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Everchem Updates
VOLUME XXI
September 14, 2023
Everchem’s exclusive Closers Only Club is reserved for only the highest caliber brass-baller salesmen in the chemical industry. Watch the hype video and be introduced to the top of the league: — read more
March 11, 2021
NIH Allergy Asthma Guidelines No Longer Dictate Carpet Removal
Dalton, GA, March 2, 2021––The National Institutes of Health’s (NIH’s) National Heart, Lung, and Blood Institute (NHLBI) released the “2020 Focused Updates to the Asthma Management Guidelines,” new federal guidelines regarding the best treatments for asthma and allergies on December 3, 2020. The guidelines have been updated and do not recommend removing carpet as a way to treat asthma and allergies.
“We’re pleased that these new guidelines recognize the most up-to-date science on carpet and indoor air quality,” said Joe Yarbrough, president, CRI. “CRI’s work has been instrumental in highlighting the studies that support this update, which is a positive development for our industry.”
The federal guidelines are used by public and private stakeholders, including other federal and state agencies along with the medical community.
“Beginning in 2013, a CRI task group comprised of subject matter experts from our industry worked to gather and submit science and data to NIH,” Yarbrough said. “Their work was instrumental in this initiative for the industry.”
CRI submitted studies that found carpet can improve indoor air quality by keeping particles out of the breathing zone until they can be removed through regular cleaning. The preponderance of research indicates that carpet has a positive impact on air quality.
Listen to the interview with Joe Yarbrough here.
March 11, 2021
NIH Allergy Asthma Guidelines No Longer Dictate Carpet Removal
Dalton, GA, March 2, 2021––The National Institutes of Health’s (NIH’s) National Heart, Lung, and Blood Institute (NHLBI) released the “2020 Focused Updates to the Asthma Management Guidelines,” new federal guidelines regarding the best treatments for asthma and allergies on December 3, 2020. The guidelines have been updated and do not recommend removing carpet as a way to treat asthma and allergies.
“We’re pleased that these new guidelines recognize the most up-to-date science on carpet and indoor air quality,” said Joe Yarbrough, president, CRI. “CRI’s work has been instrumental in highlighting the studies that support this update, which is a positive development for our industry.”
The federal guidelines are used by public and private stakeholders, including other federal and state agencies along with the medical community.
“Beginning in 2013, a CRI task group comprised of subject matter experts from our industry worked to gather and submit science and data to NIH,” Yarbrough said. “Their work was instrumental in this initiative for the industry.”
CRI submitted studies that found carpet can improve indoor air quality by keeping particles out of the breathing zone until they can be removed through regular cleaning. The preponderance of research indicates that carpet has a positive impact on air quality.
Listen to the interview with Joe Yarbrough here.
March 11, 2021
By Rajesh Kumar Singh
CHICAGO (Reuters) – An aerospace parts maker in California is struggling to procure cold-rolled steel, while an auto and appliance parts manufacturer in Indiana is unable to secure additional supplies of hot-rolled steel from mills.
Both companies and more are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply in the United States and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low, according to data from the Census Bureau. The benchmark price for hot-rolled steel hit $1,176/ton this month, its highest level in at least 13 years.
Soaring prices are driving up costs and squeezing profits at steel-consuming manufacturers, provoking a new round of calls to end former President Donald Trump’s steel tariffs.
“Our members have been reporting that they have never seen such chaos in the steel market,” said Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users.
The group, which represents more than 30,000 companies in the manufacturing sector and downstream supply chains, this month asked President Joe Biden to terminate Trump’s metal tariffs.
Domestic steel mills that idled furnaces last year amid fears of a prolonged pandemic-induced economic downturn have been slow in ramping up production, despite a recovery in demand for cars and trucks, appliances, and other steel products. Capacity utilization rates at steel mills – a measure of how fully production capacity is being used – has moved up to 75% after falling to 56% in the second quarter of 2020 but is still way below 82% in last February.
Steel shipments are up, but still below last year’s levels.
A TIGHT STEEL MARKET
Steel producer Steel Dynamics last month said it can’t get enough flat-roll sheets even for its own internal operations.
“It is very frustrating,” said Hale Foote, president at California-based aerospace parts maker Scandic Springs. “I am looking at great business…but I don’t have any material supply.”
Scandic Springs faces the risk of losing a $1 million annual contract as it can’t find a domestic supplier ready to supply 240,000 pounds of cold-rolled steel.
Indiana-based Stone City Products, which supplies components to appliance and automotive companies, is also hard-pressed to procure 2 million tons of hot-rolled steel a year for a new project.
