Good Afternoon,
More COVID-19 news relevant to the plastics industry:
Supply
- The Energy Information Administration (EIA) reported a larger-than-expected draw down of U.S. inventories last week, sending the WTI price above $41/bbl.
- Crude prices were higher in early trading with the WTI price at $41.39/bbl and Brent at $43.73/bbl.
- U.S. coal production fell 7% last year to its lowest level since 1978. The EIA estimates that production is down 27% so far this year.
Supply Chain
- The U.S. Treasury Department reached an agreement to loan $10 billion to the financially strapped U.S. Postal Service.
- Canadian daily crude-by-rail volume in May was at less than 15% of recent peak levels, idling thousands of railcars.
- Eastman Kodak, with help from a $765 million federal loan issued under the Defense Production Act, will begin making chemicals used in pharmaceuticals to fight COVID-19 as the government presses to shift manufacturing from China.
- The shift to stay-at-home viewing is upending the movie distribution industry as evidenced by Universal Studios’ new pact with AMC theaters that shortens the exclusivity period for theaters on new releases from an industry-average 90 days to just 17 days.
- We continue to experience challenges with truck deliveries, particularly LTL shipments, due to labor shortages and operational delays caused by COVID-19 protocols. Clients are advised to provide expanded lead times on orders to help assure delivery dates will be met.
- Beyond the transportation challenges, our Gold Standard logistics partners and U.S. ports continue to operate without interruption.
Markets
- New COVID-19 cases in the U.S. topped 60,000, but there are signs of plateauing in some hard-hit areas.
- COVID-19 in the U.S. has splintered into a fragmented collection of epidemics, all with different sources and requiring tailored responses.
- Twenty-one states are in the CDC’s red zone, with over 100 new infections per 100,000 people in the past week:
- Signaling its wariness about the strength of the recovery, the Federal Reserve yesterday extended its Main Street lending programs for small-and medium-sized business from September 30 through year-end.
- Goldman Sachs warned that the U.S. dollar could be displaced by gold as the world’s reserve currency because of rising government spending in response to the pandemic.
- With the lack of a unified approach to reopening, states are establishing their own guidelines for when restrictions are warranted, with most state standards falling short of CDC guidelines.
- Medicaid enrollment has spiked since the spring due to the surge in unemployment.
- A recent study of 100 COVID-19 patients revealed that 78 suffered lasting cardiovascular damage from the virus.
- Contrary to popular belief, the pandemic is reducing U.S. pregnancies, which could lead to a 500,000 drop in births next year and pose long-term implications for the economy.
- The pandemic-driven recession is cutting into results across industries as corporations report second-quarter earnings:
- GM posted a $758 million quarterly loss on a 50+% drop in revenue.
- Harley-Davidson posted a significant loss as quarterly revenues fell by over 50%.
- Boeing suffered a $2.4 billion quarterly loss on a 25% drop in revenues.
- GE posted a $2 billion quarterly loss on a 24% sales decline with its jet engine business most severely impacted.
- A surge in face mask production and sales could not offset revenue declines in other divisions as 3M’s quarterly sales slid 11.9%.
- Snack maker Mondelez, benefiting less than U.S.-centric competitors, reported a 3% drop in revenue with sales to developing regions falling as countries imposed lockdowns. Sales in Latin America were down 11%.
- Revenue for Starbucks fell 37% and the company posted a loss but is “steadily recovering” as stores reopen and it adjusts its operating model.
- McDonald’s will sell part of its Japanese affiliate and close 200 stores after posting higher-than-expected losses on a 24% drop in same-store sales.
- Retailer L Brands is cutting 850 staffers and closing 250 stores in the face of a 20% drop in quarterly revenues.
- Visa’s transaction volume fell 13% and quarterly earnings fell 23% on a pullback in consumer spending.
- Responding to consumer preferences for crossover vehicles, Mercedes is retiring at least seven luxury sedan models. Demand for luxury sedans has dropped 37% in the past five years, compared with a 73% increase in demand for luxury crossovers.
- Home prices were up 3.7% in May versus the prior-year period, but the pace and breadth of increase eased, with pricing higher in only three cities in a 20-city index.
- The Consumer Electronics Association announced that its annual CES show in January will take place virtually in 2021. Last year’s show in Las Vegas, which was attended by nearly 200,000 people from throughout the world, is suspected of helping incubate the COVID-19 pandemic.
- Lysol parent Reckitt Benckiser Group, building on demand for its cleaning products, is establishing a professional service business to advise leisure and travel businesses on hygiene matters.
- Fiber from a relative of the banana tree is being developed as a biodegradable alternative to replace plastic in face masks and hospital gowns.
- U.S. deaths from COVID-19 are approaching 150,000.
International
- A growing number of countries that have successfully tamed the virus are now attempting to stem a second wave:
- Italy is deploying the military to contain migrants in containment and quarantine centers after some have escaped.
- Germany has averaged nearly 600 new cases a day for the past seven days, a trend the country’s leading health official called “disturbing.”
- Spain suffered more than 6,000 new cases last weekend and is monitoring 361 active clusters.
- The U.K.’s prime minister, in defending the country’s quarantine mandate on travelers from Spain, said Europe is “starting to see in some places the signs of a second wave of the pandemic.”
- European governments fear returning vacationers and tourists will spark a second COVID-19 wave on the continent as the peak vacation season approaches.
- After reporting 68 new cases on Monday, China reported 101 on Tuesday, the highest daily rate since April.
- Hong Kong added 118 new cases yesterday, mostly locally transmitted.
- Australia restricted elective surgeries in Victoria, the second most populous state, as new infections spike there.
Our Operations
- To access 3D Printing training, order parts and seek technical assistance, visit our new online resource.
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- M. Holland’s official status statement is available here.
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.