag, carrier profitability should continue to accelerate, which bodes well for new vehicle demand,” Vieth said.
In a Thursday note from JPMorgan, the largest US commercial bank said it expects production of ~250,000 units in 2021 (up 17% YoY) and ~258,000 units in 2022 (up 3% YoY).
Should the economy fall victim to the worsening impact of the pandemic, fleets can cancel or retime orders. Order placements assure carriers of being assigned a build slot for their new trucks. As production backlogs grow, so does the time between order and delivery.
“Although we believe the tailwinds of still-strong consumer buying, likely to be boosted further by new stimulus checks, and inventory restocking will remain powerful in 1H21, a successful vaccine rollout and reopening of economies is likely to drive an aggressive shift in consumer dollars back to services,” Evercore ISI said in an investor note Thursday.
That could occur just as new trucks being ordered now are ready for delivery.
“To get two back-to-back order months over 50,000 is a stellar accomplishment, after previously seeing orders crater to under 5,000 units in April,” said Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence. “Now, 2021 has the potential to be an incredible recovery year.”
Orders for new dry vans and refrigerated trailers mirror the surge in the tractor orders that pull them. Flatbed orders are recovering more slowly. The September-November booking total amounted to the second-best three months in industry history. “The backlog is filled into Q4,” Dave Giesen, vice president of sales at Stoughton Trailers, told FreightWaves in December. “We will wait for the supply chain to catch up before we continue quoting as this is a long way out.”
Meanwhile, December demand for Class 5-7 trucks recorded its second-best ever volume at 35,100 units. Medium-duty orders rose 28% over November and 73% compared to last December.
“There is a symbiotic relationship between heavy-duty freight rates and medium-duty demand,” Vieth said. “Clearly, the shift in consumer spending from experiences to goods has been good for the providers of local trucking services as e-commerce has grown by leaps and bounds during the pandemic.”
https://www.zerohedge.com/markets/december-class-8-truck-orders-are-fourth-highest-history
January 13, 2021
Truck Orders Surge
December Class 8 Truck Orders Are The Fourth Highest In History
by Tyler DurdenWednesday, Jan 13, 2021 – 5:35
Class 8 truck net new orders in December were the fourth highest in history at 50,900 units, down 2% MoM but up 153% YoY. Seasonally adjusted orders in the month came in at 39,500 units (474,000 SAAR), down 18% MoM. Orders were up 139% YoY to 142,000 units in Q4 (the second best quarter on record) and up 54% to 278,400 units in 2020.
As Alan Adler at Freightwaves writes, the surge in bookings reflects continued demand for consumer goods, an awakening of the manufacturing sector and robust fleet profits from tight freight capacity. A driver shortage is worsened by closed driving schools. Other drivers are sidelined because they failed drug tests. All of these factor into higher per-mile freight rates.
“As we at ACT [Research] can often be heard saying, ‘When carriers make money, they buy trucks,’” ACT President and senior analyst Kenny Vieth told FreightWaves.
The order strength in the last four months of the year made up for a stagnant order book in April and May, when the first wave of the coronavirus shuttered truck manufacturing plants and disrupted supply chains. But a V-shaped recovery took hold in late summer and plants laid on overtime to make up for delayed orders.
“Looking to 2021, with freight-intensive economic sectors like manufacturing coming on strong, and driver recruitment continuing to lag, carrier profitability should continue to accelerate, which bodes well for new vehicle demand,” Vieth said.
In a Thursday note from JPMorgan, the largest US commercial bank said it expects production of ~250,000 units in 2021 (up 17% YoY) and ~258,000 units in 2022 (up 3% YoY).
Should the economy fall victim to the worsening impact of the pandemic, fleets can cancel or retime orders. Order placements assure carriers of being assigned a build slot for their new trucks. As production backlogs grow, so does the time between order and delivery.
“Although we believe the tailwinds of still-strong consumer buying, likely to be boosted further by new stimulus checks, and inventory restocking will remain powerful in 1H21, a successful vaccine rollout and reopening of economies is likely to drive an aggressive shift in consumer dollars back to services,” Evercore ISI said in an investor note Thursday.
That could occur just as new trucks being ordered now are ready for delivery.
“To get two back-to-back order months over 50,000 is a stellar accomplishment, after previously seeing orders crater to under 5,000 units in April,” said Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence. “Now, 2021 has the potential to be an incredible recovery year.”
