Bloomberg News

Ube Says It’s Receiving Resin Queries After Evonik Blast

April 16, 2012

Ube Industries Ltd. (4208), Asia’s largest producer of the PA-12 resin used in cars, and DuPont Co., maker of similar polymers, said order inquiries increased after a factory explosion at Germany’s Evonik Industries AG raised concern that a shortage would develop.

“We’ve received some requests from customers for more PA-12 production, but there is no room for us to produce more because we are already running at full capacity,” Koji Sumiyoshi, a spokesman at Yamaguchi, Japan-based Ube (4208), said in an interview today. “A shortage of supply will happen.”

The Japanese company joins auto-parts supplier TI Automotive Ltd. in warning that production disruptions from the March 31 Evonik blast, which killed two people, may spread. The global automotive industry faces a “severe” shortage within weeks, TI Automotive Chairman William Kozyra wrote to customers last week.

DuPont has been working with customers “to get a good sense of range of the magnitude of the issue and if we have alternative materials that might help,” Carole Davies, a spokeswoman, said today in an interview.

“We’re pretty sure that in some cases we do have alternatives that can help alleviate the potential for shortages,” she said. “There won’t be one solution for everything.”

DuPont, which doesn’t make or use PA-12, supplies Fiat SpA (F) with fuel lines made from a biodiesel form of its specialty polymers, which can replace some versions of PA-12.

‘Complete Loss’

Ube supplies about 10 percent of the global PA-12 market, which typically amounts to about 100,000 tons a year, Sumiyoshi said. Ube’s production of the resin trails behind Evonik, France’s Arkema SA (AKE) and Switzerland’s Ems-Chemie Holding AG (EMSN), he said.

Last month’s explosion in Marl, Germany, resulted in a “complete loss” of production of Cyclododecatriene, also called CDT and a key element of PA-12, Kozyra wrote. Global capacity of CDT is “very limited,” according to the letter.

Evonik, which is weighing an initial public offering of its stock by July 1, accounts for about 50 percent of the world’s CDT production, Ube’s Sumiyoshi said. The PA-11 resin can be used as a partial substitute for PA-12, Sumiyoshi said.

Engine Parts

CDT is used to make laurolactam, an ingredient in producing high-performance polymers such as PA-12, Deutsche Bank AG (DBK) New York-based analyst Rod Lache wrote in a report yesterday. The plastics are used in engine parts such as fuel and brake lines, according to the analyst.

While global carmakers may be able to make preliminary assessments this week on whether a CDT shortage would disrupt auto production, their experiences with last year’s earthquake and tsunami in Japan and flooding in Thailand may help them deal with the situation, Lache wrote.

Officials at Toyota Motor Corp. (7203) and Nissan Motor Co. (7201) said today their companies were assessing the situation. Spokesmen at General Motors Co. (GM:US), Ford Motor Co. (F:US) and Chrysler Group LLC said late last week the companies were investigating the matter.

Hyundai Mobis (012330), the main auto-parts supplier to South Korea’s Hyundai Motor Co. (005380), said in an e-mail it hasn’t been affected.

To contact the reporter on this story: Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Jamie Butters at jbutters@bloomberg.net


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