By on April 20, 2012

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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11 Comments on “CDT Cartastrophe: Europe Will Run Out First...”

  • avatar

    …automakers may soon find themselves without fuel and brake lines…

    That didn’t stop GM from making Chevy Citations, did it?

    • 0 avatar

      I remember the “first Chevy of the 80s” but was there an issue with brake lines? Locking rear drums, yes. Did I miss something during the “bong” era?

  • avatar

    According to this AN(sub) article, Investa (maker of Stainmaster carpet) is boosting production CDT at their plant in Victoria, TX:

    I wonder if this will ease the pain any, or help U.S. carmakers.

  • avatar
    Speed Spaniel

    The panic!! I better cash in my retirement now and horde Audis and BMWs…..I think we now know the true meaning of the Mayan prophecy!

  • avatar

    Any Fanboys out there,does this sound familliar?

  • avatar

    First US Government, then earthquake in Japan, now Europe. If after all that luck Detroit does not dominate in its own backyard I do not know what else can help.

  • avatar

    CDT is not the only resin that can be used for brake lines. It may be the cheapest for use in cars and trucks but other resins are also used to make other types of brake and hydraulic lines, like the ones for the aircraft industry, for instance, and the heavy-construction equipment industry, for another, where higher pressures are common.

    The same stuff is used in the carpet industry or any other industry using nylon material. If nylon-12 runs short I’m sure the chemists will find a suitable alternative for it. It may cost more but no one will do without brake lines.

  • avatar

    About 12 years ago in my career, I worked with a fitting manufacturer that kept a full year’s worth of raw materials on hand, for just such a contingency. It also helped them moderate prices.

    This story is the downside of JIT, although I would have thought Nylon-12 was a commodity everybody produced.

  • avatar

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

  • avatar

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

    • 0 avatar

      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.

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