A MARKET UPDATE for August, 2012

“THE VIEW FROM JAMESTOWN
A MARKET UPDATE for
August, 2012
From
THE CHEMICAL COMPANY.

Contact:

The Chemical Company
P.O. Box 436
19 
Narragansett Ave.
Jamestown, RI 02835
Phone: (401) 360-2800

Website: thechemco.com
Email: Info@thechemco.com

Special Message:

From Nick Roach CEO:

As I get older I tend to reflect on the past a bit more. I clearly remember the most dramatic events, such as the loss of my wife to cancer. But I also reflect on how I got to where I am and what brought me to a position of overseeing the operation of a fairly substantial chemical distributorship.

Reviewing the past brings up memories of being placed on probation at Gulf Oil when I criticized their position to stay out of the radial tire market. I also remember when I was almost fired for dropping out of their fast track management program.  I finally left out of frustration thinking I was nuts to leave. It wasn’t long before Gulf no longer existed and all the people who encouraged me to stay had lost their jobs.

Why was I perceptive and why did things eventually turn out well for me? I often wonder if it was divine intervention. I wasn’t a great student and if you had known me in my youth you would have probably described
me as crazy. So what is the formula for my success? I believe it is about caring for the people in my life. I truly care about every employee, every customer, and every supplier.

I hate failure. Why?  Because our employees wouldn’t be secure if I failed often. Failure means I would put my customers, suppliers and employees at risk.  All of them deserve my diligent attention to detail. I have always envisioned my employees, customers and the suppliers as my family. Hands on personal service are what will secure the future of our friends and family. Each of you is so important to me and The Chemical Company.

So, at times I have been great to work for and at other times I was a jerk and demanded more of the people in my life. I have always done it for the benefit of everyone and continue to do so. In reality I’m not here to make demands even if I do at times.  I’m here to listen to you and follow up on your requests and needs. 

Pay attention to the details and changes.  It could be the way someone talks on the phone, technology changes, life changes, ownership changes, whatever the change is¦  Pay attention to the details.

It’s been my job to serve you all and better understand what is necessary to improve every aspect of our company. Management goals at TCC are to serve the customer, suppliers and the employees. We need a vision of the future and understanding of the past. It can only happen if we listen to all of you. I am here to serve you, pay attention to details and improve the company.

Finally I understand after reflecting on my life, it is management’s job to listen carefully and be fair. I would like to thank you personally for your support, we will continue to listen.

Quote of the Month:

People never lie so much as after a hunt, during a war, or before an election.
Otto von Bismarck, quoted in the Montreal Gazette

From: Quimica y Derivados August, 2012

TCC Videos:
http://www.vimeo.com/24834423
http://vimeo.com/38459394
http://vimeo.com/38459041

Upcoming Events:

EPCA 46th Annual Meeting 2012 6
“ 10 October 2012 “ Budapest 
Please contact Robb Roach at Robb@thechemco.com for an appointment.

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 multiple languages!

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

 

New Products In Stock

Tetrabromo Phthalic Anhydride: TCC now offers TBPA in Small Bags (25 Kg.) and Supersacks (2,000 lb.)

Zinc Borate:TCC now offers Zinc Borate in 25 Kg. Bags

Malic Acid25 Kg. Bags (In Stock and Available Now!)

Adipic Acid25 Kg., 500 Kg. and 1,000 Kg. Bags (In Stock and Available Now!)

Products In Transit/ Available Soon
Neo- Pentyl Glycol (NPG) 500 Kg.
Sacks
Tetrakis-(hydroxymethyl)-phosphonium chloride 2200 lb. Totes
Bio- Succinic Acid 2000 lb. supersacks and 25 Kg. Bags
AntimonyTrioxide High Tint, Supersacks

New/ Updated Technical Information (hyperlinked):

Antimony Trioxide
ATBC “ Nature-Flexx 509
Chemflexx 206
Chemflexx DOA
Chemflexx TOTM
Citric Acid
Dicyandiamide Diisononyl Phthalate
Epoxidized Soybean Oil
Fumaric Acid
Malic Acid
Methanol
Succinic Acid
Tartaric Acid
Urea