The company has seen a dramatic turnaround in business after the pandemic lows in the second quarter of 2020 when orders plunged 50%. Its order book is now 25% above pre-pandemic levels.
To keep up, it is running its factories seven days a week and has increased headcount by 40%. But steel that used to get delivered in eight weeks last year now takes 12-16 weeks. Mills are not accepting requests for additional purchases.
“We have been hand to mouth with a lot of customer requirement,” said Stewart Rariden, the company’s president.
LUCKY TO BREAK EVEN
Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary – whether to absorb or pass along the increased cost.
“We’ll be lucky if we break even at this price,” said Stuart Speyer, president at Tennessee-based Tennsco. Steel costs for the manufacturer of lockers, bookcases and cabinets are up 98% in the past six months.
Whirlpool last month said increased steel costs would shave 150 basis points from its profit this year. Farm equipment maker AGCO and crane maker Terex have announced price increases to offset material costs.
In its “flash” purchasing managers survey for February, IHS Markit’s prices paid index for factories was the highest since 2011 and its gauge of prices received for finished products was the highest since 2008.
The run-up in steel prices comes at a time when the expectation of additional fiscal stimulus and a faster vaccine rollout is fueling fears of widespread inflationary pressure.
However, policymakers like Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen do not foresee a prolonged and broadbased rise in prices anytime soon with U.S. unemployment still well above pre-pandemic levels and more than 18 million Americans drawing some form of government jobless benefit.
AMERICAN VERSUS IMPORTED STEEL
Record-high prices, meanwhile, are turning out to be a bonanza for steel producers. Shares of American steel makers have gained 65% since last August. An analysis by rating agency Fitch shows U.S. steel makers enjoyed a profit margin of 45% in January. Nucor expects to post the highest-ever first- quarter profit.
Steel industry and union groups last month urged Biden to keep the steel tariffs in place, calling them ‘essential’ to the domestic industry. Steel producers are facing their own higher costs following a rise in scrap and iron ore prices.
U.S. steel prices are 68% higher than the global market price and almost double China’s, even with prices in both China and Europe up over 80% from their pandemic-induced lows.
The price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.
Logistical challenges, like container shortages, and thin overseas supply are keeping imports in check. But some distributors expect imports to pick up by June if the domestic market remains tight.
Uncertainty over the tariff outlook is one factor keeping the wraps on domestic steel output.
Angela Reed, an executive at Atlanta-based steel distributor Reibus International, says an expected review of the import restrictions is delaying a ramp-up in production and a build-up in inventories as easing of the curbs will likely drive down the domestic prices.
“(People) are trying to make sure that they don’t get hung with any of the higher-priced stuff,” Reed said.
(Reporting by Rajesh Kumar Singh; Editing by Andrea Ricci) https://finance.yahoo.com/news/u-manufacturers-grapple-steel-shortages-114741157.html
—
March 11, 2021
By Rajesh Kumar Singh
CHICAGO (Reuters) – An aerospace parts maker in California is struggling to procure cold-rolled steel, while an auto and appliance parts manufacturer in Indiana is unable to secure additional supplies of hot-rolled steel from mills.
Both companies and more are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply in the United States and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low, according to data from the Census Bureau. The benchmark price for hot-rolled steel hit $1,176/ton this month, its highest level in at least 13 years.
Soaring prices are driving up costs and squeezing profits at steel-consuming manufacturers, provoking a new round of calls to end former President Donald Trump’s steel tariffs.
“Our members have been reporting that they have never seen such chaos in the steel market,” said Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users.
The group, which represents more than 30,000 companies in the manufacturing sector and downstream supply chains, this month asked President Joe Biden to terminate Trump’s metal tariffs.
Domestic steel mills that idled furnaces last year amid fears of a prolonged pandemic-induced economic downturn have been slow in ramping up production, despite a recovery in demand for cars and trucks, appliances, and other steel products. Capacity utilization rates at steel mills – a measure of how fully production capacity is being used – has moved up to 75% after falling to 56% in the second quarter of 2020 but is still way below 82% in last February.
Steel shipments are up, but still below last year’s levels.
A TIGHT STEEL MARKET
Steel producer Steel Dynamics last month said it can’t get enough flat-roll sheets even for its own internal operations.
“It is very frustrating,” said Hale Foote, president at California-based aerospace parts maker Scandic Springs. “I am looking at great business…but I don’t have any material supply.”
Scandic Springs faces the risk of losing a $1 million annual contract as it can’t find a domestic supplier ready to supply 240,000 pounds of cold-rolled steel.
