MH Daily Bulletin: June 30

June 30, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

At M. Holland

  • M. Holland will be charging a fee to recover the reinstated Superfund Excise Tax for applicable U.S. orders starting July 1, 2022. Clients will be notified of details this week. Learn more about the tax in this Plastics News article.
  • M. Holland will be closed Monday in observance of the July Fourth holiday. We wish all subscribers a safe and happy holiday weekend.

Supply

  • Oil prices slid about 2% Wednesday on news of a larger-than-expected rise in U.S. gasoline and distillate inventories, pointing to lower demand. 
  • In mid-morning trading today, WTI futures were down 3.8% at $105.60/bbl, Brent was down 1.7% at $114.50/bbl, and U.S. natural gas was down 6.6% at $6.07/MMBtu. 
  • The U.S. administration said crude inventories fell last week even as production hit its highest level since April 2020, with U.S. refiners operating at about 95% of capacity. Government data shows refinery capacity has declined for two years in a row:
U.S. refinery capacity decreased during 2021 for second consecutive year
  • U.S. crude exports from the Gulf Coast are projected to hit an all-time high in the current quarter, according to Rystad:
  • British natural gas futures skyrocketed almost 50% Wednesday on news that Norway, the nation’s biggest supplier, reduced capacity at a major field due to a compressor failure. 
  • Exxon Mobil will sell its Canadian shale gas business for roughly $1.5 billion, a retreat from regions rich in gas but lacking in pipelines and other infrastructure. 
  • OPEC+ leaders are likely to stick to plans for a modest output increase for August upon conclusion of a two-day meeting today. 
  • Uncertainty in global oil and gas markets could stay “for some time to come” as spare capacity is very low while demand continues recovering, Shell’s chief executive said. 
  • More oil news related to the war in Europe:
    • Germany is in talks to bail out energy giant Uniper SE to stem a broader fallout from Russia’s slashed natural gas deliveries. 
    • Britain could cut off gas supplies to mainland Europe in the case of emergency shortages at home. 
    • Russian oil production jumped by 5% in June to an average of 10.7 million bpd, Moscow claims. 
    • China says it will begin subsidizing refineries if oil prices remain elevated above $130/bbl.
    • Shell is set to follow other Western energy majors by taking a stake in a $29 billion project to boost Qatar’s LNG exports. 
  • The U.S. Supreme Court today curtailed the authority of the EPA to restrict greenhouse gas emissions at power plants.  
  • California utility PG&E is asking the federal government to give it more time to apply for the funds that would allow it to continue operating its California nuclear plant. 
  • Spain restarted natural gas shipments to Morocco for the first time since November following a diplomatic row with Algeria. 
  • South Africa’s largest real estate trust is running out of diesel to operate generators as the country grapples with its worst electricity shortage since 2019. 
  • Global offshore wind added 21.1 GW of capacity last year, a record, although the International Energy Agency warns it is off track of current net-zero targets. 
  • China is hoping regulatory changes will reduce industrial energy consumption per unit of output by 13.5% in 2025. 

Supply Chain

Domestic Markets

  • The U.S. reported 193,201 new COVID-19 infections and 710 virus fatalities Wednesday.
  • The seven-day average COVID-19 infection rate is at its highest level in six weeks, while the daily average for hospitalizations is up 9% and for deaths is up 18% from two weeks ago.  
  • COVID-19 positivity rates in New York City are back up to January levels, raising fears of a sixth virus wave. 
  • The White House will buy 105 million doses of Pfizer’s COVID-19 vaccine for roughly $3.2 billion ahead of a fall booster campaign. 
  • Pfizer will begin human tests of a universal COVID-19 vaccine targeting all viral strains in the second half of this year. 
  • Consumer spending eased 0.4% in May, the first decline of the year, while a key measure of consumer price inflation rose a less-than-expected 0.3%.  
  • U.S. consumer outlays rose just 1.8% in the first quarter, the softest spending rate of the pandemic recovery. 
  • U.S. corporate profits fell 4.9% to $2.4 trillion in the first quarter following a modest gain in the previous period. 
  • The S&P 500 is down 20% year-to-date this week as it heads for its worst first-half since 1970. 
  • The U.S. dollar is hovering near a 20-year high compared to a basket of other currencies, benefiting from safe-haven demand amid fears of a global recession:
United States Dollar

International Markets

  • New global COVID-19 cases were up 18% last week.  
  • Canada will extend through September its current COVID-19 testing measures for travelers crossing land borders, the government said. 
  • Shanghai is reopening museums and other tourist attractions next week for the first time in three months.
  • Hong Kong reported over 2,000 new COVID-19 cases Wednesday, the most in two months. The island may follow China in reducing quarantine periods for incoming travelers
  • Despite a 23% rise in COVID-19 cases last week, health experts do not expect Britain to impose any new pandemic restrictions this summer. 
  • More news related to the war in Europe:
    • The U.S administration says it has immobilized over $300 billion in Russian central bank funds so far. 
    • Russia’s stock market plunged 8% Wednesday to a two-month low after Gazprom said it would halt dividend payments. The nation’s overall economy contracted 4.3% in May, new figures show. 
  • Chinese manufacturing activity rose this month for the first time since February, according to an official index. 
  • Japan’s factory output fell 7.2% in May, the largest monthly drop in two years amid continuing supply issues. 
  • Industrial production in South Korea jumped 7.3% in May from a year ago, double economist expectations.
  • An index of Euro Area consumer confidence fell to -23.6 in June, the lowest since the beginning of the pandemic even as the region’s unemployment rate fell to a fresh record-low.
  • In Germany, the unemployment rate hit a record-low 2.8% in May. 
  • Spain’s annual inflation rate jumped to a higher-than-expected 10.2% in June, the fastest pace in almost 40 years. 
  • Toyota’s production fell almost 10% below targets this year and was down 5.3% from last year between January and May. 
  • British car production rose 13.3% year over year in May, the first rise in 11 months but still almost 50% below pre-pandemic levels.
  • Stellantis is warning that the EU’s plan to phase out combustible-engine cars by 2035 could cause the auto market to collapse if soaring prices for electric vehicles are not reduced by then. 
  • Retail car sales in China jumped 28% last week compared to the same time a year ago, an industry group said. 
  • Japanese chipmaker Renesas Electronics is partnering with India’s Tata Motors to build a line of new auto and 5G system chips
  • Ford will spend over $200 million helping build a new lithium plant for Australia’s Liontown Resources in exchange for five years of supplies of the key battery metal. 
  • Hyundai is pushing back the rollout of its first hydrogen vehicle to at least 2024 due to issues with fuel cell development. 

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