MH Daily Bulletin: September 22

September 22, 2022 • Posted in Daily Bulletin

News relevant to the plastics industry:

At M. Holland

Supply

  • Oil fell 1% to a two-week low Wednesday after the U.S. Federal Reserve delivered another hefty rate hike to quell inflation. 
  • In mid-morning trading today, WTI futures were up 0.9% at $83.70/bbl, Brent was up 1.0% at $90.72/bbl, and U.S. natural gas was down 1.7% at $7.65/MMBtu.
  • The average U.S. gasoline price rose slightly on Wednesday to $3.681 a gallon, the first gain in several months. Gasoline demand over the past month fell to 8.5 million bpd, the lowest since February.
  • U.S. crude stocks rose by a lower-than-expected 1.1 million barrels last week, the EIA said.
United States Crude Oil Stocks Change
  • Valero and Marathon took more than half the crude offered from the latest release of 180 million barrels of U.S. strategic reserves.
  • Major Chinese refiners are poised to boost runs by up to 10% next month on a possible surge in export activity if the government raises fuel export quotas. 
  • Abu Dhabi National Oil is considering a deal to buy all or part of commodity trading house Gunvor Group in one of the industry’s biggest deals in years.
  • More oil news related to the war in Europe:
    • Germany on Wednesday agreed to nationalize Uniper SE, raising the government’s bill to rescue the energy giant to almost $30 billion. The move follows France’s takeover of European utility EDF last week.
    • European nations have put a collective $500 billion the past year into cushioning households and businesses from soaring energy prices.
    • The U.K. will cap wholesale electricity and gas costs for businesses at less than half the market rate starting in October, a bid to prevent widespread closures. 
    • German natural gas import costs rose 164% between January and July despite a 25.5% decline in volumes.
    • Algeria’s natural gas exports to Italy could climb by 20% this year as nations rush to find new suppliers.
  • California almost doubled its historical natural gas usage during an extreme heat wave earlier this month, when power demand set a record.
Caiso's Electricity Generation mix so far... (Jan. 1, 2022-Sept. 12, 2022)

Supply Chain

  • Hurricane Fiona intensified into this year’s strongest Atlantic storm, a Category 4, as it moves north to threaten Bermuda and eastern Canada. Over 1 million people are still without power in Puerto Rico after the storm’s devastating touchdown earlier this week.
  • Clashes between cargo workers and management have been rising across the globe this year, making logistics planning more difficult and exacerbating strains caused by COVID-era supply-chain shocks.
  • More European manufacturers are considering moving operations to the U.S., attracted by stable energy prices and significant green-energy support.
  • Some experts suggest the U.S. is poised for a manufacturing renaissance led by advanced 3D printing and boosted by federal incentives to encourage the use of additive technology.
  • Container rates from Asia to the U.S. West Coast are 80% below the year-ago level, according to the Freightos Baltic Index.
  • Container ship charter rates dropped by 20% the past week amid fears that some carriers may default on payments due to weakening demand.
  • The Suez Canal is raising fees for tankers by 15% next year and boosting the price for bulk-vessel transits by 10%.
  • Maersk says feeder services in parts of Latin America and the Caribbean are being delayed due to congestion.
  • Honolulu-based carrier Matson closed its seasonal China-California Express loop ahead of peak season after spot rates on the trade lane collapsed. 
  • Shares of corrugated cardboard manufacturers International Paper, Packaging Corp. of America and WestRock each fell over 10% after FedEx lowered its demand projections for the rest of the year. 
  • China’s monthly semiconductor output fell in August at the steepest pace in records dating back to 1997.
  • Airbus is quietly relaxing pressure on suppliers to hit the plane maker’s mid-decade output targets as logistics snarls show no sign of easing.
  • Amazon’s freighter flights are up just 3.8% since March, the smallest increase of the pandemic.
  • In the latest news from the auto industry:
  • Combined inventories at Chinese home appliance manufacturers have doubled in the COVID-19 era, swelling to their breaking point.
  • U.S. apparel retailers are preparing steep markdowns to clear excess inventory ahead of the holidays. 
  • A textile-industry survey showed business expectations for the sector have turned negative for the first time since early 2020. 

Domestic Markets

  • The U.S. averaged 55,332 new COVID-19 infections and 356 virus fatalities over the past seven days.
  • Omicron-tailored COVID-19 boosters will likely be available for children aged 5-11 by mid-October, the CDC said.
  • A new Omicron variant, BF.7, has caught the attention of scientists for its rapid spread among a crowded field of competing variants. 
  • Federal officials are recommending the FDA revise its guidelines for emergency-use authorizations to ensure better availability of medicine during future disease outbreaks.
  • First-time jobless claims rose by a modest 5,000 last week to 213,000, indicating the labor market remains tight.
  • On Wednesday, the Fed raised its benchmark interest rate by 75 basis points to a 3.00%-3.25% range and signaled more large increases would come. Risk assets like stocks and oil fell on the news, while the dollar rallied to a two-decade high. Wednesday marked the Fed’s third straight three-quarter-point increase, pushing borrowing costs to their highest level since 2008:
United States Fed Funds Rate
United States Existing Home Sales

International Markets

  • The number of foreign visitors to Japan topped 100,000 for the fifth month in August following the relaxation of strict border controls. Tourism visits to Europe, meanwhile, remain significantly below pre-pandemic levels:
COVID-19 had an unprecedented impact on tourism

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