A MARKET UPDATE for February, 2012

THE VIEW FROM JAMESTOWN”
MARKET UPDATE for
Frbruary, 2012
From
THE CHEMICAL COMPANY.

Contact:

The Chemical Company
P.O. Box 436
44 Southwest Ave.
Jamestown, RI 02835
Phone: (401) 360-2800
Website: thechemco.com
Email: Info@thechemco.com

Special Message:

 For those of us who have been in the Chemical Industry for the last 10- 20 years we have grown used to the fact that Oil and Natural Gas share similar paths when it comes to cost/ pricing. This is now simply a part of history. As we begin our voyage into 2012 it is clear that there will be two completely different journeys for the basics of our industry.

For natural gas we have seen the massive growth in production and mounting supplies. The shale gas extraction and a very mild winter have pushed spot prices lower and held them at price levels we have not seen in a decade or more. We expect this to continue and the possibility of seeing prices lower than US$2.00/ mmbtu are good. Great news for Natural Gas derivatives and their downstream chemicals.

For oil the journey will likely be much different. Supply is tight and there is a looming concern about disruptions in the Middle East and Africa. The most critical supply comes from the most troubled regions of our globe. Global economic growth and the dependence upon oil to fuel it, will certainly continue demand growth. WTI Oil pricing is hovering between $95- $100/ barrel and we expect this pricing to remain firm unless global economic growth fizzles. As we get closer to Summer WTI crude pricing will likely follow its annual track higher and gasoline prices could certainly top $4.00/ gallon this Summer.

The industry publications have been very good at highlighting the chemical industries movement into green and bio based chemistry. It is clear that this is our future, but cheaper and more available natural gas is our immediate future.

TCC Video:

http://www.vimeo.com/24834423

TCC News:

Welcome Tim Driscoll! Tim will be heading up our developing business in glass fiber and other substrates. We believe this will be a complimentary business to Chemicals and helps to diversify TCC.

Were getting ready for Informex! We hope to see you there! For a meeting time with TCC please contact Javier Fernandez at Javier@thechemco.com

Attending NPRA? Would you like to meet with members of the TCC Sales or Purchasing Team? Contact us today!

Contact: Javier@thechemco.com

Links and Social:

 Want to exchange links?? Contact us!


 For immediate updates on Chemical Industry News be sure to follow us on Twitter @thechemicalco or our facebook page here:

Habla Español??? The TCC website is available in Spanish!

TCC Downloadable Brochures

The Chemical Company Brochure
TCC Plasticizers and Plastics Additives
Iron Oxides
Composites
Flame Retardants

Upcoming Events:

INFORMEX New Orleans, LA (February 14th – 17th 2012)

NPRA 2012

April 1-3, 2012 San Antonio, TX

NPE International Plastics Showcase

April 1-5, 2012 Orlando, FL

New Products In Stock

Sydol 61 Silane 850 Kg. Totes and 250 Kg. Drums

Zinc Borate 25 Kg. Bags

Citric Acid: 1,000 Kg. and 25 Kg. Bags (In Stock and Available Now!)

Dicyandiamide: 25 Kg. Bags (In stock and available now!)

Melamine and Melafine Crystal: 1,000 Kg., 500 Kg. and 25 Kg. Bags (In stock and available now!)

Malic Acid: 25 Kg. Bags (In Stock and Available Now!)

Maleic Anhydride Briquettes: 25 Kg. Bags (In Stock and Available Now!)

Acetyl TriButyl Citrate: 1,000 Kg. Totes and 250 Kg. Drums (Our NatureFlexx 509 is in Stock and Available Now!)

Adipic Acid: 25 Kg., 500 Kg. and 1,000 Kg. Bags (In Stock and Available Now!)

Products In Transit/ Available Soon

Tetrakis-(hydroxymethyl)-phosphonium chloride 2200 lb. Totes

Succinic Acid 25 Kg. Bags

Antimony Trioxide High Tint, Supersacks

New/ Updated Technical Information (hyperlinked):

Zinc Borate
Adipic Acid
Diisononyl Phthalate
Epoxidized Soybean Oil
Malic Acid
ChemFlexx TOTM
Tartaric Acid
ChemFlexx DiOctyl Adipate
Fumaric Acid
Dicyandiamide

New Products:

Melamine Crystal and Melafine Powder is an organic compound that is often combined with formaldehyde to produce melamine resin, a synthetic polymer which is fire resistant and heat tolerant. Melamine resin is a very versatile material with a highly stable structure. Uses for melamine include whiteboards, floor tiles, kitchenware, fire retardant fabrics, and commercial filters. Melamine can be easily molded while warm, but will set into a fixed form. This property makes it ideally suited to certain industrial applications.