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 August settled higher to US$4.60/ Up $.30/ gallon from US$4.30/ gallon in July. Spot prices are in the $4.25- $4.3o/ gallon range. +

N Butane: Butane prices have strengthened to US$1.50’s per gallon up from the $1.30’s per gallon at the beginning of August. Current pricing in the $1.52- $1.55/ gallon range. +

Ethylene: U.S. Contract Price for July increased by $.02/ lb. to $.41/ lb. Current spot is in the Mid $.50’s so we expect an increase for August. +

Natural Gas: Natural Gas pricing has declined at many trading locations although a few Northeast points recently saw upward movement due to extreme hot weather and air conditioning demands. September futures pricing is less than $3.00/mmbtu. –\

Check thechemco.com for up to the minute info.

Oil: Crude Oil pricing has increased approximately $13/bbl in the past month. Current WTI Crude price is at $96.00/ barrel range and moving up. +

Check thechemco.com for up to the minute info.

Orthoxylene August contracts settled $.06/ lb. higher at $.65/ lb. This is the second August in a row that orthoxylene reflected a large increase; both August 2011 and August 2012 contracts settled at $.06/lb. +

Propylene August contracts settled at a reduction of $0.015/lb from July at $.505/lb. for polymer Grade and $.49/lb. for chemical Grade. Current trades are contract – $.01- $.02/ lb. /

CHEMICALS MARKETS

Adipic AcidAdipic Acid pricing is flat with good demand and stable supply. Ram material prices are flat but pressured due to an increasing oil price. There is considerable risk of outages  during the Atlantic hurricane season due to the locations of major producers. Building inventory is recommended. /

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

Ammonia: August pricing in Tampa has rolled at US $690/ ton Del. Availability is tight to balanced. Spot transactions are in the $655/ ton range. /

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

Ammonium Nitrate: Ammonium Nitrate producers announced a $45/ ton increase for July due to increased feedstock costs and limited availability. No announcements for August or  september. The major feedstocks ammonia and nitric acid are having some supply issues. Demand remains very good. /

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

Antimony Trioxide:     

Demand for antimony trioxide remains relatively weak and new availability from South America has helped relieve pricing. Current offers are in the upper $4.00/ lb. range. 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 has strengthened on energy costs in China.  Normal seasonal pressures due to increased energy demand are pushing prices higher.  Product is in stock and immediately available.

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

Epoxidized Soybean OilSoybean prices have stabilized. Pricing hasn’t changed much despite a higher trend for soybean pricing. Supply is very good keeping prices low and margins in the
red.
/

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

Fumaric AcidFA Pricing has pushed slightly lower. Lower Butane pricing and lower priced import offers are now affecting Fumaric pricing.

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

 Glycol (Mono, Di and Tri): Ethylene: U.S. Contract Price for July increased by $.02/ lb. to $.41/ lb. Current spot is in the Mid $.50’s so we expect an increase for August. +

MEG “ At least one producer has announced a 5 cts/ lb. increase for September. Availability is limited due to turnarounds. +

DEG- A price increase of $.03/ lb. has been announced for September. Availability is limited due to turnarounds. +

TEG- Despite seasonally slow demand a price increase of US $.04/ lb. has been announced for September. +

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

Isophthalic Acid: PIA pricing has leveled in response to stregthening raw material costs. Supply and demand remain stable. /

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

Maleic Anhydride: The Maleic Anhydride market is quiet and demand remains seasonally slow. Supply is balanced to long in North America. Prices have leveled after erosion in July due to lower butane values. /

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

Melamine:  Melamine supply is long world-wide on massive new capacities in Trinidad and Qatar. Urea prices have moved lower and therefore no longer pressuring Melamine cost. /

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

Malic Acid: Malic Acid pricing has been pressured and retreated slightly on lower butane values and good availability. TCC has Malic Acid in stock and available.

