Thursday, September 21, 2006
CAPA Supply disruption!
I just got a note from Jeff Neidinger at Solvay USA.
Dow has just announced that they are getting out of the business of making caprolactone polymer at the end of October.
It's not clear whether they are selling their production unit in West Virginia or just converting it to making some other polymer.
What we are looking at is a serious supply disruption which is definitely going to affect delivery times and might affect price.
Jeff says that Solvay is going to need 6 weeks lead time on Caprolactone from now. All of Dow's customers are keeping his phone ringing off the hook.
This is bad.
(I couldn't find them on the US stock exchanges. They are in the european exchanges though.)
Dow is taking the production capacity off-line, so we're looking at considerably higher prices and considerably longer delivery times.
From what I've seen the uses (medical primarily) of PCL can eat much high prices so they're likely to bid guys like us out of the market.
I'm scrambling to develop us some alternatives.
We could see new capacity built but that will have a considerable lead time (years) that we can't afford.
Links to this post: