If carmakers don’t find alternative resins used to make fuel systems and brake lines, Europe’s auto production will probably be disrupted first.
North American suppliers are carrying one month of supply more than European competitors of the resin called nylon 12. The global capacity to make nylon 12 has been cut by half after the explosion at chemical maker Evonik Industries AG from March 31st.
“European users will be the canary in the coal mine for this problem,” said Chris Ceraso, a New York-based analyst for Credit Suisse. 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.”
GM, Volkswagen, Toyota and Ford are already trying to find and test alternative materials and avoid losing vehicle output. Europe is expected to be disrupted first, followed by North America and South America. No automaker has reported canceled or slowed production as a result of the resin shortage. Auto manufacturers who may be most vulnerable to shortages include BMW and Daimler due to their built-to-order production system.