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

MethanolThe Methanex Non-Discounted Reference Price for August has rolled at US$1.32/ gallon. Spot pricing is currently approx. US$1.08- $1.09/ gal. and up slightly. /

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

Notes:

OCI has begun producing Methanol at their Beaumont, TX facility. Operating rates improving.

Methanex has re-started their #2 Montunui plant in New Zealand

Gas curtailments in Trinidad could reach 30% for September and beyond due to platform maintenance.

Embargo on Iranian Methanol cantinues to cause a re-shuffling of volumes world- wide.

Nitric Acid: Nitric Acid pricing increased by US$50/ ton (100% basis) for July due to high ammonia cost and availability due to an explosion and intense damage at the site of a major producer (El Dorado/DSN). Demand is good. /

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

Phenolic Resins: Phenol pricing has leveled, demand is good and supply is healthy. Formaldehyde prices remain stable with methanol prices unchanged. /

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

Phthalic Anhydride: Phthalic Anhydride pricing will increase by $.06/ lb. in September in line with the August orthoxylene price increase. Orthoxylene will likely continue to increase as oil  and aromatics pricing has strengthened. +

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

Plasticizers and Plasticizer Alcohols: Plasticizer demand world-wide has been slow seasonally but the base raw material costs, especially orthoxylene, have started to increase. Plasticizer alcohol demand has also been weak but recent strengthening is noted. INA is balanced, 2-EH has had some recent strengthening, and higher alcohols remain balanced.

Plasticizer and plasticizer alcohol pricing is stable due to slow seasonal demand and a sizeable uptick in import activities. Increases are expected in the coming weeks/ months if oit continues to strengthen.

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 increased slightly for August in line with higher benzene values (up $.30/ gallon). NA demand remains slow. +

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

Urea: Urea prilled pricing is trading in the mid- $400’s per ton. Current granular pricing is US$435/ ton. No major movement has taken place in recent weeks . /

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

Notes: 

Low water levels on the Mississippi are a continuing problem.

Seasonal demand has slowed.

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

Environmental, Health, Safety and Sustainability (EHS&S)

 

CHEMICAL INDUSTRY NEWS

The American Chemistry Council (ACC) US Chemical Production Index dropped by 0.1% in June, following a revised 0.5% decline in May. Chemical production fell in the Gulf Coast, Midwest, Southeast and West Coast regions and was flat in the Ohio Valley, Mid-Atlantic, and Northeast regions. Chemistry output is anticipated to rise by 0.5% in 2012 before
attaining a 2.3% growth rate in 2013.

The ACC’s Chemical Activity Barometer (CAB,) was unchanged at 88.5 in July after dropping by a revised 1.0% in June. The published data suggest that the US economic recovery is slowing. The chemicals industry generated about $760 billion last year.

The House of Representatives is considering a bill that would add judicial oversight to scientific assessments generated by federal agencies, as well as require agencies to prioritize
information based on well-established scientific processes.

The US chemicals and plastics industries added workers in July, according to the Department of Labor. The department said that chemicals industry added 1,100 workers, an increase of 1.3%,
bringing the total to 798,600 jobs. 

The ACC and the University of Texas at Austin released a new study indicating how non-recycled plastics can serve as an affordable, clean and abundant energy source.

The US Chamber of Commerce filed a friend of the court brief in order to challenge the Environmental Protection Agency (EPA) Utility MACT rule which aims to reduce emissions of mercury and other hazardous air pollutants from coal-fired power plants. The Chamber said that the EPA violated the Clean Air Act by using a flawed methodology to set emissions standards that are unachievable for coal plants because the necessary pollution control technologies do not exist. It has been estimated that coal fired power plant shutdowns could cause major  blackouts in the US.

A bipartisan group of US Senators cautioned the EPA not to misuse the Clean Air Act to regulate security at chemical facilities. They pointed out that existing laws and regulations adequately
address what should be done in the case of a terrorist attack on these facilities. About a week later the Senate Environment and Public Works Committee voted along party lines to approve a measure that would toughen chemical safety laws overseen by the EPA. The measure would require safety testing of all industrial chemicals and force chemical makers to show that new compounds are safe. Under current law, the EPA can only call for safety testing after evidence is submitted showing that a chemical is dangerous.