Indiana-based Stone City Products, which supplies components to appliance and automotive companies, is also hard-pressed to procure 2 million tons of hot-rolled steel a year for a new project.
The company has seen a dramatic turnaround in business after the pandemic lows in the second quarter of 2020 when orders plunged 50%. Its order book is now 25% above pre-pandemic levels.
To keep up, it is running its factories seven days a week and has increased headcount by 40%. But steel that used to get delivered in eight weeks last year now takes 12-16 weeks. Mills are not accepting requests for additional purchases.
“We have been hand to mouth with a lot of customer requirement,” said Stewart Rariden, the company’s president.
LUCKY TO BREAK EVEN
Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary – whether to absorb or pass along the increased cost.
“We’ll be lucky if we break even at this price,” said Stuart Speyer, president at Tennessee-based Tennsco. Steel costs for the manufacturer of lockers, bookcases and cabinets are up 98% in the past six months.
Whirlpool last month said increased steel costs would shave 150 basis points from its profit this year. Farm equipment maker AGCO and crane maker Terex have announced price increases to offset material costs.
In its “flash” purchasing managers survey for February, IHS Markit’s prices paid index for factories was the highest since 2011 and its gauge of prices received for finished products was the highest since 2008.
The run-up in steel prices comes at a time when the expectation of additional fiscal stimulus and a faster vaccine rollout is fueling fears of widespread inflationary pressure.
However, policymakers like Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen do not foresee a prolonged and broadbased rise in prices anytime soon with U.S. unemployment still well above pre-pandemic levels and more than 18 million Americans drawing some form of government jobless benefit.
AMERICAN VERSUS IMPORTED STEEL
Record-high prices, meanwhile, are turning out to be a bonanza for steel producers. Shares of American steel makers have gained 65% since last August. An analysis by rating agency Fitch shows U.S. steel makers enjoyed a profit margin of 45% in January. Nucor expects to post the highest-ever first- quarter profit.
Steel industry and union groups last month urged Biden to keep the steel tariffs in place, calling them ‘essential’ to the domestic industry. Steel producers are facing their own higher costs following a rise in scrap and iron ore prices.
U.S. steel prices are 68% higher than the global market price and almost double China’s, even with prices in both China and Europe up over 80% from their pandemic-induced lows.
The price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.
Logistical challenges, like container shortages, and thin overseas supply are keeping imports in check. But some distributors expect imports to pick up by June if the domestic market remains tight.
Uncertainty over the tariff outlook is one factor keeping the wraps on domestic steel output.
Angela Reed, an executive at Atlanta-based steel distributor Reibus International, says an expected review of the import restrictions is delaying a ramp-up in production and a build-up in inventories as easing of the curbs will likely drive down the domestic prices.
“(People) are trying to make sure that they don’t get hung with any of the higher-priced stuff,” Reed said.
(Reporting by Rajesh Kumar Singh; Editing by Andrea Ricci) https://finance.yahoo.com/news/u-manufacturers-grapple-steel-shortages-114741157.html
—
March 11, 2021
Logistics crisis to persist into Q3 as availability trumps pricing – Brenntag CEO
Author: Will Beacham
2021/03/11
BARCELONA (ICIS)–The global logistics crisis is expected to last at least until the third quarter of 2021, and is making availability of product more important than price, according to the CEO of Brenntag, the world’s largest distributor.
Global chemical supply chains are under intense pressure thanks to the US Gulf polar storm, which knocked out a significant proportion of production capacity there, and ongoing problems with shortages of shipping containers plus road transport delays.
The supply crunch has led to record-breaking prices and panic buying by some consumer industries which are desperate to maintain security of supply. Apart from the US storm damage, planned and unplanned outages elsewhere are adding to the problems.
In an interview with ICIS, Brenntag CEO Christian Kohlpaintner, said he expects the shipping logistics disruption to last at least until the third quarter of the year, though Brenntag itself has been able to maintain supplies to customers.
“Logistics costs and container prices are sky-rocketing by three to four times and we don’t see any relief over the next one or two quarters. It’s the China to Europe route but it’s the same everywhere – colleagues in Asia have been talking to shipping companies which indicated this will last well into Q3.”
Across many customer industries, maintaining security of supply has become most important. ICIS has reported that some downstream users may have to close production facilities because of a lack of feedstocks.
The problem is particularly acute for the US auto supply chain, which is running short of polyurethane (PU) feedstocks.