Succinic Acid is a dicarboxylic acid comprised of four carbon atoms. The chemical is produced as a colorless crystalline solid and is used in the drug, agriculture, food products, and other industries.

NP 500 Non-Phthalate Plasticizer Non-phthalate plasticizer to replace general purpose phthalate plasticizers like DOP, DOTP and DINP. Drums, Totes and Bulk Available.

NP600 Non- Phthalate Plasticizer Non-phthalate plasticizer to replace the general purpose phthalate plasticizers DIDP. Drums, Totes and Bulk Available.

NatureFlexx 509 100% Phthalate Free General Purpose Plasticizer! This high molecular weight plasticizer is an excellent, phthalate free replacement for general purpose phthalate plasticizers like DINP, DOP, DOTP, Etc.Drums, Totes and Bulk Available.

Malic AcidA subtle and persistent sour in food applications as well as an excellent acidulant. New technical applications are being discovered as well. Food and Technical Grade material is in stock and immediately available. Packaging is 25 Kg. Bags, 2,000 lb. Supersacks and a 50% solution.

 

Please contact Robb Roach at robb@thechemco.com
or Tel: (401) 423- 3100 for more information.

We appreciate your taking the time to review this newsletter. We welcome your comments as well as contributions regarding our readers’ company/industry activities. Please send them to Bob Beavins at chemcobob@comcast.net

**Please note that all products are now in Alphabetical Order and many products are hyperlinked to their own information page.**

At the end of each paragraph you will notice a symbol and the meaning of these symbols are as follows:

+ Denotes upward pricing momentum
\ Denotes stable pricing momentum
Denotes downward pricing momentum

CRITICAL RAW MATERIALS MARKETS

Benzene U.S. benzene contracts for February settled up to US$4.20/ gallon , which is up from US$3.70/ gallon in January. +

N Butane Butane prices were trending into the $2.00- $2.05/ gallon range for early January but have slipped. Recently prices have dropped and are currently in the $1.85- $1.90/ gallon range.

Natural Gas Mid-January spot prices reported down to ~$2.49/MMBtu from December’s $3.07. Pricing has steadily declined from $4.50 in August. –

Oil Current WTI Crude price is in the $97 – 100/bbl range. \

Check thechemco.com for up to the minute info.

Orthoxylene February contracts settled up $.07/ lb. to $.69/ lb. +

Propylene Producers have announced a February price increase of $.17- $.22/ lb. December and January pricing was set at $.56 for Polymer Grade and $.545 for Chemical Grade. ++

CHEMICALS MARKETS

Adipic Acid: Adipic Acid pricing is moving up on higher raw material cost, specifically Benzene. There are massive new capacities in China but thankfully some of the future projects have been cancelled. NAFTA and Euro consumers are seeing low priced offers from China but local supply has been stable and competitive thus these offers have been mostly ignored. PU demand should pick up over the next month or two. +

For more information please contact Robb Roach at robb@thechemco.com

Ammonia: February pricing has settled sharply lower. Pricing in Tampa has dropped $83 from $555/ metric ton to $472/ metric ton. A large drop in pricing internationally and European debt crisis fears are pegged as drivers for this decrease. –

For more information please contact Robb Roach at robb@thechemco.com

Ammonium Nitrate: AN prices have stabilized and should move lower if ammonia pricing continues to drop. Demand remains very good and supply is limited hence plants are sold out. /

For more information please contact AJ Petrarca aj@thechemco.com

Antimony Trioxide:     

Demand for antimony trioxide remains weak but pricing has stabilized in excess of US$5.00/ lb. Buyers continue to keep inventories to a minimum and use alternate chemistries where possible. /

For more information please contact AJ Petrarca aj@thechemco.com

Dicyandiamide:       

Pricing is stable demand is good especially for fertilizer.  Prices are expected to remain stable in the near term future.  Product is in stock and immediately available. / 

For more information please contact AJ Petrarca aj@thechemco.com

Epoxidized Soybean Oil: Pricing is stable. Soy Bean pricing is also stable. Demand for plasticizer applications remains good. /

For more information please contact Robb Roach robb@thechemco.com

Fumaric Acid: FA Pricing is stable. Butane has retreated from the $2.00+/ gallon range where is was trending throughout January. Import offers have kept domestic pricing level. /

For more information please contact AJ Petrarca aj@thechemco.com

Glycol (Mono, Di and Tri):

MEG – Demand remains slow. Spot pricing is in the $.46/ lb. range. Several producers nominate a $.01- $.02/ lb. increase for Feb. 1. /

DEG- The DEG market is seeing very weak demand and over supply. Spot is around $.37/ lb. and contracts are approaching the high $.30’s/ lb. / –

TEG- Demand improved a bit in January but is still very slow as seasonal temps are high. Spot is selling in the mid $.70’s/ lb. /-

For more information please contact Robb Roach at robb@thechemco.com

Isophthalic Acid:

PIA pricing has stabilized. Expect increases toward Summer if oil pricing moves higher as expected. /

For more information please contact Robb Roach at robb@thechemco.com

Maleic Anhydride:

Maleic Anhydride supply is balanced to long as UPR demand is extremely soft and destocking is noted. Prices are holding steady yet feedstock costs have retreated. Natural gas is hitting extreme low’s and Butane is now back in the US$1.90/ gallon range. /

For more information please contact AJ Petrarca aj@thechemco.com

Melamine:    

Melamine availability is relatively long on good supply and slow demand. Pricing dropped in Q4 but has recently stabilized.  /

For more information please contact Javier Fernandez  Javier@thechemco.com 

Malic Acid: Malic Acid supply has improved but long lead times continue. TCC has Malic Acid in stock and available. /

For more information please contact AJ Petrarca aj@thechemco.com

Methanol: The Methanex Non-Discounted Reference Price for February remains at US$1.34/ gallon. Spot pricing is currently approx. $1.12- $1.13/ gal. and stable. /

For more information please contact Robb Roach at robb@thechemco.com

Notes:

Methanex began the turnaround of its Atlas plant in Trinidad and it is expected to last 40-45 days.

Gas Curtailments in Trinidad have continued and range from 10% to 20%. The curtailments will continue as long as the gas delivery system cannot manage upstream outages.

Methanex confirmed that they will move 1 of their idled plants from Chile to Geismar, LA.

Methanex has secured a long term gas supply arrangement in New Zealand and plans to re- start their second plant in Monunui, New Zealand. This could take place as early as this Summer.

Nitric Acid:

Nitric Acid pricing has stabilized along with lower feedstock/ ammonia pricing. Demand is good. /

For more information please contact Robb Roach at robb@thechemco.com

Phenolic Resins:

Phenol remains tight and availability is the key issue. Phenol prices are expected to increase in February due to higher benzene values. Formaldehyde prices have stabilized with recent Methanol nominations. /

For more information please contact John Santini at john@thechemco.com

Phthalic Anhydride:

Phthalic Anhydride pricing will increase by $.06/ lb. in February in line with January’s orthoxylene pricing. +

For more Information please contact Javier Fernandez at javier@thechemco.com

Plasticizers and Plasticizer Alcohols:

Plasticizer demand world-wide has improved. There is some re-stocking reported after the typical year-end inventory depletion. Plasticizer alcohol demand has been flat and prices have bottomed the exception being higher alcohols which are a steady export to Asia. Plasticizer spot pricing has seen some recovery recently especially in Asia.

Orthoxylene pricing has increased by 7 cts/ lb. in February giving momentum to future increases. +

U.S. Producers have announced a price increase for both branched and linear plasticizers to take effect on February 15, 2012. +

For more information please contact Forest Goodman at forest@thechemco.com

Note: Some plasticizers have limited availability. Please contact TCC for further details.

TCC Plasticizers available:

Non- Phthalate:

ChemFlexx Dibenzoate Esters

ChemFlexx DiOctyl Succinate (DOSX)

ChemFlexx NP 500” Non- Phthalate Replacement for General Purpose Plasticizers

ChemFlexx NP 600” Non- Phthalate Replacement for DIDP

NatureFlexx 509” Phthalate Free General Purpose (ATBC)

Epoxidized Soybean Oil

ChemFlexx TOTM (TriOctyl Trimellitate)

ChemFlexx DOA (DiOctyl Adipate)

ChemFlexx 8 10 Trimellitate

Phthalate:

Vestinol 9 DiIsononyl Phthalate (DINP)

ChemFlexx 206” Functional Linear Phthalate Replacement

ChemFlexx 208” Low Temp Functional Linear Phthalate Replacement

ChemFlexx DOP (DiOctyl Phthalate)

ChemFlexx DUP (DiUndecyl Phthalate)

DMP (DiMethyl Phthalate)

ChemFlexx DOTP (DiOctyl Terephthalate)

Brominated DOP

ChemFlexx 9 11 Phthalate

ChemFlexx L9 Phthalate

Styrene monomer: Styrene Pricing will increase for February in line with higher benzene values. Demand remains slow. –

For more information please contact Robb Roach at robb@thechemco.com

Urea: Urea prices have stabilized after a big drop in early 2012. Seasonal demand will soon but buyers are enjoying lower prices in the meantime. Granular barges are pegged at $380- $400/ ton and prilled at a Net $20- $25/ ton premium. –

For more information please contact Robb Roach at robb@thechemco.com

Notes:

Seasonal demand has begun and is likely the key to stabilizing Urea prices.

Large corn acreage is expected in 2012.

Zinc Borate: Pricing has been relatively steady but demand has increased as consumers scramble to replace a portion of their Antimony Trioxide usage where possible. Product is in stock and immediately available.

For more information please contact Robb Roach at robb@thechemco.com

For more information on these or any of the products and services provided by TCC please contact Robb Roach directly at Robb@thechemco.com or go to our web site at thechemco.com

CHEMICAL INDUSTRY NEWS

The US chemical industry outperformed projections in 2011 with a growth rate of 3.8%. However, the American Chemistry Council expects the industry to expand by only 1.6% in 2012. The agricultural and pharmaceutical sectors are expected to perform well.

According to the ACC’s 2011 Year-End Situation and Outlook gradual economic improvement will occur in 2012 before a stronger recovery occurs in 2013. The chemical industry contributes $720 billion to 26% of US Gross Domestic Product. The ACC’s priorities for 2012 are a reworked Toxic Substances Control Act and a long term reauthorization of the Chemical Facility Anti-Terrorism Standards as well as a serious national energy strategy.

The plastics industry is moving the major responsibility for warding off local efforts to ban/tax plastic bags from the plastics division of the ACC to the industry’s main plastics association, the Society of the Plastics Industry, Inc. At the same time, ACC is creating a new Flexible Film Recycling Group within its plastics division. Its main focus will be to improve the recycling rate of plastic film.

Dow was named in the first edition of Thomson Reuters’ Top 100 Global Innovators. The listing recognizes the company’s continued investment in innovation. Dow Chairman and CEO Andrew Liveris said that the company’s integrated portfolio of solutions makes the world healthier, cleaner, and more convenient while providing increased value for their customers.

Dow Chemical Co. and Japan’s Ube Industries have formed a joint venture, Advanced Electrolyte Technologies, for the manufacture of formulated electrolytes for lithium-ion battery cell manufacturers. Midland, MI production is expected in late 2012. The new company also plans to construct facilities in China and in Europe.

US chlor-alkali operating rates for October were reported at 78%, down from 87% in September. Producers are expected to increase prices for all grades of off-schedule liquid caustic soda.

The European plasticizers industry is struggling to convince policy makers and regulators that modern plasticizers are safe.

Coca-Cola Co. is making what it said was a multi-million dollar investment in three bio-based companies in an effort to accelerate the development of a PlantBottle made entirely from plants. Coke’s target is to advance the technology to make purified terephthalic acid (PTA) from non-petroleum sources. The plant bottle contains 70% PET. The company did not disclose the size of its investment in any of the three companies.