Sunoco’s idled propylene splitter in Marcus Hook, PA was acquired by Braskem, and the company will direct production to a nearby facility that it owns. Pennsylvania will provide financial
assistance with $15 million in financing so long as the company invests at least $56 million at the site. The deal is also contingent on Braskem creating a minimum of 28 new jobs and retaining 119 existing workers for at least five years.

PPG and Georgia Gulf announced on July 19 that PPG plans to separate its commodity chemicals business and merge it with Georgia Gulf. Initial information indicates that PPG shareholders would receive 50.5% of shares of the new company, with Georgia Gulf shareholders holding 49.5%.

Bayer MaterialScience LLC will be closing its Baytown, TX facility later this year in order to complete a $120 million upgrading. This is expected to improve the site’s safety and reliability while increasing capacity.

On July 17 the federal government announced that baby bottles and sippy cups can no longer contain bisphenol-A (BPA). In October, the ACC had asked the Food and Drug Administration (FDA) to phase out rules allowing BPA in these products after determining that all manufacturers of these products had abandoned the use of BPA.

The ACC expects to complete its review of the Responsible Care program prior to 2013, intending to revamp its product safety code and continuing to emphasize energy efficiency and sustainability elements.

The EPA chose not to revise the permitting thresholds for greenhouse gas emissions (GHG) in a final rule issued on July 3. The EPA said that it is retaining existing rules because state
permitting authorities need more time to develop infrastructure necessary to issue GHG permits.

US chlor-alkali operating rate for June rose to 84% of capacity, from the 74% number seen in May.

Saudi Basic Industries (SABIC) and ExxonMobil recently predicted that their joint venture Kemya  synthetic rubber plant will have an immediate earnings impact when it comes on line in
the second half of 2015. The project cost is estimated at $3.4 billion.

Germany’s seasonally adjusted unemployment rate remained at 6.8% in July. The German economy grew by 0.5% in the first quarter, but concerns over the euro crisis have led to a cautious approach to hiring.

Clariant plans to invest $35 million in a new cellulose ethanol plant in Straubing, Germany which is expected to produce about 1,000 MT/year of cellulose ethanol biofuel and chemical raw
material. The company said that this plant represents the interim stage necessary prior to moving to full production plants capable of producing up to 150,000 MT of ethanol annually.

Unemployment in the eurozone was reported at 11.2 % in June and was the same as an upwardly-revised May number. This was the 14th consecutive monthly increase and the highest in the history of the currency.

Japan posted its biggest first half trade deficit, reflecting the economic consequences of the country’s decision to discontinue nuclear energy and increase dependence on imported fossil fuels. The Ministry of Finance reported a trade deficit of 2.92 trillion yen, or $37.3 billion. Japan’s Prime Minister Noda has lobbied about the need to resume the use of nuclear power.

New information shows China’s second quarter growth slowing. Increase in GDP dropped to 7.6% year to year in Q2 down from 8.1% in Q1 and the lowest level since early 2009. China’s consumer price index fell 2.2% after an increase of 3% in May. China posted a trade surplus in July of $35.2 billion, up from June’s $31.7 billion.

China’s Sinopec and Japan’s Mitsui Chemicals established a joint venture to build a 750,000 MT/year ethylene-propylene-diene terpolymer unit in Shanghai, China with an estimated cost of $316 million. The new company, named Shanghai Sinopec Mitsui Elastomers, will be held equally by the partners. Start-up is projected for the first quarter of 2014.

China Petroleum and Chemical (Sinopec) and BASF signed a preliminary agreement to build a world scale iso-nonanol plant in China’s Guangdong province. China currently relies entirely on imports of the material, with a volume of 318,000 MT in 2011. The companies will each have a 50% interest in the joint venture.

Growth in China’s gross domestic product slowed to 8.1% year-on-year in the first quarter of 2012. This is the lowest rate of economic growth since the first quarter of 2009. Chinese government GDP growth projections are less than 8% for the year.

