MH Daily Bulletin: July 22

July 22, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

At M. Holland

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  • Oil prices fell 3% Thursday after the European Central Bank raised interest rates, sparking recessionary fears.
  • In mid-morning trading today, WTI futures were up 0.9% at $96.72/bbl, Brent was up 0.9% at $104.80/bbl, and U.S. natural gas was down 4.4% at $8.28/MMBtu.
  • U.S. retail fuel prices have fallen for 37 consecutive days, with the average gasoline price down to $4.41 a gallon, according to AAA. 
  • Valero, Marathon and Phillips 66 are set to bring in a collective $14 billion in cash from operations this quarter, the most ever, according to S&P Capital. Earnings at the U.S.’s eight biggest refiners could surge over 650% from last quarter. 
  • U.S. energy consumption fell by a record 7.5% in 2020, with only Alaska registering an increase:
Energy use fell during 2020 in all U.S. states except Alaska

Supply Chain

  • A sweltering heat wave scorched the U.S. for a third consecutive day Thursday, particularly in East Coast and Southern states, as 160 million Americans face temperatures above 100 degrees this weekend. 
  • Extreme heat in Texas has sparked over 7,000 acres of wildfires this week. 
  • Europe’s heat wave moved steadily eastward Thursday, prompting emergency alerts throughout Italy, Poland and Slovenia.
  • California’s administration held firm on enforcing a 2019 state law that tightens rules for non-employee truck drivers, as hundreds of protesters continue to block truck movements into and out of the Port of Oakland, the third largest port on the West Coast. 
  • The queue of vessels awaiting berths at the Port of Los Angeles is down 80% since the start of the year.  
  • Union Pacific is charging customers extra for delayed freight pickup from trains as pressure mounts for railroads to quickly clear containers from backlogged West Coast ports. 
  • FedEx is suspending Sunday residential delivery in certain U.S. markets starting Aug. 15, a move following pleas from independent contractors for better compensation and an easing of shipping volumes amid rising costs. 
  • Mexico could face up to $30 billion in tariffs as the U.S. and Canada ramp up a trade spat over the nation’s energy policies. The dispute could affect the nation’s energy, automotive and agriculture sectors and cloud North America’s investment attractiveness just as manufacturers are looking to return manufacturing from Asia.  
  • The 60,000-member trade union of Mexico’s Telmex went on strike for the first time in nearly 40 years Thursday after failing to reach a contract deal with the Mexican telecom giant. 
  • U.S. transit systems are faltering due to a severe shortage of bus drivers
  • Contract workers at South Korea’s Daewoo Shipbuilding offered to end a strike if the company drops legal threats. 
  • Aviation supplier lead times for sourcing material can now run six months to over a year, threatening plane-makers’ plans to boost output.
  • Swiss automation firm ABB, seen as a barometer of global manufacturing, reported a 20% increase in orders last quarter amid easing supply chain constraints.
  • Mattel’s second-quarter sales rose 20%, signaling continued strong demand for toys even as inflation reduces household budgets.
  • The Philadelphia Fed’s monthly index of Mid-Atlantic factory activity slumped in July to the lowest since May 2020, with economists seeing further slowdown in the months ahead. 
United States Philadelphia Fed Manufacturing Index

Domestic Markets

  • Private equity firms spent a record $226.5 billion taking companies private in the first half of 2022, up 39% from the same time last year as lower corporate valuations made it easier to lure businesses away from stock markets. 
  • Despite surging rent costs, it is still more affordable to rent than to purchase a home in 38 of the 50 largest U.S. metro areas, research shows. 
  • Shares of American Airlines and United Airlines fell over 9% Thursday despite both carriers posting their first quarterly profit without U.S. government aid since the pandemic began, as higher costs threaten to offset booming demand. 
  • Flight capacity at American Airlines (-10%) and United Airlines (-13%) will be trimmed well below 2019 levels this year in a bid to halt travel disruptions.  
  • Boeing won orders for 297 aircraft at this week’s first Farnborough Airshow of the pandemic, handily beating Airbus’ 85 orders. 
  • AT&T says more of its customers are falling behind on their bills, a sign that rising costs are pinching many households on essential services. 
  • Social media company Snap Inc. posted its weakest-ever quarterly sales growth as economic turmoil hits digital advertising. U.S. social-media giants shed nearly $90 billion in market value following the news. 
  • Domino’s Pizza missed quarterly profit estimates Thursday amid soaring costs and a severe labor shortage

International Markets

  • Global COVID-19 cases have doubled over the past six weeks, according to the World Health Organization.
  • Over 3.3 million people contracted COVID-19 in Europe last week, with cases tripling the past six weeks:
First European Central Bank Rate Hike in Eleven Years
  • An S&P Global survey of private-sector activity in the euro area dropped to a 17-month low in July, led by worsening output among manufacturers and a near-stalling of service-sector growth. 
  • The Bank of Japan maintained its ultra-low interest rates Thursday despite raising forecasts for inflation this year.  
  • South Africa surprised markets by delivering a 75-basis-point interest-rate hike on Thursday, its largest in over two decades. 
  • Global mergers and acquisitions activity dropped 20% year over year by volume in the first half of 2022, according to PricewaterhouseCoopers. 
  • European budget carrier Ryanair reached a tentative agreement on pilot contracts that could improve operations in France and Spain. 
  • Australia’s Qantas Airways scrapped over 8% of domestic flights last month, making it the country’s least reliable carrier.
  • China’s search engine giant Baidu unveiled an autonomous vehicle with a detachable steering wheel, which the firm plans to use in robotaxi services by next year. 

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