Japan, German automakers less affected

Japan's automakers rely on Asia's biggest maker of PA-12, Ube Industries based in Yamaguchi, and German automakers can turn to Switzerland's Ems Chemie Holding, UBS said.

French automakers will be exposed, UBS said, because they largely rely on France's Arkema SA for the nylon resin and Arkema relies on Evonik for CDT to produce its PA-12.

US automakers and suppliers are highly reliant on Evonik or companies reliant on the German industrial conglomerate to make PA-12.

"Whilst the industry will likely approve substitute materials within the second quarter, the disruption to production in coming weeks may disproportionately affect automakers with already weak balance sheets," the UBS note said.

Italy's Fiat SpA and France's PSA Peugeot Citroen were named by UBS as two automakers that "may experience further working capital disruptions in the second quarter" due in part to payment to suppliers for first-quarter production.

All suppliers, even those that do not make auto parts using PA-12, will be affected by the shortage, UBS said. If the shortage impacts brake and fuel systems, it will affect other components because it is difficult to assemble vehicles and fit critical parts later, the bank's analysts said.

Schattenmann of Dow Automotive said: "While we do not manufacture CDT or utilize the resin made from CDT in our manufacturing processes, we are actively evaluating alternative material solutions that could replace PA-12 in select applications."

And Kullman of DuPont said: "Our specialists are working on the ground with the specific (automakers) and understanding if we could provide those that it does look like we'll get some upside from that."

She said it was too early to say how deeply DuPont would become involved in the business of supplying polymers for auto suppliers and automakers, but that the effort would be "positive" for DuPont.

Invista Inc, a subsidiary of privately held Koch Industries of Wichita, Kansas and the maker of Stainmaster carpets, produces CDT. Invista will help the auto industry with CDT supply as much as it can, but has little to spare beyond its existing customers, said Invista spokeswoman Jodie Stutzman.

TI Automotive CEO Bill Kozyra sounded the alarm on the severity of the nylon resin PA-12 shortage to customers in a letter last week. That was followed by a meeting of major automakers and suppliers in suburban Detroit attended by more than 200 people.

Frank Buscemi, spokesman for TI Automotive, said cooperation among automakers, suppliers and chemical companies was high.

"Alternatives may not be the same for every type of auto part that uses PA-12," said Buscemi, who added that different suppliers and automakers may use different solutions to keep making the same type of tubing, hoses or fuel tanks.