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March 11, 2021
US BDO ‘on brink of being completely out of control’, contributing to auto supply chain crunch
Author: Antoinette Smith
2021/03/10
HOUSTON (ICIS)–Supply of US butanediol (BDO) and derivatives is severely short, and among other issues is contributing to production constraints in the key automotive sector.
In particular, US supply of BDO derivative polytetramethylene ether glycol (PTMEG) is critically short, with an unanticipated government order requiring precedence over contract customers, according to numerous market sources.
PTMEG can be used to make spandex fibres and polyurethanes, such as thermoplastic polyurethane (TPU) elastomers, and urethane adhesives, sealants and surface coatings.
BDO derivative tetrahydrofuran (THF), a precursor to PTMEG, also may be subject to a separate government contract, according to sources, further tightening supply.
THF is the biggest outlet for BDO, in 2020 consuming more than 40% of US BDO production, according to the ICIS Supply and Demand Database.
For 2021 that share is projected to drop to 30%, as a result of the closure of producer Lycra (Shandong Ruyi) in late 2020, which reduced US BDO capacity by about 30%.
Global supply of BDO is extremely tight, with China’s average run rates reaching almost 75%, well above the balance point of 60%, and leading to lower run rates for downstream polybutylene terephthalate (PBT) in the region.
“Demand is incredibly high, and every pound that goes out is going to go somewhere,” said one US seller.
“We’re at the brink of being completely out of control,” said another, describing the fragile market balance.
Shortages of BDO as well as co-feedstock isocyanates and other chemicals could lead downstream plants to go idle.
One downstream plant was running out of BDO, said a buyer, while another was “limping along” due to lack of isocyanates.
The BDO scarcity and strong demand have led to hefty price increase nominations for Q2 contracts of 45-60 cents/lb.
OUTLOOK
The concurrent shortage of isocyanates could limit demand for BDO, and help the market rebalance more quickly.
Supply should soon increase, with the restart of LyondellBasell’s upstream propylene oxide/styrene monomer (PO/SM) plant in Channelview, Texas, following planned maintenance and a winter storm.
The company also produces BDO at the site.
The two other US producers were physically unaffected by the storm, but logistics – loadings and transportation – are causing problems, due to driver and truck shortages.
“You can be sitting on material but no one is able to get there” to deliver it, a producer said.
ICIS senior analyst Rob Peacock said the current supply situation for polyurethanes (PU) feedstocks – which include BDO – could well contribute to production disruptions in the auto industry.
“Auto supply chains will struggle with other polymers and plastics, as well as microchips and other bits, but definitely will with PU chemicals as the volume out is relatively large, and the rest of the world has tightened up,” Peacock said.
AUTOMOTIVE SUPPLY CHAIN TIGHTENS
Shortages throughout the supply chain are forcing automotive plants to lower production and furlough workers, and could even spill into Q2, according to industry experts LMC Automotive.
The impact could be that global production makes only a limited recovery in 2021 compared with 2020, say Jincy Varghese, ICIS demand analyst, and Rhian O’Connor, ICIS senior analyst.
A semiconductor shortage as a result of increased pandemic-related demand for gaming consoles, laptop computers and other technology has slowed automotive production.
The US is among the worst hit by these shortages, as inventory levels are thin, say Varghese and O’Connor.
Ford, FCA, Volkswagen, General Motors, and Honda have all announced temporary factory closures over Q1 across the US, Canada and Mexico.
Oxford Economics estimates this will result in a 230,000-unit hit in the region for Q1.
The automotive industry has contributed to the US economic recovery, though to a lesser degree than the construction sector.
US January auto sales were up by 2.5% month on month, but remained lower year on year, according to US Bureau of Economic Analysis (BEA) data.
US passenger car production also slumped month on month in December, where data lags by a month, falling by more than 10% from the previous month. Year on year, US passenger car production is down by 9.3%, the BEA said.
BDO is a chemical intermediate used in the production of polymers, solvents and fine chemicals.
US BDO producers are Ashland, BASF and LyondellBasell.