Orders for new dry vans and refrigerated trailers mirror the surge in the tractor orders that pull them. Flatbed orders are recovering more slowly. The September-November booking total amounted to the second-best three months in industry history. “The backlog is filled into Q4,” Dave Giesen, vice president of sales at Stoughton Trailers, told FreightWaves in December. “We will wait for the supply chain to catch up before we continue quoting as this is a long way out.”
Meanwhile, December demand for Class 5-7 trucks recorded its second-best ever volume at 35,100 units. Medium-duty orders rose 28% over November and 73% compared to last December.
“There is a symbiotic relationship between heavy-duty freight rates and medium-duty demand,” Vieth said. “Clearly, the shift in consumer spending from experiences to goods has been good for the providers of local trucking services as e-commerce has grown by leaps and bounds during the pandemic.”
https://www.zerohedge.com/markets/december-class-8-truck-orders-are-fourth-highest-history
January 13, 2021
Asian Propylene Update
Asian propylene-naphtha spread crunches to 4-month low on naphtha upswing
Highlights
Naphtha prices rise on robust demand, crude uptick
Propylene prices weaken as buyers retreat
- Author
- Wanda Wang Melvin Yeo
- Editor
- Wendy Wells
Singapore — Asian naphtha prices strengthening to an almost 12-month high as propylene prices weaken has narrowed the propylene-naphtha spread to a four-month low, S&P Global Platts data showed Jan. 13.
The spread between FOB Korea propylene and naphtha C+F Japan cargo assessments narrowed $7.75/mt day on day to $424.25/mt at the Jan. 12 Asian close. The spread was lower on Sept. 4, 2020, at $420/mt, Platts data showed.
The typical breakeven level for propylene production is around $250/mt, and the Asian propylene-naphtha spread has remained above this level since Jan. 9, 2020, Platts data showed.
Feedstock naphtha, used by steam crackers to produce propylene has been on a crude-driven price uptrend, which pushed benchmark naphtha C+F Japan cargo up $7.75/mt day on day to $525.75/mt at the Asian close Jan. 12, a level last higher on Jan. 24, 2020, at $531.75/mt, Platts data showed.
Crude prices have firmed in response to the recent production cut by Saudi Arabia, vaccine rollouts and stimulus hopes.
Front month March Brent crude futures were assessed at $55.98/b at the Asian close Jan. 12, up $2.05/b week on week, Platts data showed. Front month Brent crude at the Asian close had averaged $50.11/b in December and $43.62/b in November, Platts data showed.
In addition, naphtha demand is robust as petrochemical makers are keen to run their naphtha-fed steam crackers at full or close to full capacity on positive olefin margins. Moreover, winter demand has boosted LPG to a premium to naphtha, making it uneconomical as an alternative cracker feedstock, sources said.
PROPYLENE UNDER PRESSURE
Propylene prices have been weighed down by thin trading activity, the availability of cheaper domestic cargoes in China, and weakness in polypropylene, sources said.
The CFR China propylene price was assessed steady day on day at $975/mt Jan. 12 and down $40/mt month on month, while the FOB Korea marker was unchanged day on day at $950/mt and down $20/mt month on month, Platts data showed.
Chinese buyers were putting import spot purchases on hold as they were expecting prices to soften when South Korean majors YNCC and LG Chemical restart cracker operations later this week. Weaker downstream polypropylene futures were also impacting their buying interest.
The planned restarts of naphtha-fed steam crackers in January and February are slated to increase propylene supply, sources said.
China’s Fujian Meide is also expected to produce on-spec propylene from its new PDH plant in Fujian province this month, and this is expected to add further pressure on import prices, sources said.
January 13, 2021
Asian Propylene Update
Asian propylene-naphtha spread crunches to 4-month low on naphtha upswing
Highlights
Naphtha prices rise on robust demand, crude uptick
Propylene prices weaken as buyers retreat
- Author
- Wanda Wang Melvin Yeo
- Editor
- Wendy Wells
Singapore — Asian naphtha prices strengthening to an almost 12-month high as propylene prices weaken has narrowed the propylene-naphtha spread to a four-month low, S&P Global Platts data showed Jan. 13.
The spread between FOB Korea propylene and naphtha C+F Japan cargo assessments narrowed $7.75/mt day on day to $424.25/mt at the Jan. 12 Asian close. The spread was lower on Sept. 4, 2020, at $420/mt, Platts data showed.
