MH Daily Bulletin: September 1

September 1, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

At M. Holland

  • During M. Holland’s recent summer internship program, 15 bright college students worked both in-person and remotely across many departments. Click here to read more about their experiences at M. Holland and their perspectives on the plastics industry.
  • M. Holland’s latest logistics outlook examines current challenges and industry trends that are impacting shipping, trucking and rail. Although the plastics industry is faring a little better than earlier this year, M. Holland’s experts predict disruption to continue well into 2023. Click here to read the full outlook for the remainder of 2022.
  • M. Holland will be attending the North American Detroit Auto Show on Sept. 14-15. This annual showcase for emerging automotive technologies will be held at Huntington Place in Detroit, Michigan. If you’re attending, please RSVP for M. Holland’s reception or contact Mike Gumbko, Strategic Account Manager, to set up a meeting with our Automotive team.
  • M. Holland will be closed Monday, Sept. 5, in observance of the Labor Day holiday.
  • Market Expertise: M. Holland offers a host of resources to clients, prospects and suppliers across nine strategic markets.

Supply

  • Oil prices fell over 2% Wednesday on worries that new COVID-19 restrictions in China will further weaken demand. Prices fell almost 10% in August, the third month of declines.
  • In mid-morning trading today, WTI futures were down 2.7% at $87.16/bbl, Brent was down 2.6% at $93.14/bbl, and U.S. natural gas was up 2.0% at $9.31/MMBtu.
  • U.S. crude stocks fell by 3.3 million barrels last week and are about 6% below the five-year average for this time of year, according to the government.
  • U.S. crude output rose to 11.8 million bpd in June, the highest since April 2020. Natural gas production also rose to a record 109.3 billion cubic feet per day. 
  • BP’s refinery in Whiting, Indiana — the Midwest’s largest — has restarted production after being idled last week due to an electrical fire.
  • OPEC+ says underproduction among its members will leave a smaller-than-expected surplus this year of just 0.4 million bpd
  • OPEC’s oil output hit 29.58 million bpd in August, the highest of the pandemic despite being about 1.4 million bpd below targets. 
  • OPEC sources indicate output cuts floated by Saudi Arabia last week are likely not imminent
  • The Port of Gibraltar closed for several hours Wednesday after a bulk carrier collided with an LNG tanker, causing a fuel-oil leak. 
  • Exxon Mobil joined Shell in seeking to divest their California oil and gas joint venture, Aera, one of the state’s largest oil producers.
  • Alberta is readying to pay off nearly $10 billion in debt, its biggest repayment ever, after surging oil prices boosted revenue in the Canadian province.
  • U.S. production of ethane, a key feedstock for manufacturing plastics and resins, reached a monthly record of 2.5 million bpd in March and has remained at near-record levels since. 
EIA expects U.S. ethane production to grow by 9% in the second half of 2022
The UK Energy Price Cap Is Through the Roof

Supply Chain

  • Excessive heat warnings are in place for millions of people in California, Oregon, Washington, Nevada and Idaho, with high temperatures expected to last through Labor Day weekend. The heat is straining power supplies, with California’s grid operator warning Wednesday that the state could see organized blackouts.
  • Severe drought conditions are focusing a spotlight on the high water consumption of data centers, among the top 10 industrial users of water, which can consume as much water as a thousand homes for cooling. 
  • Crop harvests across much of Europe are expected to drop by double-digit percentages this year due to widespread drought and excessive heat. 
  • UPS added peak-season surcharges extending through Jan. 14, aimed largely at high-volume customers.
  • With U.S. freight demand easing, the pendulum is swinging to favor shippers in rate negotiations
  • Shell entered a 10-year agreement to supply Israeli shipping line ZIM’s new LNG-powered container ships operating between Asia and the U.S. East Coast starting next year.
  • In the latest news from the auto industry:
    • German engineering giant Bosch is spending over $200 million to boost electric vehicle fuel cell production in South Carolina. 
    • The U.S. Energy Department extended an $11 million grant to the University of Michigan as researchers work to develop ceramic components for electric vehicle batteries, a bid to boost range and lessen fire risk.
    • BMW launched production of hydrogen fuel cells for its new iX5 SUV, making it one of the last automakers to continue pursuing the alternative fuel technology for passenger vehicles. 
    • GM announced plans to build a new “tiny” electric convertible in a joint venture with China’s SAIC-GM-Wuling Automobile starting in September.
    • Subaru plans to release its next-generation autonomous driving technology in 2025.
    • Tesla continues to slash waiting times for its Model Y in China as the automaker boosts production in Shanghai.
    • Chinese electric-vehicle maker BYD more than tripled its first-half profit to $520 million as sales jumped 300%.
    • A method under research to charge electric cars in 10 minutes could be available in five years, according to U.S. government researchers.
    • GM and LG Energy, as well as Stellantis and Samsung SDI, are the latest tie-ups between automakers and battery suppliers seeking to expand capacity by sharing hefty upfront costs. The GM/LG battery joint venture in Ohio began production Wednesday.
    • Volkswagen and Audi are stockpiling inventories of glass parts such as windshields as European glass-makers get squeezed by higher energy prices. 
    • Toyota plans to triple its investment in a new North Carolina battery plant from $1.29 billion to $3.8 billion, partly in response to rising consumer demand for electric vehicles.
  • Over 1,500 workers at Canadian logistics firm Loomis Express agreed to a new contract Wednesday to avoid a strike that would have disrupted facilities across eight provinces. 
  • Robot sales are booming, with deliveries to the automotive industry comprising 59% of orders in the second quarter while the food and consumer-goods industry increased robot sales by 13%, according to the Association for Advancing Automation.
  • London-based Taylor Maritime Investments is offering to take over Grindrod Shipping in a deal that values the bulk carrier at nearly $500 million.
  • Intermodal provider RoadOne acquired Texas-based port trucking company Wilmac Enterprises.

Domestic Markets

Where Employers Struggle to Fill Open Positions
  • Manufacturers, hotels, warehouses and restaurants are increasingly letting new hires work just a few days a week on flexible schedules due to continued tightness in the U.S. labor market.
  • The average U.S. mortgage rate rose from 5.65% to 5.8% week over week. Mortgage applications dropped 2% and were 23% lower than a year ago as the National Association of Home Builders suggests the nation may be in a housing recession
  • U.S. food prices rose 10.9% year over year in July, the biggest increase since 1979, according to the Labor Department.
  • Restaurant traffic was up 10% year over year in the first three weeks of August to pre-pandemic levels, but the industry has been squeezed by rising food costs, absorbing about half of the 15% increase of the past year. 
  • Bed Bath & Beyond announced plans to close 150 stores and cut 20% of corporate and logistics jobs as part of a sweeping overhaul of its ailing operations.
  • A U.S. bankruptcy court declined to give Chapter 11 protections to 3M based on a bankruptcy filing by its Aearo Technologies subsidiary, exposing the firm to more jury verdicts in faulty earplug lawsuits that have already yielded over $265 million in damages.
  • The U.S. is suspending 26 flights by Chinese carriers next month in a dispute over Beijing’s strict COVID-19 policies. 
  • Labor Day air travel is expected to rebound to pre-pandemic levels this year as holiday spending is already up 17%.
  • Delta has issued over $6 billion in refunds since 2020 for canceled or delayed flights.
  • With flight costs soaring, Google Flights research shows travelers can save 12% on ticket prices by traveling during the week rather than on weekends. 

International Markets

The Erosion of UK Pub Culture

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