A MARKET UPDATE for September, 2012

THE VIEW FROM JAMESTOWN”
A MARKET UPDATE for

September 2012
From
THE CHEMICAL COMPANY.

Special Message:

From the Wall Street Journal:

A new round of negotiations has been scheduled in the dispute between shipping companies and dock workers at ports along the East Coast.

Federal mediators announced the new talks on Thursday. They are scheduled for the week of Sept. 17.

The longshoremen’s contract expires at the end of September, and some retailers have already begun re-routing ships in anticipation of a possible strike.

Key issues in the labor dispute include overtime rules and royalty payments to longshoremen based on container weight.

The U.S. Maritime Alliance, which represents shippers, says union members are taking advantage of loose overtime rules and driving up shipping costs. The longshoremen’s union says a small minority are being singled out to unfairly characterize the whole membership.

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

 

Quote of the Month:

“In times like these, it helps to recall that there have always been times like these.”
Radio broadcaster Paul Harvey, quoted in The Buffalo News

TheChemCo

From:         C&EN, September 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.

 

Please visit the TCC booth at:

Boston EXPO 2012

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

NatureFlexx 509: Phthalate Free General Purpose Plasticizer.  Available in Totes (2200 lbs.) and Drums.

Phthalic Anhydride:  TCC offers Phthalic Anhydride in 25 Kg. Bags and 2,000 lb. supersacks.

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 Acid: 25 Kg. Bags (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

Bio- Succinic Acid 2000 lb. supersacks and 25 Kg. Bags

 

 


New/ Updated Technical Information :

Stearic Acid

ChemFlexx DOTP

Vestinol 9 DINP

Dicyandiamide

Maleic Anhydride

Tris (Chloroisopropyl) Phosphate (TCPP)

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 September settled down $.40/ gallon to US$4.20/ gallon from US$4.60/ gallon in August. Spot prices are stronger and in the $4.35- $4.4o/ gallon range.

N Butane:  Normal Butane prices are trading in the mid to upper US$1.50’s per gallon.  Current pricing is in the $1.56- $1.57/ gallon range.  Prices have strengthened slightly in September from the low $1.50’s per gallon.  /+

Ethylene:   U.S. Contract Price for August increased by $.04/ lb. to $.46/ lb. Current spot is in the Mid to high $.50’s due to strong demand. +

Natural Gas: Natural Gas production declined sharply in late August when producers began evacuating platforms in preparation for Hurricane Isaac. However, prices did not spike. September futures prices were at the $2.65/mmbtu range.  –\

Check thechemco.com for up to the minute info.

Oil: Current WTI Crude price is at $92+/- barrel range.  WTI pricing eclipsed $100/ barrel in mid- September before its most recent drop.  –

Check thechemco.com for up to the minute info.

Orthoxylene: September contracts settled $.02/ lb. higher at $.67/ lb.  +

Propylene: Contract pricing for September has yet to settl.  Nominations of a $.025/ lb. and $.04/ lb increase have been offered. August contracts were $.505/ lb. for Polymer Grade and $.49/ lb. for Chemical Grade.  + 

CHEMICALS MARKETS

Adipic Acid: Adipic Acid pricing is flat with good demand and stable supply.  Raw material prices are lower.  There continues to be considerable risk of outages during the second half of 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: September pricing in Tampa increased US$15/ ton to US $705/ ton del’d.  Availability is tight to balanced.  Gas curtailments in Trinidad are a major concern and will likely further tighten the Ammonia market in the coming weeks/ months.

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

Ammonium Nitrate: Ammonium Nitrate pricing is stable.  Seasonal demand will evaporate over the coming months holding prices steady.  The major feedstocks ammonia is relatively tight due to the gas curtailments in Trinidad. /

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. Not much has changed as 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:       

Prices have come off approx. US$400-500/MT in the past 2 months.  Producers are selling at or below cost to keep volumes up with the anticipation of 2 new production facilities in China that are expected to be operational by the end of October 2012.  – 

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

Epoxidized Soybean Oil: Soybean prices have stabilized.  Supply is healthy keeping prices low and margins in the red.  /

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

Fumaric Acid: FA Pricing has pushed slightly higher on improved butane values and limited availability. Product has become tight due to flooding at a U.S. Producers plant. +

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

 Glycol (Mono, Di and Tri):

Ethylene:   U.S. Contract Price for August increased by $.04/ lb. to $.46/ lb. +

MEG – U.S. producers have announced a 5-8 cts/ lb. increase for October.  Spot prices are in the mid- $.50’s fob Gulf.  Availability is extremely limited nearly impossible to secure. +

DEG- U.S. producers have announced a price increase of $.03- $.05/ lb. for October. Spot prices are in the extremely high $.50’s per lb. fob Gulf.  Availability is also limited due to turnarounds. +

TEG- U.S. producers have announced a price increase of $.06- $.15+ per lb.  Spot pricing is in excess of $1.15/ lb. +

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

Isophthalic Acid:

PIA pricing has increased slightly in response to strengthening 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 on strengthening 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

Methanol: The Methanex Non-Discounted Reference Price for September has rolled at US$1.32/ gallon. Spot pricing is currently approx. US$1.11/ gal. and stable. /

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

Notes:

Methanex took down their Damietta, Egypt plant at the end of August due to gas supply constraints.  An extremely hot summer was blamed for the curtailment.  This is not seen as a long term issue.