According to Kohlpaintner: “Today it is not product price which is decisive, it is product availability which is decisive. We have to behave very responsibly in times of shortages and maintain supply to the market, to fulfil contractual obligations.”
ICIS analysis shows that around 20% of US chemical capacity is still offline following February’s Gulf polar storm. Although plants are gradually restarting the disruption is expected to last for weeks or even months.
Kohlpaintner said Brenntag has been hit in the US by the storm with some of its facilities not operational for four to five days. “We could not ship to customers because of the polar storm. Now there are shortages in the market clearly visible which we are trying to navigate.”
US supply chains are constrained right now, he added, and it will take time to get product lines restarted and replenished.
Despite the ongoing logistics problems, Kohlpaintner said Brenntag’s size and reach means it has been able to maintain supplies to customers.
“Fortunately, for the time being we have not interrupted supplies to our customers. This is the strength of Brenntag with multiple supply chains and the ability to operate independently.”
He pointed out that strong competition to get reservations for space on containers is driving pricing up. The company is also experiencing short notice cancellations from shippers which means it has had to increase the use of air freight for critical products.
He said a key learning from the pandemic was the importance of maintaining these relationships. “The industry behaves very rationally and logically – it values long term relationships and that is the way it should be.”
He pointed out that the supply shortages have been made more challenging because underlying demand is good in almost all industries.
M&A UPDATE
In 2020 Brenntag only announced three acquisitions with a total enterprise value of €46m, yet the company sets aside €200m-250m/year for mergers & acquisitions (M&A) activity.
Kohlpaintner said the company is maintaining that €200m-250m guidance, but pointed out it is an average figure.
He added: “Last year was a challenge for M&A with Covid. The sector was very quiet for four to five months starting in March until September, then it quickly picked up again.”
Since the CEO took over at the start of 2020 he has sharpened its M&A focus on emerging markets, especially Asia and China in particular. He also targeting larger acquisitions, which give a meaningful boost to operating earnings.
The acquisition of China’s Zhongbai Xingye in January 2021 fits all these criteria, and is seen as the first step in this direction
Zhongbai Xingye distributes food ingredients and had annual sales of €146m in the 12 months to June 2020. Brenntag will first acquire a 67% stake, with an enterprise value of around €90m, in the first half of 2021. It plans to boost this to 100% by the end of 2024.
Kohlpaintner said: “The M&A market is now very vibrant and active. It’s a good time to sell for people who want to – multiples are very high, and people like us who want to act as consolidators are looking for opportunities.”
WORKING CAPITAL CONTROL
Kohlpaintner was unhappy with the way working capital had been employed, identifying a decline in the last half-decade years. He asked managers to improve focus on working capital and gave the CFO a clear role in managing it.
“Brenntag is very decentralised with local business and customer proximity a key strength. However we can ask housekeeping questions about inventory levels, and whether to keep slow-moving product lines – this is what we did in 2020.”
Trading conditions in 2020 allowed inventory to be kept under control: “We had massive volume declines in 2020, especially in the second quarter, then gradually recovering. But volumes were still well below 2019 and in this situation you can harvest working capital which had been tied up in inventory.”
CAUTION FOR 2021
In this week’s full year 2020 financial results, Brenntag gave 2021 earnings guidance of €1.08-1.18bn operating earnings before interest, tax, depreciation and amortisation (EBITDA) compared with €1.06bn last year. The guidance assumes an uplift from its Project Brenntag initiative, M&A contribution and stable exchange rates.
Kohlpaintner commented: “The first half is not yet clear – we have the impact of strained supply chains and we still have Covid shutdowns everywhere. I am more optimistic for H2 on the recovery.”
PROJECT BRENNTAG UPDATE
The CEO said Project Brenntag, which aims to boost profitability, is progressing to plan. Reporting for the two new divisions – Brenntag Essentials and Brenntag Specialties – will begin in the first quarter of 2021.
Of the 100 sites targeted for closure, 30 had been closed in 2020 while 200 out of 1,300 headcount reduction was achieved. The project gave a €15m contribution to operating earnings in 2020, which should rise to €220m/year from 2023.
CHEMONDIS TIE UP
Kohlpaintner sees the value in developing digital sales channels, and in October 2020 Brenntag signed a deal to put its brand on the CheMondis online marketplace. It also has its own digital sales channel, Brenntag Connect.
This is a pilot project, said Kohlpaintner: “It’s early days – we have agreed to put a booth on their marketplace. We want to understand how this additional channel to market will work. It’s clear that digital sales channels will gain importance so you will hear me talk more about this including Brenntag Connect.”
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