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Winter Storm Uri
Our sources are comparing the arctic weather that descended on Texas and much of the South this week to Hurricane Harvey in 2017, the most disruptive climate event to hit the Gulf Coast petrochemicals industry in history. Here’s what we know:
- Winter Storm Uri has caused at least 17 deaths in Texas.
- A second winter storm is hitting the southern U.S. today.
- U.S. oil production has dropped by a third, with production in the Permian Basin down by nearly two-thirds. Fracking in the Permian Basin is expected to remain shut down through the end of the week.
- Gas prices could reach $3 per gallon for the first time since 2014 after a spate of refineries halted operations.
- Supply for next-day delivery at Oklahoma’s Oneok Gas Transportation hub traded at $999/MMBtu for two contracts Tuesday, a 24,000% premium from a week ago.
- The weather caused electricity prices to skyrocket, creating windfalls for power generators able to supply and massive losses for others.
- A second day of rotating blackouts due to extreme cold left more than 5 million customers without power on Tuesday.
- The storm closed Texas airports and canceled over 4,000 flights nationwide.
- Nearly 5 million homes and businesses lost power in Mexico after imports of natural gas from the U.S. were curbed, knocking power stations offline. The outages are expected to cost local industry nearly $900 million.
- Texas authorities asked the Freeport liquefied natural gas export terminal to dial back operations to preserve natural gas.
- Walmart temporarily closed 415 stores due to the polar blast.
- FedEx was among several large companies whose operations were temporarily halted by the deep freeze.
- The automotive industry suffered much disruption from the inclement conditions:
- Ford closed its Kansas City F-150 assembly plant due to a lack of natural gas.
- GM canceled shifts at plants in Indiana, Tennessee and Texas.
- Stellantis closed its assembly plant in Toledo, Ohio.
- Toyota canceled shifts at plants in Kentucky, Indiana, Mississippi, Texas and West Virginia.
- Oil and gas producers Occidental Petroleum and Pioneer Natural Resources pushed back their fourth-quarter earnings releases due to impacts of harsh weather across Texas.
- The arctic weather has severely disrupted petrochemicals production:
- Flint Hills declared force majeure on polypropylene products due to the storm.
- ExxonMobil warned that the inclement weather may affect availability of polyethylene at its Texas facilities.
- Formosa Plastics Corporation USA declared force majeure on PP, PE and upstream products from its Point Comfort, Texas, plant.
- Formosa has temporarily closed its Point Comfort, Texas, site due to the storm.
- INEOS declared force majeure on polypropylene products due to the storm.
- Invista declared force majeure on US supply of PA66 intermediate chemicals.
- LyondellBasell declared force majeure on polyethylene and polypropylene products due to the storm.
- Occidental, the second-largest producer in the Permian Basin, declared force majeure on oil deliveries.
- OxyChem declared force majeure on U.S.-based PVC products.
Supply
- Crude prices were higher in early trading today, with the WTI up 1.5% at $60.94/bbl and Brent 1.8% higher at $64.50/bbl. Natural gas was down 0.6% at $3.11/MMBtu.
- A federal court blocked construction of ConocoPhillips’ $2 billion Willow crude oil project in Alaska, halting plans for one of the biggest oil projects in North Slope history.
- Unusually cold Siberian weather has prevented Russia from increasing its oil output to meet expanded 2021 OPEC+ quotas.
Supply Chain
- The federal government is extending to May 31 its pandemic-related exemptions to driver work hours.
- Shipper CMA CGM is creating a specialized air freight division with the purchase of four modern Airbus long-range freighter aircrafts.
- The number of container ships on order rose by 23 last week to 201, the biggest weekly gain in two years, as orders for new vessels are expected to reach $10 billion in the first quarter.
- Maersk, the world’s largest shipping company, said all new ships it acquires must be able to run on carbon-neutral fuels.
- A new policy requiring all first-class mail to be put on a single delivery track could significantly slow up services at the United States Postal Service, meaning more costly delivery for both consumers and commercial mailers.
- Nearly 90% of supply chain professionals have plans to invest in supply-chain resilience over the next two years.
- The earthquake in Japan last week forced Toyota to temporarily suspend vehicle production on 14 lines at nine factories.
- We expect continuing logistics disruption in the U.S. from severe winter conditions blanketing much of the country.
- Logistics conditions remain strained, with trucking demand exceeding availability and continued congestion at ports due in part to operating challenges related to the pandemic. Clients are advised to provide expanded lead times on orders to help ensure delivery dates.
Markets
- There were 62,398 new COVID-19 cases in the U.S. yesterday and 1,756 fatalities.
- With U.S. COVID-19 infections and hospitalizations down for the fifth straight week, fatalities are expected to follow, decreasing up to 43% over the next month, according to forecasts.
- The White House is extending foreclosure moratoriums and mortgage forbearances through the end of June, while the federal moratorium on evictions is still set to expire March 31.