The typical breakeven level for propylene production is around $250/mt, and the Asian propylene-naphtha spread has remained above this level since Jan. 9, 2020, Platts data showed.
Feedstock naphtha, used by steam crackers to produce propylene has been on a crude-driven price uptrend, which pushed benchmark naphtha C+F Japan cargo up $7.75/mt day on day to $525.75/mt at the Asian close Jan. 12, a level last higher on Jan. 24, 2020, at $531.75/mt, Platts data showed.
Crude prices have firmed in response to the recent production cut by Saudi Arabia, vaccine rollouts and stimulus hopes.
Front month March Brent crude futures were assessed at $55.98/b at the Asian close Jan. 12, up $2.05/b week on week, Platts data showed. Front month Brent crude at the Asian close had averaged $50.11/b in December and $43.62/b in November, Platts data showed.
In addition, naphtha demand is robust as petrochemical makers are keen to run their naphtha-fed steam crackers at full or close to full capacity on positive olefin margins. Moreover, winter demand has boosted LPG to a premium to naphtha, making it uneconomical as an alternative cracker feedstock, sources said.
PROPYLENE UNDER PRESSURE
Propylene prices have been weighed down by thin trading activity, the availability of cheaper domestic cargoes in China, and weakness in polypropylene, sources said.
The CFR China propylene price was assessed steady day on day at $975/mt Jan. 12 and down $40/mt month on month, while the FOB Korea marker was unchanged day on day at $950/mt and down $20/mt month on month, Platts data showed.
Chinese buyers were putting import spot purchases on hold as they were expecting prices to soften when South Korean majors YNCC and LG Chemical restart cracker operations later this week. Weaker downstream polypropylene futures were also impacting their buying interest.
The planned restarts of naphtha-fed steam crackers in January and February are slated to increase propylene supply, sources said.
China’s Fujian Meide is also expected to produce on-spec propylene from its new PDH plant in Fujian province this month, and this is expected to add further pressure on import prices, sources said.
January 13, 2021
PPG to Acquire Versaflex
PPG to Acquire Coatings Manufacturer VersaFlex
January 05, 2021
PITTSBURGH–(BUSINESS WIRE)– PPG (NYSE:PPG) today announced that it has reached a definitive agreement to acquire VersaFlex, a manufacturer specializing in polyurea, epoxy and polyurethane coatings for water and waste water infrastructure, flooring, transportation infrastructure, and industrial applications. VersaFlex is a portfolio company of DalFort Capital Partners. The transaction is expected to close in the first quarter of 2021, subject to customary closing conditions. Financial terms were not disclosed.
“VersaFlex’s attractive segment mix with strong growth outlook, unique product offering, broad expertise, and manufacturing capabilities in polyurea and flooring coatings will complement and expand upon PPG’s current product offering,” said Ram Vadlamannati, PPG senior vice president, protective and marine coatings (PMC) and president, Europe, Middle East and Africa. “This acquisition supports PPG’s commitment to growing our industry-leading technology portfolio and customer touchpoints.”
VersaFlex is an aggregation of four U.S.-based protective coatings companies, consisting of legacy VersaFlex, Raven Lining Systems, Milamar Coatings and Specialty Products, Inc., which were acquired by DalFort Capital from 2017-2019. VersaFlex has approximately 130 employees and its full year 2020 revenue is expected to be approximately $70 million. The company operates three manufacturing sites located in Kansas, Oklahoma and Washington.
PPG: WE PROTECT AND BEAUTIFY THE WORLD™
At PPG (NYSE:PPG), we work every day to develop and deliver the paints, coatings and materials that our customers have trusted for more than 135 years. Through dedication and creativity, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. With headquarters in Pittsburgh, we operate and innovate in more than 70 countries and reported net sales of $15.1 billion in 2019. We serve customers in construction, consumer products, industrial and transportation markets and aftermarkets. To learn more, visit www.ppg.com.
About DalFort Capital Partners
DalFort Capital Partners is a sector-focused investment firm based in Dallas, Texas, specializing in partnering with entrepreneurs and management teams in the lower middle market. The company works collaboratively to strengthen a company’s strategic and financial position through operational improvements and acquisitions of complementary businesses. DalFort specialize in identifying and executing strategic add-on acquisitions for our portfolio companies that enhance the company’s relationship with existing customers and expand its reach into new geographies or market niches.
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