October 2008 STATE OF THE SALT ADDRESS
To our customers and distributor partners:
In last month's communiqué, we talked about recent events that along with on-going problems had combined in such a way as to create "the perfect storm" of deicing demand which our distributors and customers needed to know about.
In this month's newsletter, we want to update some of that information and tell you where things have improved and where things have declined. Like previous newsletters, we provide dozens of links to the data and we openly share with you how we interpret this information. You can look at the same tea leaves we do and decide if you see it the same or not.
In a nutshell, we still read the information pretty much the same as we did in September; deicer inventories are not sufficient to meet demand on a National scale. The US market is still well over 2MM tons short on highway salt. OK, so that's the bad news. The good news is that those of us who are located along the Atlantic seaboard are not anywhere nearly as hard hit by this as those customers in the Midwest and Central United States.
In The News
I participated in a conference call/Webinar in late August with Dick Hanneman, the President of the Salt Institute, which is a salt industry association. He has spoken with the press and major news agencies regarding the current salt crisis and some of his public statements are now making national news regularly. We have plenty of salt in the ground, but not enough on the ground and in simple terms that’s the problem.
There are conflicting reports regarding the extent of damage at Morton’s plant in Inagua, Bahamas. Locally in New England, customers who have dealt with Morton are being told that they have no more than 30% of the salt volume available for the Northeast that they had last year. According to the Bahamian papers, they are still cleaning up and recovering from the extensive damge. Who is going to pick up that shortfall and how?
Packaged deicers are quickly falling into problems. Dow announced implementation of "order control" (allocation) on their flake calcium chloride products two weeks ago and we are seeing some serious supply problems on calcium flake with the lack of US production beyond Dow and lack of imported material. Bagged salt inventories are falling quickly as we predicted and expected and lead times with most manufacturers are out as much as 7 weeks as of the first of the month. Our packaged MAG inventories are decreasing at a time when we normally are building in preparation of winter. Demand is picking up instead of letting off and this is putting the squeeze on. Unless things look a little rosier here, we think these lead times for packaged deicers of all flavors will only increase steadily until winter and then will go into full thermonuclear meltdown if we get snow before year end in the Midwest and/or the Northeast.
Looking at bulk road salt supplies, overall we feel that we are ok but clearly the industry is lugging hard to cover record demand. No real horror shows as of yet in the East, but in the Midwest prices are skyrocketing and availability continues to dwindle creating panic and driving hungry buyers to the plentiful coasts for their needs. This will eventually put us in supply trouble if it doesn’t stop soon.
Let’s talk briefly about alternative products: We seem to be getting a lot of calls for liquids to replace salt. You will find many schools of thought on this topic but we are going to stick our neck right out on the chopping block here and now: in our experience liquid deicers cannot replace salt! Think about it. Liquid deicers are at least 70% water so when you add water to snow and ice, do you think you’re going to get less snow and ice?
Chemical management of snow and ice is for the most part basic high school science. You add a freeze point lowering material to frozen water (snow and ice) to push the freeze point below the prevailing temperature. Simple right? Add salt to water and it won’t freeze at 32. Some chemicals are far more effective and have much lower freeze points, but the basic premise of lowering the freeze point to turn that snow and ice back into a liquid is what is done in 95% of all chemical deicing operations. How that ties to liquids is that when you eliminate dry materials and replace them with 70% water, you have not changed the chemistry of your objective, but you have increased the amount of brine you need to make to cover the additional water you’re adding.
We do not advocate the use of only liquids for snow and ice management. While some people are doing it and getting away with it, our experience with the friction loss testing which we did with the Massachusetts Turnpike Authority over 10 years ago working with State Police professional drivers proved that applying only a little bit too much liquid for conditions creates a virtual death trap on the pavement; it is black and wet and looks right, but in fact is so slippery that its like driving on a skating rink.
