CDT Cartastrophe: Europe Will Run Out First

Bertel Schmitt
by Bertel Schmitt
cdt cartastrophe europe will run out first

Europe’s car industry, already in the midst of Mediterranean meltdown, will be first to suffer the big resin famine, says a Credit Suisse report. European carmakers will have to stop the lines first unless alternatives are found for key component CDT. After the explosion of a key factory in Germany, automakers may soon find themselves without fuel and brake lines. Some sooner, some later.

According to Reuters, the global supply of PA-12 was already stretched thin before the explosion. Bloomberg, which currently owns the resin beat, cites Chris Ceraso, a New York-based analyst for Credit Suisse. He writes today in a report that global capacity to make PA-12, also called Nylon-12, may have been cut by as much as half. Evonik and France’s Arkema are two of only four global sources of Nylon-12. Says Ceraso:

“European users will be the canary in the coal mine for this problem. Industrial customers there are much more likely to keep comparatively thinner inventories and don’t have the benefit of large amounts of materials in transit. This means that the most immediate supply disruptions are likely to surface in Europe.”

Automakers in North America are likely sitting on one month of supply of the resin PA-12.

Ceraso figures that European-based makers will take the brunt of the shortage, followed to a slightly lesser extent by North American and South American customers.

Automakers in Japan are likely to avoid “large-scale” disruptions (this time) because suppliers carry several months’ supply, Takashi Moriwaki, a Deutsche Bank AG analyst, wrote in a research note yesterday.

European carmakers carry next to no inventories. Also, large parts of European sales are built to order, meaning immediate disruption.

The blow to U.S. carmakers will come four weeks later. Some, especially GM, sit on more than two months of inventory. If the resin shortage is prolonged, the formerly toxic inventory would make GM look like the hero.

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3 of 11 comments
  • Jthorner Jthorner on Apr 21, 2012

    Contrary to the business fads of the past two decades, strategic supply inventories are not always a bad thing.

  • Blowfish Blowfish on Apr 21, 2012

    Aren't brake lines are made out of metal? or these new brake lines made out of nylon 12?

    • Highdesertcat Highdesertcat on Apr 21, 2012

      The flexible portion of each brake line, i.e. from the caliper to the metal hard-line is made of nylon. It's better than the re-enforced rubber lines they used in days of old. Rubber cracks. From the master cylinder to the Anti-Lock valves it's metal, and from there to each wheel along the body it is also metal. The flex lines SHOULD be replaced whenever you do a major brake system overhaul (as in master cylinder, calipers, discs), but most people don't keep their vehicles long enough to require that. But for collectors and restorers, rebuilding the brake system is common. Even Nylon will eventually harden and split under pressure.

  • Random1 Pretty excited about this update, I didn't see it available in mine this morning, but any day now... I think only Apple maps will be on the center display, and not Waze yet, but I assume that'll come soon enough. As to the unnecessary Tesla comment above : I'll take the build quality, the looks, and generally normal items that all cars should have over the M3 any day of the week.
  • Jonathan H. The ES production is going back to Japan so it's safe to assume its assembly building will be utilized for the new EV. Seems like a good fit for what will probably be fairly low volume compared to the Camry/Rav4 assembly lines.
  • NotMyCircusNotMyMonkeys how many are shorting this 23 cent (really!) stock?
  • Bobbysirhan These prices will make more sense by the end of July.
  • Kcflyer It fits perfectly in the you will have nothing and be happy agenda. Eliminate affordable transportation for the middle class. The ultra rich will have stuff like this.