Farmers and various food industry organizations are attempting to kill a proposed EPA safety regulation for dioxins, saying that the exposure limit isn’t justified and could unnecessarily scare consumers away from meat and milk products. The proposed limit is below standards set by the World Health Organization and the European Union.

A federal appeals court ruled on December 30 that the EPA must delay implementation of pending regulations aimed at limiting harmful power plant pollution that crosses state lines. This would have put new limits on sulfur dioxide and nitrogen dioxide emissions from power plant smokestacks in 27 Eastern states. A coalition of utilities and industry groups petitioned the court to halt their implementation, arguing that they will harm the economy and threaten the reliability of the power grid.

On January 13 the chairman of the House Energy and Commerce Committee asked the EPA to postpone by four months a deadline for chemical producers to submit mandated information, saying it’s confusing and industry needs more time to digest changes. The American Chemistry Council(ACC) and the Society of Chemical Manufacturers and Affiliates (SOCMA) supported the request.

Invista, DuPont, INEOS, Lyondell Basell and Dow Chemical Texas petrochemical sites are involved in a trial that could threaten their operations. At issue is water at their locations that environmentalists say should help save endangered whooping cranes.

Hess announced that it will take a $525 million charge resulting from the shutdown of the HOVENSA LLC refinery in St. Croix, USVI, a joint venture between Hess and Petroleos de Venezuela SA. The facility will operate as an oil storage terminal.

A permit for the proposed Keystone XL oil sands pipeline, designed to bring crude oil from Alberta’s oil sands to Gulf Coast refineries was rejected by President Obama on January 18. Speculation is that Canada will turn to China for those exports. Canadian Prime Minister Stephen Harper expressed his profound disappointment with the news from Washington. President Obama indicated that the construction company is free to re-apply. At the same time the Obama administration has indicated that it wishes to move forward with energy production. It was estimated that the Keystone project would have provided 20,000 direct jobs.

PetroFina, a 100% affiliate of Total, has reached agreement with ExxonMobil to acquire the remaining 35% interest it doesn’t now hold in Fina Antwerp Olefins.

BASF is investing $30 million in a US start-up intended to use plant cellulose to produce large quantities of low cost sugar used in plastics. Renmatix, based in King of Prussia, PA says that it can use hardwood to produce chemicals such as acrylic acid, a plastics building block. A Renmatix representative said that a facility will be built by 2014 that will ship sugar competitive in cost with Brazil’s sugar cane crop, the global benchmark.

Following a favorable court ruling, Ethylen-Pipeline Sud expects to start in the middle of 2012. It will connect 400,000 MT/year of ethylene from BASF’s major hub at Ludwigshafen with chemical sites in Bavaria.

Chevron Phillips Chemical has decided to build its previously announced ethane cracker at its facility in Baytown, TX. Estimated cost to the company is $5 billion with a completion during 2017.

Chinese petrochemical giant Sinopec plans to build a 1.8 million MT/year coal to olefins project in Henan province in central China. This joint venture with Henan Coal Chemical Group will cost approximately $3.3 billion. Sinopec spent $19.7 billion on acquisitions in 2011, including a stake in a deepwater offshore field in the Gulf of Mexico, and US shale assets from Chesapeake Energy.

Sinopec recently closed a deal with Saudi Arabia’s Aramco to build an oil refinery in the Red Sea city of Yanbu. The facility will process 400,000 bbls/day. Saudi Aramco will hold a 62.5% stake, with Sinopec holding the balance.

Large offshore Brazilian oil deposits could turn the country into one of the world’s largest producers. President Obama had indicated US desire to be the major customer during a visit in 2011. However, agreements have been signed with Chinese companies.

Brazil has overtaken Great Britain as the world’s sixth-largest economy. In its latest World Economics League Table, the Centre for Economics and Business Research (CEBR), based in London, said that Asian countries were moving up while European countries were slipping down. The Brazilian economy grew 7.5% in 2010, but the government has cut final growth projections to 3.5% for 2011. The CEBR said that the US economy is the biggest, followed by China, Japan, and Germany.

Nearly $3.6 trillion was erased from global stock markets in 2011 as the eurozone financial crisis was felt across the world.

IMF chief Christine Lagarde said that the eurozone needed a bigger firewall to prevent Italy and Spain from falling into default. The bail-out system has a ceiling of €500 billion, but a larger target number may be necessary.

