The price of salt and premium deicers can fluctuate based on any number of criteria.I'm a follower of the book "Super Freakonomics" (the sequel to "Freakonomics") which is about economic trends based on common-sense observations. My current analysis contains my view of common sense observations as they relate to the deicing market and deicer supply lines.
Volatile markets When we think of volatile markets, we likely think of the stock market. But in reality, any commodity market may be adversely impacted by volatility.
We've seen this over the years in both salt and in premium deicers as fluctuations in supplies can be impacted by lots of different things that may not be so obvious: legal actions, embargos, weather and demand.
Deicers are often overlooked for volatility, but make no mistake about the possibility of prices taking wild swings based on supply and demand. Late summer weather has already impacted salt production, and with much of the Northeast U.S. coast still cleaning up after Hurricane Irene – you can understanding how these types of outside events impact your supplies and suppliers of winter deicers.
Weather is difficult to predict, as evidenced by the weatherman who failed to see it snowing outside his studio window as reported that the day would be clear. I have been an outspoken opponent to the manmade greenhouse gas global warming theorists, so when NASA starts agreeing with me, I feel like I'm not alone.
As much of North America is sweltering under record summer heat, and as the days since summer solstice grow ever shorter, don't let those heat records skew your view and expectations of what the coming winter might bring. It is my firm belief that the pattern of weather we saw this past winter will continue.
Let's take a stab at what to expect this winter. I am no better at predicting the winter to come than my dog, the Old Farmer's Almanac and NASA. You can take what I think with a grain of … never mind.
I watch sunspots, and the sunspots are continuing to be very minimal. The sun's activity is nearly identical to that of the period of time that lead up to the last "mini ice age" of medieval times. I think that everything is cyclical and we are entering another cold cycle.
So from my view, I see more of the same as we saw last year: snow north, ice in the middle and cold in the south. In one case the freeze ups in Texas last winter are now the same areas with 30 days over 100F.
This is no accident, and I think it is a strong indicator that we are not going to get off lightly as far as winter weather goes.
Only time will tell, but the early bird gets the biggest and cheapest worms as far as bulk salt goes. So we turn our focus to a developing scenario where weather and salt mines are entangled: The F3 tornado that impacted Compass Mineral's Sifto Salt Goderich, Ontario facility on Aug. 21 is a big question mark.
As of this writing, it is too early to determine the extent of damage, but Compass is reporting significant damages to their above-ground structures, and evaporation plant and below-ground operations will not restart until repairs are made to above-ground facilities. Compass's Goderich facility is the largest salt mine in the world with 9 trillion tons capacity and accounts for two thirds of Compass's salt production. The sole fatality in this event was the ship boom operator who was trapped under rubble that took more than 24 hours to remove. This suggests that the damage is extensive and they might be down for an extended period.
This tornado could not come a worse time as pre-season demand is just beginning on the heels of a robust winter that depleted supplies of salt across the Northeast U.S. It's very hard to predict the results of this, but it safe to assume that the longer they are down the more impact that will have on salt supplies in the Upper Midwest U.S. and Ontario.
Where we think this will create some pain is in the Upper Midwest and Ontario as other producers are tapped to pick up the shortfall while Compass is down for repairs. If the damage is such that it is prolonged like the hurricane damage to Morton's Inagua Bahamas facilities was a few years ago, then it could take Compass offline for much of the pre-season.
This would have a very significant potential adverse impact on a broader scale as everyone scrambles to cover their shortfalls. Speaking of hurricanes, we still have a month or two of hurricane season left, and this factor too can affect salt stockpiles that are arrive by sea and are stored at the ports.
The energy prices that killed us at the pump all year are still having a significant effect on salt prices.
In North America, the majority of the cost of a ton of salt on the road is transportation in one form or another.
Thinking a bit more on the Goderich mine tornado damage, if plans to supply from Goderich have to be backfilled by supplies from farther away moving along the highway with $4/gallon diesel fuel, the potential for a quick run up on salt prices like we saw three years ago is definitely there.
On the basis of Internet video shot by locals, it appears that the loading and storage areas have taken significant damage. That being the case, those markets will see some sudden changes in both price and availability of product.
Stay tuned and start reading all that you can on this if you are serviced by the Sifto Goderich mine.
Salt prices currently in our primary service zones (Eastern Seaboard) are flat on the heels of a record winter in the Northeast U.S. It was an average winter in the Midwest, still an off-winter in Canada and a cold but manageable snow winter in the South. A commodity trader would look at those factors and expect prices to rise, but they have not. In fact, they came down some and stand to come down a lot more if energy prices will back off their run-up.
Only time will tell, but I continue to advocate the early bird getting the biggest and cheapest worms as far as bulk salt goes.
Bagged salt is absolutely changing. As the push from the primary producers to limit sales of medium dried salt for bagging continues to choke off the supply side for local baggers and blenders, these companies will be using lesser quality salt – road salt in many cases– to bag. This will be evident in the quality of what you get from non-producer product. Again, if the evaporation plant at Goderich was involved in premium medium dried salt for bagging, then an ugly supply situation could get very ugly quickly.
The salt-producer community continues to limit the supply of the premium medium salt in bulk for bagging in what is likely a continued effort to drive those high net-back dollars to their own bottom line. In bagged salt this season, the key to supply will be driven by quality first, price second. If you put price first, you're going to be paying for a something that may likely deliver more headaches than performance. What is the cost of your sidewalk spreader jamming up with big chunks? What's the cost of a broken window from the stray rock coming off your spinner?
Before you commit to and buy bagged salt, ask for a sample of what you're buying and retain it as the standard so you can go back on your supplier if they deliver something that doesn't work or is different from what you agreed to buy.
Premium deicers, which for the most part are either calcium chloride or magnesium chloride, are in fairly good shape on a broad scale. Spot challenges with imported materials in some cases are going to show some change.
Overall, just like we have advocated in salt and blended deicers, demand that your supplier gives you a full chemical breakdown of what you are buying. There are a lot of liver-pill salesmen out there offering things that lack the chemistry to be "equal" to other products, so don't let anyone fool you into assurances that have no backup guarantee.
Supplies of salt and deicers are fair. However, a combination of the wrong factors at the right time could tip this quickly. Calcium chloride still reigns supreme in the premium deicer market as the overall winner for performance across a broad range of temperatures. However, just like salt, there are lots of different qualities of calcium chloride and a 74 percent pellet from China will not outperform a 92 percent pellet from Michigan – that is just simple chemistry of 74 percent active calcium chloride horsepower versus 92 percent active calcium chloride.
Always demand a certified statement of ingredients, the name of the manufacturer, and know that you are getting what you think you are supposed to be getting.
Magnesium chloride for snow and ice comes basically only in one flavor: 100 percent magnesium chloride hexahydrate. The anhydrous magnesium chloride is too reactive for use in any applications other than industrial, so for the most part, all forms such as flakes, crystals, pellets, granular and pastilles of magnesium chloride are hexahydrate. There are definitely quality differences between products, so know how that affects your needs. We have many tens of thousands of tons of magnesium chloride in our warehouses and en route to the U.S. from overseas, and this growing segment of our market continues to be very robust as more people discover the advantages of this very safe deicer.
In summary, salt and deicers supplies are fair. However, a combination of the wrong factors at the right time could tip this quickly. At this time of year, we strongly encourage early buying for the lowest prices and best supplies. The closer we get to winter, the more supplies and prices could change unfavorably.
Rob English is president of Chemical Solutions, Inc. of Franklin, Mass and the company's MeltSnow.com and NewEnglandSalt.com, and is a frequent contributor to Snow Magazine.
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