March 11, 2021
US BDO ‘on brink of being completely out of control’, contributing to auto supply chain crunch
Author: Antoinette Smith
2021/03/10
HOUSTON (ICIS)–Supply of US butanediol (BDO) and derivatives is severely short, and among other issues is contributing to production constraints in the key automotive sector.
In particular, US supply of BDO derivative polytetramethylene ether glycol (PTMEG) is critically short, with an unanticipated government order requiring precedence over contract customers, according to numerous market sources.
PTMEG can be used to make spandex fibres and polyurethanes, such as thermoplastic polyurethane (TPU) elastomers, and urethane adhesives, sealants and surface coatings.
BDO derivative tetrahydrofuran (THF), a precursor to PTMEG, also may be subject to a separate government contract, according to sources, further tightening supply.
THF is the biggest outlet for BDO, in 2020 consuming more than 40% of US BDO production, according to the ICIS Supply and Demand Database.
For 2021 that share is projected to drop to 30%, as a result of the closure of producer Lycra (Shandong Ruyi) in late 2020, which reduced US BDO capacity by about 30%.
Global supply of BDO is extremely tight, with China’s average run rates reaching almost 75%, well above the balance point of 60%, and leading to lower run rates for downstream polybutylene terephthalate (PBT) in the region.
“Demand is incredibly high, and every pound that goes out is going to go somewhere,” said one US seller.
“We’re at the brink of being completely out of control,” said another, describing the fragile market balance.
Shortages of BDO as well as co-feedstock isocyanates and other chemicals could lead downstream plants to go idle.
One downstream plant was running out of BDO, said a buyer, while another was “limping along” due to lack of isocyanates.
The BDO scarcity and strong demand have led to hefty price increase nominations for Q2 contracts of 45-60 cents/lb.
OUTLOOK
The concurrent shortage of isocyanates could limit demand for BDO, and help the market rebalance more quickly.
Supply should soon increase, with the restart of LyondellBasell’s upstream propylene oxide/styrene monomer (PO/SM) plant in Channelview, Texas, following planned maintenance and a winter storm.
The company also produces BDO at the site.
The two other US producers were physically unaffected by the storm, but logistics – loadings and transportation – are causing problems, due to driver and truck shortages.
“You can be sitting on material but no one is able to get there” to deliver it, a producer said.
ICIS senior analyst Rob Peacock said the current supply situation for polyurethanes (PU) feedstocks – which include BDO – could well contribute to production disruptions in the auto industry.
“Auto supply chains will struggle with other polymers and plastics, as well as microchips and other bits, but definitely will with PU chemicals as the volume out is relatively large, and the rest of the world has tightened up,” Peacock said.
AUTOMOTIVE SUPPLY CHAIN TIGHTENS
Shortages throughout the supply chain are forcing automotive plants to lower production and furlough workers, and could even spill into Q2, according to industry experts LMC Automotive.
The impact could be that global production makes only a limited recovery in 2021 compared with 2020, say Jincy Varghese, ICIS demand analyst, and Rhian O’Connor, ICIS senior analyst.
A semiconductor shortage as a result of increased pandemic-related demand for gaming consoles, laptop computers and other technology has slowed automotive production.
The US is among the worst hit by these shortages, as inventory levels are thin, say Varghese and O’Connor.
Ford, FCA, Volkswagen, General Motors, and Honda have all announced temporary factory closures over Q1 across the US, Canada and Mexico.
Oxford Economics estimates this will result in a 230,000-unit hit in the region for Q1.
The automotive industry has contributed to the US economic recovery, though to a lesser degree than the construction sector.
US January auto sales were up by 2.5% month on month, but remained lower year on year, according to US Bureau of Economic Analysis (BEA) data.
US passenger car production also slumped month on month in December, where data lags by a month, falling by more than 10% from the previous month. Year on year, US passenger car production is down by 9.3%, the BEA said.
BDO is a chemical intermediate used in the production of polymers, solvents and fine chemicals.
US BDO producers are Ashland, BASF and LyondellBasell.
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
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