More COVID-19 news relevant to the plastics industry:
Oil prices fell 8.3% last week, ending a six-week rally, on fears of a second wave of COVID-19 infections.
Prices were higher in mid-day trading today, with the WTI up 1.4% to $36.77/bbl and Brent up 2.0% to $39.50/bbl.
BP now estimates that Brent will average $55/bbl through 2050, down from its previous assumption of $70/bbl. The company will take a $13 billion write-down on the value of its reserves and could leave oil “stranded” in the ground.
Supply chain disruptions have upended the illicit drug trade, causing shortages of workers and precursor chemicals, a plunge in coca leaf prices, and the collapse of some rural economies in Latin America and Asia.
The White House is seeking a Phase 4 recovery tranche worth $2 trillion aimed at supporting manufacturing. The Senate is pressing for a $1 trillion plan, and the House of Representatives is proposing a $3 trillion package.
With U.S. government debt expected to exceed 130% of output this year, higher than during WWII, policy makers may be forced to employ the same post-war strategy of “financial repression” to address the debt load, where interest rates are held low for a prolonged period.
The University of Michigan’s index on consumer sentiment improved to 78.9 the week ended June 10, compared with an average of 72.3 for the prior four weeks.
Though jobless claims are declining, 30% of job losses could be due to “reallocation shock” and may be permanent, according to Bloomberg Economics.
The unemployment rate among lower wage earners, disproportionately minority, climbed as high as 35% by mid-May, compared with just 5%-15% for higher wage workers, according to the Federal Reserve.
Payment processors such as PayPal and Square are exacerbating cash flow challenges for some companies by delaying access to deposits out of concern for customer returns and cancellations.
The U.S. automotive industry is reportedly just a few weeks away from running at full strength. However, call offs by anxious auto workers and infections at factories are creating challenges for the reopening industry.
Mexican auto plants, under pressure to raise production to support U.S. assembly operations, are scrambling to seek extensions of domestic content requirements in the new USMCA pact, which takes effect July 1.
Rental car company Hertz, in bankruptcy, is selling tens of thousands of used cars at discount prices, aggravating an already overstocked used car market.
24 Hour Fitness filed for bankruptcy, the latest failure among fitness centers facing a 28% rate of membership cancellations, according to the International Health, Racquet & Sportsclub Association.
Retailers with a more rural footprint, such as Tractor Supply, Lowe’s and Dollar General, have fared better than their more urban competitors and may continue to benefit if people relocate from densely populated cities.
Rigorous cleaning protocols by companies reopening offices could expose employees to dangerous levels of unhealthy chemicals in disinfectants on an EPA-approved list.
Some employees working remotely in another state could face double taxation if their company is in one of six states with “convenience” income tax rules: Arkansas, Connecticut, Delaware, Nebraska, New York and Pennsylvania.
Some areas experiencing rising infection rates are extending restrictions as the CDC reports that COVID-19 fatalities in the U.S. could approach 140,000 by July 4. New York and Texas are threatening renewed lockdowns if case levels rise.
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