MH Daily Bulletin: August 2

August 2, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

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Supply

  • Oil prices dropped 4% Monday as weak manufacturing data in several countries weighed on the demand outlook.
  • In mid-morning trading today, WTI futures were up 0.8% at $94.64/bbl, Brent was up 0.8% at $100.90/bbl, and U.S. natural gas was down 6.7% at $7.73/MMBtu. WTI is at its widest discount to Brent in at least three years.
  • The U.S. emergency crude stockpile dropped to 469.9 million barrels last week, its lowest level since 1985.
  • OPEC and its allies meet tomorrow to decide on September output, with analysts pointing to a potential modest increase.
  • Analysts say OPEC pumped 28.98 million bpd of crude in July, about 310,000 bpd higher than June but well short of agreed targets. 
  • Saudi crude exports hit 7.5 million bpd in July, the highest level in more than two years amid rising pressure from the U.S. to boost production. 
  • Libya’s crude output has rebounded after a series of disruptions that more than halved supply, with nationwide production returning to a four-month high of 1.2 million bpd
  • Australia, one of the world’s top LNG exporters, is considering curbs on exports to manage an expected supply crunch next year. 
  • Valvoline is selling its unit that makes lubricants, coolants and other auto products to state-owned Saudi Aramco for $2.65 billion in cash as the company sharpens its focus on U.S. retail services. 
  • BP said it would raise its dividend 10% after second-quarter net income reached a higher-than-expected $8.5 billion
Oil Companies Profiteer As Fuel Prices Soar

Supply Chain

Greater China Dominates Global Microchip Exports

Domestic Markets

  • The U.S. reported 114,021 new COVID-19 infections and 357 virus fatalities yesterday. 
  • New data shows COVID-19 infections are back on the rise in Florida.
  • A widely tracked index of U.S. manufacturing activity fell to a two-year low of 52.8 in July. The data comes as retailers continue to report excess inventories and commodity prices ease
United States ISM Purchasing Managers Index (PMI)
  • U.S. construction spending tumbled 1.1% in June on a sharp decline in single-family homebuilding, a reflection of rising interest rates. 
United States Construction Spending
  • U.S. merger activity slowed sharply in the first half of 2022, with dealmaking down 40% from last year as market conditions remain uncertain.
  • U.S. consumers spent 71% more at discount grocery stores from October 2021 to June 2022. Meanwhile, spending at other grocery stores declined by 5%. 
  • America’s youngest consumers are falling behind on credit card and auto bills while they accumulate credit card debt at a pace not seen since before the pandemic. 
  • U.S. home-price appreciation slowed sharply in June, according to mortgage software firm Black Knight. Surging rent prices also showed signs of a cooldown.  
  • Leasing volume for Manhattan office space reached a pandemic-era high in July despite remaining 11.6% below the pre-pandemic average. 
  • Heineken posted a surprise 24.6% rise in first-half operating profit on higher sales volumes in all regions, notably Asia-Pacific. 
  • Oracle started laying off employees in the Bay Area yesterday as part of a $1 billion cost-cutting plan that includes thousands of layoffs in its global workforce. 
  • Activision Blizzard experienced a 28% drop in sales in the latest quarter as consumers limit spending on video games in response to high inflation. 
  • Estée Lauder is in talks to buy luxury fashion brand Tom Ford for a rumored $3 billion, one of the cosmetic giant’s largest-ever acquisitions. 
  • Revlon received permission Monday to proceed with a $1.4 billion loan to continue operations while in bankruptcy, just one month after missed payments to supply chain vendors led the firm to file for Chapter 11. 

International Markets

  • France scrapped all remaining COVID-19 restrictions for incoming travelers Monday. 
  • A worsening property crisis in China could send one-third of the nation’s steel mills into bankruptcy in a squeeze that’s likely to last at least five years, according to private meetings with executives. 
  • Factories across the U.S., Europe and Asia struggled for momentum in July as flagging global demand and China’s lockdowns slowed production, surveys showed on Monday. 
  • England’s central bank is expected to lift its key interest rate by 50 basis points this week to 1.75%. 
  • German retail sales fell 8.8% in June for the steepest decline in almost 30 years. 
  • Brazil posted a lower-than-expected trade surplus of $5.44 billion in July, with growth in imports strongly outpacing exports.
  • Russia’s economic woes are set to deepen after its central bank warned that last quarter’s 4.3% decline in GDP will be followed by an even larger decline of 7% this quarter. 
  • Hong Kong’s economy shrank 1.4% in the second quarter, its second straight quarterly contraction.
  • Saudi Arabia posted record GDP growth of 11.8% in the second quarter, driven by a 23.1% rise in oil revenue. 
  • British bank HSBC saw second-quarter profit surge 62% to $5.5 billion as rising interest rates boosted returns on loans.
  • Portugal’s civil aviation workers are preparing to strike for three days starting Aug. 19 in a dispute regarding pay and conditions. 
  • ANA Holdings and Japan Airline maintained their positive earnings outlooks for the year Monday as airlines see a strong recovery in demand. 
  • Boeing plans to build a new research site in Japan focused on sustainable aviation fuel and other sustainable technology. 
  • Wind turbine maker Siemens Gamesa is considering cutting 9% of its global workforce, or about 2,500 jobs, in reaction to losses that prompted its main shareholder, Siemens Energy, to launch a takeover. 
  • Single-use plastic bag usage dropped 20% in England since a tax was imposed on consumers last year. 

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