The American Trucking Association reported that tonnage increased 1.2% in June, after falling 1.0% in May. Compared with June 2011, the tonnage index was up 3.2%. Year-to-date, tonnage was up 3.7% compared with the same period last year.

The US Postal Service is nearing a first-ever default on billions in payments due to the Treasury, raising concerns about its solvency. USPS officials have decided not to pay $5.5 billion due in
early August and a similar amount due in September. The Postal Service has projected a loss of $14.1 billion for the year and it may avoid bankruptcy by defaulting on these payments.

In the second quarter, international container volume in North America reached 1,951,571 units, up 3.9% compared with second quarter 2011.

Intermodal volume in 2Q totaled 3,716,321 units, up 5.2% year over year.

Shale oil and gas-related:

Duke University scientists completed a study regarding salty deposits found in northeastern Pennsylvania’s drinking water and concluded that hydraulic fracturing operations are not responsible.

Williams Partners is joining forces with Caiman Energy and private equity firms in order to invest $800 million in pipelines and processing facilities for oil and natural gas production in the Utica Shale. Williams, based in Tulsa, OK, will contribute approximately $380 million to the venture in the next several years. The funds will be used in Ohio and northwestern Pennsylvania.

An ethane tax credit has become law in Pennsylvania as an attempt to attract petrochemical plants to the state. Pennsylvania would provide tax credits to any company that purchases ethane for use in making ethylene in the state. A company must invest $1 billion to build a plant and create at least 2,500 full-time jobs during the construction phase. The tax credit
is performance-based with the company receiving $2.10 for each barrel of natural gas containing ethane. A state representative said that the credit is primarily to offset taxes for the petrochemical company.

According to a new study by Bank of America Merrill Lynch, the economic benefits of the far-reaching finds of oil and natural gas are approaching $1 billion per day. More than 1,400 US oil and natural gas midstream and upstream projects are backed by more $163 billion in investments.

Proposed rules for fracking on federal lands would add approximately $1.5 billion in annual costs to the natural gas industry according to a study published by the Western Energy Alliance.
Various estimates indicate that close to 1.5 million US jobs will be generated by the shale gas boom by 2015 and 2.4 million by 2035. The rules are expected to be finalized by year-end.

Texas is the projected home to twelve or more planned chemical facility projects, including an expansion of Dow Chemical’s Freeport complex. This will be the biggest chemical industry growth since the 1980’s. Louisiana is also attracting projects.

An increasing number of corporations are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions of dollars in tax increases and budget cuts in January, 2013, undermining economic growth in the future.

THE ECONOMY

The Congressional Budget Office reported that the federal government incurred a budget deficit of $975 billion for the first ten months of fiscal 2012, $125 billion less than the deficit recorded in the same period in fiscal 2011. This practically guarantees that the deficit for fiscal 2012, which ends September 30, will be above $1 trillion. The Treasury Department reported that the federal debt was $15.9 trillion as of July 31, 2012. It stood at $5.7 trillion in 2001.

The Bureau of Economic Analysis reported an advance estimate for the second quarter 2012 Gross Domestic Product growth at an annual growth rate of 1.5%, that is, from the first quarter to the second quarter. This is a reduction from the initial estimate of 2.2%. In the fourth quarter of 2011, real GDP increased 3.0%. Current-dollar GDP, the market value of the nation’s output of goods and services, increased at a rate of 3.1% or $117.6 billion in the second quarter to a level of $15,595.9 billion. Revised fourth quarter increase was reported as 4.2% or $157.3 billion.

The Conference Board’s Leading Economic Index declined 0.3% in June to 95.6 (2004=100) following a 0.4 % decrease in May and a 0.1 % decrease in March.

The Conference Board Consumer Confidence Index which had declined in June increased slightly in July. It stands at 65.9 (1985=100) up from an adjusted 62.7 in June. April and May were reported as 64.4 and 68.7 respectively.

