MH Daily Bulletin: August 4

August 4, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

At M. Holland

  • The European Union enacted the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation to protect human health and the environment from the effects of chemicals. Click here to learn more about what REACH compliance means for the plastic industry
  • M. Holland’s 3D Printing group offers a rapid response alternative for producing selected parts where resin availability is tight. For more information, email our 3D Printing team.
  • Market Expertise: M. Holland offers a host of resources to clients, prospects and suppliers across nine strategic markets.

Supply

  • Oil prices slid 4% on Wednesday, approaching six-month lows after U.S. data showed a rise in crude stocks last week. 
  • In mid-morning trading today, WTI futures were down 3.0% at $87.97/bbl, Brent was down 3.3% at $93.63/bbl, and U.S. natural gas was down 1.4% at $8.15/MMBtu.
  • U.S. crude inventories unexpectedly rose by 4.5 million barrels last week as exports fell and refiners lowered runs. Gasoline stocks also posted a surprise build on waning demand. 
  • Crude inventories are rising at the top U.S. storage hub in Cushing, Oklahoma, as the spread shrinks between WTI and Brent futures and U.S. export demand softens. 
  • U.S. gas prices fell for a 50th day on Wednesday, with the national average declining 3 cents to $4.16 a gallon.
  • OPEC and its allies agreed to modestly raise production by 100,000 bpd in September, an amount equal to about 0.1% of global oil demand.
  • LNG volumes through the Panama Canal are down 30% since early June, when a fire shut down the U.S.’s second-biggest export facility run by Freeport LNG. Certain operations at the site can resume in October, according to U.S. regulators. 
  • U.S. producer APA Corp saw second-quarter profit nearly triple to $926 million, while the firm bought more than $500 million of property in west Texas to expand its operations in the Permian basin. 
  • U.S. producer Occidental plans to use its soaring earnings to accelerate debt payments and cash distribution to shareholders but will not raise oil production, the firm said. 
  • Brigham Minerals, which owns the rights to extract oil and natural gas from land across numerous U.S. shale basins, is exploring a sale or merger, according to reports.
  • U.S. shale giant Chesapeake will focus on its key shale gas plays as it gradually exits non-core oil projects.
  • U.S. LNG exporter Cheniere Energy struck a 20-year supply agreement with Thai state-owned energy company PTT. 
  • The U.S. power grid added 15 GW of new utility-scale electricity generation in the first half of 2022, with another 29 GW potentially coming online by the end of the year.
The U.S. power grid added 15 GW of generating capacity in the first half of 2022

Supply Chain

  • Severe drought across California has pushed up the price of water by 56% since the start of the year, choking off supplies to cities and farms. 
  • Intensifying heat in Texas will test the state’s power grid today with demand expected to top 80 GW for the first time ever. 
  • China’s military exercises around Taiwan will disrupt supply chains through Sunday as shippers avoid Taiwanese ports and trade routes that pass through the area. 
  • Commercial transport on Dutch rivers is at risk after weeks of drought prompted officials to declare a water shortage
  • The Port of Oakland is suing truckers and others involved with recent protests that shut down container flows and worsened congestion earlier this month. 
  • BNSF and Union Pacific have started metering containers out of Southern California to avoid another intermodal meltdown like last summer, but the move is causing some import boxes to sit for six weeks or longer.
  • Stanley Black & Decker announced plans to shrink its manufacturing footprint and slash its product portfolio by 40% as part of a multi-year, $1.5 billion cost-cutting program. 
  • Maersk posted net profit of $8.6 billion in the second quarter, driven by “exceptional market conditions” in container shipping. The liner expects container demand to fall this year, however, as inventories pile up in warehouses.  
  • The U.S. president plans to sign a bill providing tens of billions of dollars to the domestic chip making industry next Tuesday after Congress passed the measure last week. 
The Hidden Suppliers of the Chip Industry
  • In the latest news from the auto industry:
    • Chinese electric vehicle maker BYD extended its lead over rivals in July, selling a record 162,539 units, up threefold from last year. 
    • BMW says vehicle sales will start to normalize by year’s end after its all-time order backlog clears. 
    • GM’s autonomous driving technology will soon be available on over 400,000 miles of North American highways, double its current operating area. 
    • Subaru’s U.S. sales rose 19% in the latest quarter, marking the automaker’s strongest growth of any region. 
    • Swedish truck maker Volvo Group plans to build a large-scale production site for electric vehicle battery cells to help meet growing demand for zero-emission transport. 
    • July sales at Volvo fell 21.5% as supply chain problems continued to hamper production. 
    • Geopolitics may delay a decision by China’s CATL, the world’s largest battery maker, to build production in North America, according to reports. 
    • Electric vehicle maker Lucid Group slashed the number of vehicles it expects to make this year by half, citing supply chain and logistics challenges. 
    • Albemarle Corp, the world’s largest producer of lithium for electric vehicle batteries, expects profit to surge 500% in its lithium division this year.
    • Carmakers are reporting lower demand in Europe and North America amid what analysts say is growing evidence that consumers are balking at high prices amid budget belt tightening. 
    • China’s exports of electric vehicles to Western Europe and Southeast Asia more than doubled in the first half of the year. 
    • RoadOne Intermodal Logistics will work with IKEA and Nikola to test the use of electric trucks at the Port of Baltimore
    • Landstar is telling owner-operators in California that they need to relocate out-of-state to remain independent contractors with the carrier. 
  • The ports of Rotterdam and Singapore plan to build the world’s longest “green corridor” for maritime shipping by 2027, a route that will prioritize zero-emissions ships and logistics solutions.
  • A union representing nearly 2,500 Boeing workers near St. Louis voted to accept a three-year contract offer from the plane-maker, averting a potential strike. 
  • Staple crop prices have tumbled in recent weeks to about where they were a year ago amid an exodus of speculative traders from the commodities market. 
  • The London insurance sector is preparing to cover Ukrainian grain and fertilizer shipments through a secure corridor from the Black Sea in voyages that may need up to $50 million of cover per cargo. 
Where Food Imports Are Affected in the Ukraine Crisis

Domestic Markets

International Markets

  • Japan’s rolling average of new COVID-19 infections hit 1,628 per million people Wednesday, the highest among G7 nations. Pandemic-induced worker shortages are crippling the nation’s hospitals, public transit and other essential services
  • South Korea reported over 110,000 new COVID-19 cases on Wednesday, a three-month high.
  • The Bank of England raised interest rates by 50 basis points, the biggest hike in over 25 years. 
  • Euro zone retail sales plunged 1.2% in June while factory gate prices continued to rise, according to new data. Euro zone business activity also contracted in July for the first time since early last year. 
  • China’s services activity grew at the fastest rate in 15 months in July despite a dip in foreign demand and more companies cutting staff. 
  • Bank of America downgraded its 2023 growth forecast for Mexico’s economy from 1% to 0% due to potential fallout from a U.S. downturn, which could also stall rebounding activity in the nation’s airline industry, according to forecasts. 
  • European budget carrier Ryanair flew a record 16.8 million passengers in July, putting it ahead of Lufthansa as Europe’s largest airline by passenger volume. 
  • Japan’s Nintendo sold 23% fewer of its flagship Switch consoles in the latest quarter, a result of continued chip shortages. 
  • Russian shoppers flocked to H&M after the retailer opened its doors for the last time in the country, offering steep discounts to get rid of inventory. 

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