The Northeast and Mid-Atlantic US have too much humidity in the air to use the same techniques that work in arid mountain states like Colorado and Washington when you’re using magnesium and calcium chloride liquids. In arid climates, 100% of the moisture these hygroscopic chemicals pull is from the snow and ice. In the East, these materials see competition between the snow and ice and much higher atmospheric moisture levels than in arid high altitudes.
Liquids work great in conjunction with dry material and even allow a 30% reduction in dry deicer application rates when used properly in pre-wetting, and, liquids work great in anti-icing where you spray in advance of the arrival of snowfall to prevent it from sticking to the pavement. But outside of those two proven applications in our region, we don’t support or recommend the use of liquids to be used solely in place of salt. Disaster is imminent in our experience and you need to have ground speed controls and very specific application rates to get effective direct application of liquids for anti-icing. Know what you are doing when applying liquids or be prepared to get to know your legal representatives and insurance providers a lot better! Liquids work great, but they are not a replacement for dry deicers. We do offer pre-treated salt (pre-wetted) and it is readily available from most of our ocean terminals. Check with your representative for price and availability in both bulk and packaged pre-treated salt.
Weather is the Key
Who do you want to believe and who can you believe? Accuweather metorologist Joe Bistardi says we are going to get creamed with snow this winter and is predicting at least to Nor'easters for the I95 corridor from Richmond to Boston. The Farmer's Almanac says the same thing as do many of the "talking heads" in the weather business.
There is an interesting new issue which has poked its head over the horizon and we’ve been watching this closely because it seems to have a direct affect on our weather: sunspots. More to the point, for those of you who live to see snow, you noticed we have already had our first arctic blast and heavy snowfall in the Pacific Northwest and that was last week; THE EARLIEST snow they've seen in over 100 years.
We have all heard Al Gore’s global warming presentations. I won’t get into them other than to say that on a personal level, I don’t subscribe to them. I actually think that Al has it both right and wrong; I think he’s right in that we are in global warming and wrong in that this is the beginning of it. More to the point I have read for a few years an on-going body of evidence that confirms we have been in global warming for about the last 100,000 years or so – otherwise we’d be still sitting under 300’ of glacial ice. My belief is that we are at the end of global warming and turning the corner on the next ice age.
Before everyone hits that delete key or tosses this in the trash, please hear me out. These climate cycles are clearly something that none of us have our arms around and no one can say definitively what’s really happening; science, the Farmer’s Almanac, wooly caterpillars, or my arthritic ankles – they all appear to be equally wrong and unreliable.
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We had global warming for the last 50,000 or so years – that is undeniable simply based on glacial ice receding and our geology. Those round stones around your house got tumbled under the millions of tons of ice that pushed them down from Canada. But what about this new ice age you ask?
To know more about this please do a little light reading at places like the International Climate and Science Coalition, Woods Hole Oceanographic Institute, NOAA’s National Climatic Data Center, and this 2004 article in Science Daily. Truth or myth? I don’t know, you tell me. Sunspots virtually ended early-winter last winter and immediately following that we had the hardest, coldest, snowiest winter in 50 years across the entire northern hemisphere. Before dismissing this as quack science and embracing the Al Gore doctrine, please read up and form your own views. I think you’ll be a little bit surprised and enlightened in what you find.
I have been in the snow and ice control chemical business for 35 years. In that time I have noticed that things seem to run in cycles. A former competitor once summed it up by saying the deicer business is two years of mediocrity, followed by one year of bliss, followed by two years of misery. What he meant was one out of five years would be great, two lousy, and two average but not necessarily in that order.
We have seen a lot of those “mediocrity years” in certain regions and that was a significant factor in the municipal and private markets being lulled into a sense of false security over the past 6 or 7 years in the Midwest and Mid-Atlantic. It hadn’t snowed like “the old days” for almost a decade so who needs a lot deicers on hand? They found out the hard way last winter and they are still reeling and finding out both financially and with severe shortages just how wrong they were.
