After a historic two year run for the entire chemical and logistics industries, the temperature cooled in July of 2022. It was an unsustainable pace that had to end and we braced for a tough second half of the year. Fortunately, it was not as bad as we expected! The pace slowed and some inventories remain high, but domestic demand for chemicals and freight services rebounded to 2019 levels and stayed there. At TCC we are committed to remain nimble, flexible and adaptive to these cycles. Call us, email us, text us – We will answer!
Today, we are pleased to report that demand is picking up. The last few weeks, order numbers rivaled those of late summer 2022. Most exciting is the number of sample requests and technical discussions with current and potential customers. No longer are we in survival mode; we are back in the lab looking at improved performance, more sustainable raw materials, and more predictable supply chains. We have introduced new products to our customer base including Evonik’s Dipentyl terephalate and DINCD (Diisononyl 1,4 Cyclohexan Dicarboxylate). These innovative products show true promise! Elatur DPT will improve migration performance in DOTP and ElaturCH, and DINCD is a hydrogenated Diisononyl terephthalate with excellent performance as a general purpose plasticizer. This, along with bio THF, Epoxidized Linseed oil, and others are exciting and sustainable!
I am pleased to report that TCC’s Latin America operations continues to show steady growth. We have grown both our employees and offerings to this region. Throughout Caribbean, Central and South America, we are investing and partnering to get boots on the ground offering everything from bulk to packaged products. We will be expanding this quarter away from Mexico City to Manterrey and Queretaro. We have now been servicing LATAM for more then 20 years!
Our sister company, The Logisitix Company, continues to provide professional logistics support to TCC and many customers throughout the chemical industry and beyond. Their growth has been exceptional due to their responsive customer service, deep knowledge of ocean, rail, truck and transmodel management and competitive rates. They also report an overall increase in outbound tender volumes, and slight spot rate increases on load boards indicate demand is improving in logistics nationally (good sign for economy). By the way: we have a confidentiality code between our companies and will not share customer or shipping information. We are happy to provide a direct confidentiality agreement for further confidence.
Our other sister company, Kettlebottom Creative, has been busy with Podcasts, video production, web site updates, AFPM invites, IT support and much more for TCC and TLC. They also report robust outside work for local television stations making 30 second ads, website and marketing development work for and IT and IT security support. They do a great job!
It is becoming crystal clear that the best deal on chemicals (pricing and availability) is right now.
Why?
- Raw material costs are at their lows.
- Inventories are still relatively high.
- Most world scale producers are running rate-ably despite high energy costs in EU and COVID lockdowns in China.
- Freight rates are their lowest since 2019.
- December and January demand was very limited.
- There was a fear in EU of Russian disruption of energies (oil and gas).
- We had 3.25% increase on cost of money in 2022.
- China had intermittent yet consistent covid lock down in 2022.
- Inflation was rampant and shortages were persistent.
- US dollar was strong!
What has and will change:
- US, EU and China stock markets are doing well.
- The stock markets typically know before we do.
- Many world scale producers are planning turnarounds during 2023.
- Oil prices have increased the last two weeks without China demand yet…. And are expected to go much higher.
- China is biggest consumer of oil in the world and their demand has been severely muted by lockdowns.
- China new year is Jan 22nd.
- China will reopen in two weeks and it will be a big opening. Why?
- Their people demonstrated their frustrations and it got world-wide media attention. Xi doesn’t like this.
- They can no longer control their people with lockdowns so they need to send them to work.
- China GDP was a dismal 3% growth last year due to prolonged COVID lock down. They’re competitive and wont like this stat.
- Mobility and holidays are back! Planes, trains and automobiles are back and full in China as they emerge from lock down (remember how it was for us?).
- Interest rate hikes are expected to slow and eventually stop.
- Russian disruption on energy didn’t happen (fear has subsided).
- Sanctions are beginning to work.
- Energy was up 60% last year/ commodities only 26%.
- US dollar has weakened.
- Europe and India PMI (Purchasing Manager Index) has rebounded.
- Inflation has weakened world-wide. Money supply has reached a low and rebound.
The overall picture is much better than it was! The fed will stop hiking, and there will be stimulus in China (largest oil importer, largest commodity consumer, and 2nd largest economy in the world). This is a recipe for growth and much better global demand.
TCC maintains a long-term focus on our clients (customers and producing partners) and employees. This focus has provided powerful returns as a value added global raw material provider.
Our long-term history and focus has, and will, prove that we are a good company. We have high standards that are not part of a temporary trend. They are part of our daily, weekly, and long-term standards of operation.
At TCC, we represent our shareholders every day. Our employees, customers and producing partners.
