MH Daily Bulletin: September 16

September 16, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

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Supply

  • Oil futures fell over 3% Thursday to a one-week low, led by expectations for weaker global demand. Futures are headed for their third weekly decline.
  • U.S. natural gas fell as much as 9% Thursday after major railroads secured a tentative contract deal with unions, averting the chance that a walkout would boost demand for gas by threatening coal supplies to power plants.
  • In mid-day trading today, WTI futures were up 0.3% at $85.37/bbl, Brent was up 0.7% at $91.44/bbl, and U.S. natural gas was down 5.2% at $7.89/MMBtu.
  • The U.S. 3:2:1 crack spread, a measure of refining profit margins, is on track for its lowest price since early March.
  • U.S. energy officials met with governors of six northeastern states Thursday to address the region’s soaring fuel costs heading into winter.
  • U.S. utilities added a larger-than-expected 77 billion cubic feet of natural gas to storage last week as gas output is expected to hit a monthly record in September. More gas rigs are now operating than before the pandemic:
More natural gas rigs are now operating in the United States than before the pandemic

Supply Chain

  • Major U.S. railroads and unions secured a tentative deal after 20 hours of intense talks brokered by the White House to avert a rail shutdown that could have hit food and fuel supplies across the nation. Leaders of 12 unions involved in the talks must now sell the agreements to members, who will vote to ratify or reject them over the next several weeks. U.S. passenger rail services are resuming operations preemptively shut down earlier this week.
  • On Thursday, the Shanghai region’s ports began to reopen, airports resumed passenger flights and train services were restored as the city dropped its typhoon alert to the lowest level. Typhoon Muifa has weakened into a tropical storm as it heads north to Shandong province. 
  • Tropical Storm Fiona has formed in the Atlantic, becoming the sixth named storm of the 2022 Atlantic hurricane season and triggering storm watches in the U.S. Virgin Islands and Puerto Rico. 
  • Northern California’s Mosquito Fire has grown to 63,000 acres since sparking on Sept. 6, now the state’s largest wildfire of the year.
  • Worse-than-expected quarterly revenue at FedEx will prompt the shipper to close offices and park aircraft amid declining package volumes worldwide. The firm’s shares fell almost 20% in late trading Thursday.
  • Air cargo volumes fell 5% year over year in August, extending a months-long streak of reduced demand. Volumes were down a sharp 17% in Europe in July.
  • A strike by tugboat operators is slowing vessel operations at Canada’s Port of Vancouver.
  • The biggest names in U.S. heavy industry, including U.S. Steel, Alcoa and Nucor, have warned that demand for metals used in everything from automobiles to iPhones is slumping quicker than expected, while rising costs for energy and raw materials continue to weigh on margins.
  • The chief executive of Corning, the world’s biggest fiber optic cable producer, says Europe needs a more robust supply chain for the telecommunications industry
  • U.S. plastics shipments are forecast to grow 1.8% this year, adding to last year’s gains after a 0.9% downturn in the first year of the pandemic.
  • In the latest news from the auto industry:
    • Magna, North America’s largest auto supplier, is testing a last-mile autonomous delivery robot for use on public roads in Michigan. 
    • Up to 95% of the lithium in lithium-ion electric vehicle batteries is not being recycled due to high costs, according to Germany’s Evonik Industries. 
    • MercadoLibre, a large Latin American e-commerce retailer, will double its electric-vehicle delivery fleet to over 1,000 by year’s end. 
    • Officials with the EU’s executive arm raised concerns with the U.S. that its tax incentives for domestically made electric cars could violate WTO rules.
  • In consolidation news:

Domestic Markets

  • The U.S. reported 59,855 new COVID-19 infections and 357 virus fatalities Thursday. The nation is currently averaging just under 400 daily virus deaths
  • U.S. health officials say this year’s flu season will be particularly bad as people’s immune systems weakened amid COVID-19 precautions. 
  • At least 800 U.S. school districts are using four-day weeks this year in a bid to entice more people into the pandemic-hit teaching profession. 
  • U.S. factory production rose slightly by 0.1% in August as resilient business investment offset a pullback in the output of consumer goods.
United States Manufacturing Production MoM
  • U.S. import prices fell for a second month in August, weighed down 1% by declining costs for petroleum products and a strong dollar.
United States Import Prices
  • U.S. business inventories rose 0.6% month over month and 18.4% year over year in July, a considerably slower pace from prior months as cooling demand forces companies to be cautious.
United States Business Inventories

International Markets

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