What we are beginning to also see is new and unproven sources of salt arriving at the banquet table. A lot of salt buyers are going to get taken to the cleaners this season as they buy what they think is the same quality and type of salt they've had in the past from these new sources. When a new source of supply shows up in the midst of unprecedented shortages, it's a good time to practice due diligence as a buyer and make sure you kow what you are committing to. They are here to make a quick killing with product they've never brought into the US and many of these first buyers will be their crash test dummies.
We’ve seen some salt from the Middle East, North Africa, and other countries that has some issues in our view. Be on the watch for it. Salt with high moisture content is easy to buy on the cheap because it will freeze solid when the temperatures drop. See how much your customers like chiseling their frozen up stockpiles and bags to understand how just 1-2% additional moisture can wreck havoc on something as simple as trying to load a truck at 20 degrees at 3AM.
After moisture content, look at the particle size distribution. We were offered a ship of salt that had a specification of 24% ½” size. Think about that. How many windshields or storefront plate glass do you want to buy this winter with half inch rocks flying off the spinner and treated surfaces you just hit? How effective is that ½” hunk of salt when it is jammed in the bottom of your sidewalk spreader with 100 lbs more on top of it? How much will your customers love you then? What about impurities and what are they? These mined materials are contaminated naturally with other elements and some of them are very problematic. Demand that your deicer supplier give you an analysis of what they are selling to you right down to the trace elements. If they tell you it’s a “proprietary formula”, then tell them that the Federal and State Right to Know Laws require they disclose what’s in their product and what the percentages are. Don’t let them blow smoke in your eyes in an attempt to blind your view and throw you off the scent. If they start dancing when you ask them for certifications of the contents of what they are selling you, then think about what else they are deliberately trying to hide. We are not sending rockets into orbit here; we’re melting snow and there are no secret formulas – only secrets they don’t want you to know – like how much regular old rock salt is really in that stuff they say is environmentally friendly! It is basic high school chemistry and don’t let anyone tell you differently. If they are hiding what they are selling to you, then you should wonder why.
These are all things that most of our customers don’t have to think about because we are carefully evaluating new and existing sources constantly and making certain that the quality of the deicing materials you get from us will work for you. We don’t want that 3AM wakeup call with your customer throwing a nutty on the other end of the phone because we just stopped traffic on two interstates and burned up the motors on your application equipment trying to spread junky deicers that didn’t work. We are proud of the quality of our products and we will put our certified chemical analysis up to prove it! Will your supplier provide a certified statement of what they just sold to you?
Here is where I might quote Astronaut John Swigert, Jr from the Apollo 13 mission: "Houston, we've had a problem here". While I don't want to send everyone into panic mode, the fact is we are obligated to communicate just how serious the problems are in packaged deicers. We are definitely going to run out and we are getting there sooner than we expected; much sooner. We are unable build inventory in any product we sell. Normally at this time of year, our pre-season is coming to an end and we are refilling our warehouses in the last part of October and all of November as we await the arrival of snow. This season, that's not happening. Demand is draining all of it as fast as we can bag it. This is not unique to us and this is an industry wide problem. We have been consistent in our message all year; if you need deicers this winter and want to be assured of having them, then you need to get them in your hands long before flakes arrive. In some cases it's already too late; our calcium chloride flakes winter inventory is now weeks from being sold out. Dow is already sold out. There are no reinforcements on the horizon at this point as a worldwide shortage of calcium created by record snow and oil field demand continues to suck it up like a shop vac. No it’s not all gloom and doom, but the problems we saw last month have not improved at all. They have in fact deepened.
Lastly, we proudly trumpet the arrival of our Pure & Natural Deicer blend. This new product is tinted green for easy identification of treated areas and we have nearly five million pounds of it in our new Mansfield warehouse. Packed in 50 lb. heat sealed poly bags, 50 bags per pallet, Pure & Natural Deicer answers the call for a deicer with color. Look for us to add color to some of our regular deicers next season as we have finally identified a safe, biodegradable dye that breaks down quickly and is environmentally safe like our products.
Here are a few Google News searches that you might find interesting to read:
Tell your customers to be ready for supply problems when it snows and delays in deliveries the closer we get to snow season because these kinds of problems are not corrected quickly.