German energy giant RWE announced on December 22 that it had failed to agree with Russia’s Gazprom regarding a joint project to build and operate power plants in Germany, Britain, and the Netherlands.

Germany’s seasonally adjusted unemployment rate dipped slightly in December to 6.8% from 6.9% a month earlier.

China reported that its GDP growth slowed to 9.2% in 2011, compared to the 10.4% rate of 2010. However, certain analysts question the accuracy of the numbers.

Ten years after China was accepted into the World Trade Association, its port of Shanghai is now the world’s busiest for containers. Initial estimates indicate that it will be the first port anywhere to handle container volume totaling 30 million 20-foot equivalent units (TEU’s).

Transportation experts believe that the continuing threat of piracy on shipping routes between the Middle East and Asia, as well as the routes between the Gulf of Aden and the Red Sea will create upward pressure on shipping costs. In 2011, security costs rose by 30% in high risk piracy zones, going from an average of $70,000 per voyage to $100,000 per voyage.

North American railroad volume surged in the final week of the calendar year driven in part by rising retail sales. Commodity carloads such as chemicals showed the second-largest increase of 2011, up 12%. Intermodal carloads also rose significantly.

The American Trucking Association reported that tonnage increased 0.3% in November. Compared with November 2010, tonnage was up 6.0%. Trucking represents 67.2% of tonnage carried by all modes of domestic freight transportation. Trailer manufacturers report strong sales activity, a positive sign for the economy.

Shale gas-related news:

Halliburton has developed new hydraulic fracturing (fracking) fluid formations using ingredients from the food industry. Traditional fluids are composed of hydrochloric acid and other chemicals. Separately, Fountain Quail, a division of wastewater recycler Aqua Pure, has developed a small, mobile, closed wastewater treatment system for use at fracking sites. The company states that the water is clean and can be reused.

According to the Pennsylvania Public Utility Commission, residents and developers have saved approximately $13 billion in energy costs over the past two years because of natural gas. The PA Department of Labor and Industry stated that oil and gas-related jobs in the state have increased more than 100% in the past three years, nearly three quarters of the new hires being state residents.

The pressure to open NY to shale gas exploration continues with strong opposition from environmental groups. The economic spillover from Pennsylvania has been reported in the Elmira area, where the airport is booming, hotels are at capacity and retailers report 60% growth. The Independent Oil and Gas Association of New York is asking the state’s Department of Environmental Conservation to conclude its review of hydraulic fracturing (fracking,) saying that delays have led to the loss of jobs.

West Virginia and Ohio are developing incentive packages in hope of securing a major ethane cracker to be built by Royal Dutch Shell. Fracking in Ohio is promising to bring direct jobs and it is also having an indirect effect in places like Youngstown, where a $650 million factory is coming on line to supply pipeline parts.

In his State of the Union address on January 24, President Obama pushed drilling for gas in shale rock through the use of fracking.

The amount of data on fracking chemicals reported by natural gas drillers is increasing as states implement regulations that require such reporting.

Enterprise Partners LP said that it has received sufficient commitments to move ahead with a planned 1,230 mile pipeline to deliver ethane from the Marcellus and Utica shale regions to the Gulf Coast.

THE ECONOMY

The Congressional Budget Office reported that the federal budget deficit was $320 billion in the first quarter of fiscal year 2012, $49 billion less than the deficit recorded in the same period in fiscal 2011. Much of that difference was because approximately $26 was due to shifts in timing of certain payments. Without the shifts in timing of payments, the decline in the deficit for the period would have been about $23 billion.

The Treasury Department reported that the federal debt climbed to $15.5 trillion as of December 31. It stood at $5.7 trillion in 2001. The debt is now roughly equal to the entire US economy. The total national debt topped the size of the economy for three years during and after World War Two.

The Bureau of Economic Analysis reported that third quarter 2011 Gross Domestic Product increased at a revised annual rate of 1.8%, that is, from the second quarter to third quarter. This was down from the earlier third quarter estimate of 2.0%. GDP increased 1.3% in the second quarter. Current-dollar GDP, the market value of the nation’s output of goods and services, increased at a revised 4.4% or $163.3 billion in the third quarter to a level of $15,176.1 billion. Second quarter increase was reported as 4.0% or $145.0 billion. GDP is expected to remain the same in 2012.