- The White House is increasing the U.S.’s COVID-19 vaccine supply to 13.5 million doses per week, up from 11 million, while the number of shots distributed through pharmacies will double.
- The CDC is considering a recommendation that states extend the interval between the first and second doses of COVID-19 vaccines, a strategy for quickly getting first shots for more people.
- In a stark image of America’s vaccine disparity, more than 10% of Manhattan’s Upper East Side residents have been vaccinated against COVID-19, while only 3% of people in Harlem have received shots.
- CVS is reentering the federal government’s healthcare marketplace next year in the wake of a growing presence in COVID-19 testing and vaccination services.
- The head of the St. Louis branch of the Federal Reserve said the U.S. economy’s financial outlook is generally good, with growth potentially outpacing that of China in coming years.
- Farm profits in 2020 reached their highest levels in seven years, with more than a third of income coming from direct federal assistance payments.
- General Mills benefited from the trend to cook more at home during the pandemic, announcing increased focus on ice cream, cereal and Mexican meals going forward.
- The TSA reported the busiest air travel weekend since the New Year’s holiday, with back-to-back days of over 1 million people traveling last weekend.
- Airline passenger traffic in the U.S. fell more than 60% last year to the lowest level since 1984.
International
- New COVID-19 cases globally fell 16% over the past week, and fatalities declined 10%.
- India reported its first cases of the highly infectious COVID-19 strains found in South Africa and Brazil.
- COVID-19 cases in the Netherlands are on the rise again due to increased rates of the virulent U.K. strain. Containment is challenged by a recent court ruling striking down the nation’s curfew imposed on Jan. 23.
- Sweden is preparing tougher restrictions following a recent spike in new infections of the U.K. COVID-19 variant.
- Policymakers are urging Mexican officials to divert a limited supply of COVID-19 vaccines to remote regions, where limited access to healthcare poses a greater risk from the virus. Mexico plans to formally complain to the United Nations today about the uneven distribution of vaccines globally.
- Japan is kicking off its COVID-19 vaccination program today amid the nation’s third, and most serious, wave of infections.
- Hong Kong is close to approving the COVID-19 vaccine from Chinese developer Sinovac Biotech, which would become the second shot approved in the city-state.
- Infections with the U.K. COVID-19 variant are doubling each week in Germany, now comprising 22% of all new infections. Germany will begin offering free rapid COVID-19 testing to citizens starting March 1.
- Germany’s economic minister urged caution in easing coronavirus restrictions, leading business lobby groups to believe the country’s economy will not quickly reopen.
- South Africa will share 1 million AstraZeneca/Oxford COVID-19 vaccines with other African countries. The nation also received its first shipment of shots from Johnson & Johnson yesterday.
- With only 4.8% of Europeans vaccinated against COVID-19, the bloc is falling behind in slowing the spread of new variants, forcing governments to extend or tighten restrictions on people and businesses.
- European governments have provided a third of all business lending during the pandemic downturn — equivalent to about 9% of the collective size of bloc economies — raising fears about how to remove support without exposing major weak points in the economy.
- China surpassed the U.S. as Europe’s largest trading partner last year.
- Singapore’s economy is expected to grow up to 6% this year, a turnaround from last year’s worst recession ever when the nation’s GDP shrank 5.4%.
- Israel’s economy contracted a smaller-than-expected 2.4% last year amid strong high-tech exports and sustained consumer spending.
- Canadian factory sales climbed 0.9% month over month in December, with shipments of wood products reaching a record high. The nation’s home sales and prices reached new highs in January, fueled by a 13% drop in listings from December.
- With job prospects dimmed, more young people are signing up for the military or staying in service roles longer. Applications are up in Australia, Canada and South Korea, while members are staying longer in the U.S. and Israel.
- Car sales in Europe plunged 26% in January amid soaring COVID-19 infections and tightened restrictions.
- Ford will spend $1 billion to convert a German auto factory to make electric vehicles and expects that two-thirds of its sales in Europe will be electric vehicles or hybrids by 2030.
Our Operations
- Join us tomorrow at 1:00 p.m. CT for a webinar on 2021 Drivers and Trends for the North American Plastics Market, featuring Andrew Reynolds, Director of Business Publishing International (BPI); Ray Hufnagel, President and CEO at Plastic Express; Frank LaRocque, Director of Resale Sales at M. Holland; and Mike Foldvary, Director of Distribution Sourcing at M. Holland. Click here to register.
- Our 3D Printing business unit has launched a new e-commerce site. Access the new site here.
- Market Expertise: M. Holland offers a host of resources to clients, prospects and suppliers across nine strategic markets. To arrange a videoconference or meeting with any of our Market Managers, please visit our website.
Thank you,
M. Holland Company
We will provide further COVID-19 bulletins as circumstances dictate. For all COVID-19 updates and notices, please refer to the M. Holland website.