The Institute for Supply Management’s Manufacturing Index registered 49.8%, an increase from 49.7% in June and indicated contraction in this sector for the second consecutive month after 34 consecutive months of expansion. May was reported at 53.5%. A reading below 50% indicates that the manufacturing economy is generally retracting. The Non-Manufacturing Report for July was 52.6%, higher than June’s 52.1% indicating continued growth at a slower rate.

In June, retail and food services sales adjusted for seasonal variations were $401.5 billion, a decrease of 0.5% from May but 3.8% above June 2011. Total sales for the April through June 2012
period were up 4.7% from the same period a year ago. 

Privately owned housing starts in June of 760,000 were 6.9% above the revised May estimate of 711,000 and 23.6% above the revised June 2011 rate of 615,000. Single family housing starts in
June were at a rate of 539,000 or 4.7% above the revised May figure of 515,000. New home sales decreased 8.4% in June, to a seasonally adjusted annual rate of 350,000, and were 15.1% above the June 2011 figure of 304,000.

The National Association of Realtors reported that sales of existing homes declined 5.4% in June to a seasonally adjusted annual rate of 4.37 million from May’s adjusted level of 4.62 million. Home prices rose in June, up 7.9% from a year earlier. June’s gain was the strongest since February 2006.

US foreclosures held steady in June after an increase in May. There were 60,000 finished foreclosures in each month. The level was down from a year earlier.

New orders for manufactured durable goods in June increased $3.4 billion or 1.6% to $221.6 billion. This increase, up for two consecutive months, followed a 1.6% May increase.

June unfilled orders for manufactured durable goods increased $3.7 billion or 4.0% to $988.6 billion. This followed a $2.3 billion increase in May.

Consumer Price Index for all urban consumers was unchanged in June on a seasonally adjusted basis. Over the last twelve months, the index increased 1.7 % before seasonal adjustments. The energy index continued to fall and declined 1.4% in June on a seasonally adjusted basis and offset increases in the other major indexes. The gasoline index decreased 2.0% in June.

The Producer Price Index for finished goods increased 0.1% in June, seasonally adjusted, following a reduction of 1.0% in May, and a decline of 0.2% in April. On an unadjusted basis, prices for finished goods increased 0.7% for the twelve months ended June 2012.

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

Inflation: Inflation rate was 1.7% in June following May at 1.7%. An average rate of 2% is projected for 2012.

A relentless drought in approximately 55% of the US is obliterating crop production and will send food prices rising, experts warn. This is the highest number since 1956. The US Department
of Agriculture has reduced crop projections for corn by 12%. It’s expected that food and fuel prices will impacted. 

Unemployment: The July 2012 rate rose slightly to 8.3% as reported by the Bureau of Labor Statistics and marked more than three years of unemployment at or above 8%. The BLS stated that the long-term unemployed, i.e., jobless for 27 weeks and over was little changed at 5.2 million. Those individuals accounted for 40.7% of the unemployed. North Dakota led the nation with the lowest unemployment rate in June of 2.9%, attributable to the Bakken shale oil activity.

The Associated Press surveyed a number of economists and found a broad consensus that the official poverty rate will rise from 15.1% in 2010, climbing as high as 15.7%. An increase of 0.1% would put poverty at the highest level since 1965.

Trade Deficit: For May 2012 the goods and services deficit decreased to $48.7 billion from a revised April figure of $50.6 billion as exports increased and imports
decreased. 

Crude Oil: Volatile due in part to Iranian crisis and a strike in Norway. Present WTI spot price ~$94/bbl.

Natural Gas: Henry Hub spot price closed on August 8 at $2.96/MMBTU. Working natural gas in storage remains above the five year average.

Industrial production increased 0.4% in June, after having declined 0.2% in May. At 97.4% of its 2007 average, total industrial production in June was 4.7% above the level of a year earlier. June capacity utilization rate for total industry increased to 78.9%. This was 4.7% above the rate of a year earlier but 1.4% below 1972 “ 2011 average.

The US dollar trading at 78.4 Japanese yen; $1.24 = euro. The British pound sterling = $1.56. Canadian dollar trading at US$1.001.

Current US gold price quoted at $1604.40/ounce compared to the record price of $1920/ounce in September, 2011.

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