The Conference Board’s Leading Economic Index increased 0.5% in November to 118.0 (2004=100) following a 0.9% increase in
October and a 0.1% increase in September.

The Conference Board Consumer Confidence Index which had improved in November, increased again in December. It stands at 64.5 (1985=100) up from 55.2 in November.

The Institute for Supply Management’s Manufacturing Index registered 53.9% in December, an increase of 1.2% from November’s 57.2% indicating expansion in the manufacturing sector for the 29th consecutive month. A reading above 50% indicates that the manufacturing economy is generally expanding. The Non-Manufacturing Report for December was 52.6%, higher than November 52.0% and indicating continued growth at a slightly lower rate.

In December, retail and food services sales adjusted for seasonal variations were $400.6 billion, an increase of 0.1% from November, and 6.5% above a year earlier. Total sales for the twelve months of 2011 period were up 7.7% from 2010.

Privately owned housing starts in December of 657,000 were 4.1% below the revised November estimate of 685,000 and 24.9% above the December 2010 rate of 526,000. Single family housing starts in December were at a rate of 470,000 or 4.4% above the revised November figure of 450,000. According to the Commerce Department, new home sales rose 1.6% in December, to a seasonally adjusted annual rate of 315,000. That was less than half the 700,000 new homes that economists say should be sold in order to sustain a healthy housing market.

The National Association of Realtors reported that sales of existing homes rose in December to the highest level since January, 2011. Purchases increased for the third month, climbing 5% to a 4.61 million annual rate. Sales of previously owned homes make up 94% of the housing market and rose 4% to a 4.42 million annual pace.

New orders for manufactured durable goods in December increased $6.2 billion or 3.0% to $214.5 billion. This increase, up five of the last six months, followed a 4.3% November increase.

December unfilled orders for manufactured durable goods, up twenty of the last twenty-one months, increased $13.1 billion or 1.5% to $912.3 billion and followed a 1.4% November increase.

Consumer Price Index was unchanged in December. In the last twelve months, the index for all items increased 3.0% before seasonal adjustments. Over the past 12 months the energy index has increased 6.6%. The gasoline index declined 2.0% in December, and has increased 9.9% over the past twelve months.

The Producer Price Index for finished goods declined 0.1% in December, seasonally adjusted, following 0.3% increase in November. On an unadjusted basis, prices for finished goods increased 4.8% in 2011, after rising 3.8% in 2010.

Interest rate: Prime at 3.25%, unchanged since 12/16/08.

Inflation: Inflation rate in December reported as 3.0% following November 3.4%. Average for the year projected at ~3.2%, up from 1.5% in 2010, becoming lower in 2012.

Unemployment: Economists surveyed by The Wall Street Journal are forecasting an unemployment rate of 8.5% twelve months from now. The December 2011 rate was reported at 8.5% by the Bureau of Labor Statistics. November rate fell by 0.4% to 8.6% after holding in the 9.0 – 9.2% range from April through October. The BLS reported that the long-term unemployed, i.e., jobless for 27 weeks and over was little changed at 42.5%.

Trade Deficit: For November 2011 the goods and services deficit increased to $47.8 billion as imports increased and exports decreased.

Crude Oil: Prices hover at ~$100/bbl. Present WTI spot and future prices ~$99/bbl.

Natural Gas NYMEX prices have dropped significantly to as low as $2.49/MMBTU, due in part to milder weather in the Northeast. Working natural gas in storage remains above the five year average.

Industrial production in December increased 0.4% after having

fallen 0.3% in November. For the fourth quarter as a whole,

industrial production rose at an annual rate of 3.1%, its tenth

consecutive quarterly gain.

December capacity utilization rate for total industry increased to 78.1%. This was 2.9% above the rate a year earlier but 2.3% below 1972 – 2010 average.

The US dollar trading at 77.70 Japanese yen; $1.30 = euro. The British pound sterling = $1.56. Canadian dollar trading at US$1.00

Current US gold price reported as $1666/ounce compared to the record price of $1920/ounce in September.

Leave a Reply

Your email address will not be published. Required fields are marked *