Notebook: The Roller Coaster Ride of Supply and Pricing
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Notebook: The Roller Coaster Ride of Supply and Pricing

Gain some insight on the screwed-up supply chain’s impact on commonly used ice-melt materials heading into this winter.

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November 4, 2021

It is almost hard to believe how quickly our markets, our world, and our businesses have changed as we continue to exit the restrictive conditions of the pandemic of 2020. Some things we could see coming but many have taken, and will continue to take, the professional snow and ice management community by surprise.

By now, most within the industry are more knowledgeable with how our economic infrastructure is experiencing spiraling costs and growing limited supplies of various items that we use daily. The deicer business is no different and has experienced many changes with prices and product availability.  

Earlier this week, I addressed a group of snow-and-ice/lawn equipment dealers as they trained on a new sidewalk machine from Ariens designed to plow, broom, apply liquids, and drop dry deicers. What was interesting was to hear how they are fighting shortages of parts and supplies of basic items and the fact that the production of this new machine was delayed for many months as they were awaiting component parts that were stuck in a port, on a truck, etc.

I mention these anecdotes only to point out that no matter what you do for work, these conditions of change impact you and the rest of the professional snow and ice management industry. The one thing that is nearly universally disliked is change. As Americans, we have allowed ourselves to become complacent with just-in-time inventories and inexpensive materials at the expense of American production. Now manufacturers and suppliers are vulnerable and exposed as we struggle to get supplies in the congested shipping world.

So, let’s talk about our main subject and topic of interest: chemical deicers!

Salt
Salt supplies across the country are in very good shape as the season begins. The dust is settling from the acquisition of Morton and there is some reshuffling of “players” in the Northeast. Overall, I believe bulk road salt will be fine this winter. Obviously, unexpected late-season weather can confound even the best laid plans from the supply chain. Therefore, we will have to wait and see what Mother Nature delivers. As of today, I do not anticipate any supply problems or disruptions in bulk salt.

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Calcium Chloride

Calcium Chloride (dry)
This is pinch-point No. 1 in the supply chain. Dry calcium chloride products have had two price increases over the past six months. We have only one domestic producer of calcium chloride, and with the fall off of oil production in 2020 and early 2021, the demand for calcium chloride in that market softened a good bit. This ended with the combination of the suspension of the Keystone XL pipeline project, more vehicles moving in 2021, and a resurgence of North American oil development. Calcium chloride is a “completion fluid” for oil drilling and harvesting. In 2020, the demand for calcium chloride was low.

Imported calcium chloride accounts for a sizable portion of the US supply. Those imports have ground to a trickle, which is forcing markets to turn to domestic production.

Adding to the squeeze is the snow and ice market, which has turned to domestic production to replace shortages of materials that are not arriving from foreign sources. So, you can see where this is going.

This preseason we saw record sales of calcium chloride for winter use, and it is not letting up. This is not a bottomless pit of supply. Therefore, we expect to see allocations of domestic production as they try to keep their markets supplied without allowing runaway sales to deplete the entire inventory. When I wrote this, there were no restrictions on our sales of dry calcium chloride products, but I sense it is coming and soon.

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Magnesium Chloride

Magnesium Chloride (dry)
Like the situation with calcium chloride, there is one producer of dry magnesium chloride in the US. In addition, there have been three price increases in the last six months.

Magnesium chloride imports have been robust through the pandemic and early 2021, but as container prices skyrocketed those supplies were choked off leaving only what is on the ground. We expect to see imported magnesium chloride continue to reach the Gulf Coast and Atlantic Seaboard markets, but in significantly lower volumes due to these wildly out-of-control container shipping costs. We also anticipate it is a virtual race to the “walls” of the warehouses (empty) for magnesium chloride and that will also likely fall into allocations and tight supply.

If you do not have these products under your roof and control, then it may be too late. However, only time will tell.

Liquid Calcium Chloride and Magnesium Chloride
In every dark cloud there is always a bright spot and liquid premium melters are that bright spot. Inventories are very high, and we do not expect to see any problems with these two liquid compounds for snow and ice control … at least not currently.

Recap
Overall, the markets are very strong in preseason buying and preparation. Salt supplies are strong, and we do not foresee any salt supply issues at this time. We do expect to see continued problems with unexpected items resulting from this worldwide container debacle and congestion.

Additionally, we do not see the container congestion easing for at least 24 months and perhaps a good bit longer. It’s a big log jam and it’s occurring all over the planet. I’ve written extensively about this for the past year, so this should not come as too much of a surprise.

Like peering into any crystal ball, I could be reading the tea leaves incorrectly, but this my view at this time.

Snow Magazine contributing editor Robert S. English is President of Chemical Solutions, Inc., Franklin, MA. You can reach him at rob@meltsnow.com.