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

Nitric Acid:

Nitric Acid pricing is level yet pressured by good demand and higher ammonia pricing. /

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

Phenolic Resins:

Phenol pricing has shifted lower on less demand and lower benzene values.   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 $.02/ lb. in October in line with the September 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 of PZ alcohols (driven by propylene) as well as orthoxylene, have started to increase.  Producers have nominated a 4 cts/ lb. increase for October 1st and demand is expected to improve.

Plasticizer alcohol pricing was slow seasonally but demand has improved slightly along with pricing driven mainly by higher propylene values.    A new 2-EH unit is expected to start end of 2012 in China and a new INA unit is expected to start soon in Singapore.

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 decreased slightly for Setpember in line with lower benzene values (down $.40/ gallon). NA demand remains slow.

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

Urea: Current granular pricing is US$435/ ton up from $418- $420 in early September.  This recent uptick is associated with September product shipping pre- Mississippi River closure.  /

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

Notes:

Low water levels on the Mississippi River is a continuing problem.

Reduced traffic on the Mississippi River will mean less pre- river close barges.

Zinc Borate: Pricing has been relatively steady 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

The Antea Group

 

CHEMICAL INDUSTRY NEWS

The American Chemistry Council (ACC) US Chemical Production Index dropped by 0.1% in July, following a revised flat growth in June. Chemical production fell in the Gulf Coast, Midwest, Ohio Valley, Mid-Atlantic, Southeast and West Coast regions. Production was flat in the Northeast region. Through the first seven months of 2012 chemical production was up 0.3% nationally compared to the same period in 2011.

The ACC’s Chemical Activity Barometer (CAB,) for August showed a 0.4% growth to 89.4%, after July’s revised number of 89.0%. The published data suggest that the US economic recovery is slowing. The chemicals industry generated about $760 billion last year.

ICIS Chemical Business magazine published its annual 100 Top Chemical Companies listing ranked by 2011 sales and BASF led the list with $95.2 billion in sales. The new number two was China’s Sinopec with $65 billion in chemical sales, edging out ExxonMobil’s $64.7 billion. The top 100 companies had combined sales of $1.4 trillion in 2011.

Pennsylvania increased chemical industry jobs by 3.6% during the past twelve months, the biggest sector increase in a statewide gain in industrial employment of 0.5%.

A new research study conducted by the Columbia Center for Children’s Environmental Health (NY) found that children between the ages of five and nine who are exposed to two types of phthalates have an elevated risk of asthma related airway inflammation. The study didn’t specify what types of products with phthalates the children might have been exposed to.

The DuPont Co. said on August 30 that it is selling its performance coatings business for $4.9 billion in cash to The Carlyle Group, a Washington, DC headquartered private equity firm. The performance coatings business caters to the automotive and industrial coatings sectors and has approximately 11,000 employees in more than seventy countries.

The total value of mergers and acquisitions (M&A) in the chemical industry slowed in the first half of this year. M&A activity was reported as $25.3 billion, compared to $55.8 billion from the same period a year ago.

Mexican chemicals company Mexichem recently signed a memorandum of understanding with OxyChem for a joint venture to build a facility to produce over 500,000 tons/year of ethylene. A feasibility study for the proposed cracker is expected to be completed in the second quarter of 2013. The project is expected to cost approximately $1 billion, with a 50/50 split between the parties.

BASF doesn’t see increased global economic growth for the remainder of 2012 and believes that earnings will not match those of 2011.

US chlor-alkali operating rate for July rose to 86% of capacity, up from the 82% number seen in June. Operating rate in July 2011 was 83%. Dow Chemical Co. CEO Andrew Liveris said that Dow, the world’s biggest chlorine producer, is seeing a reduction in European demand going beyond normal summer shut-downs.

On August 21, the US Court of Appeals for the DC Circuit vacated an EPA rule that would further limit emissions from coal-fired electrical power generating plants in 28 states. It ruled that the EPA exceeded its authority under the Clean Air Act, basically saying that it went too far in imposing its authority over state air pollution control programs. This decision marked the 15th time that a federal court has struck down an Obama regulation and the sixth court defeat for the EPA.

The ethanol food vs fuel controversy continues. The EPA has received a request to waive the federal mandate for corn-based ethanol in gasoline, citing this season’s extreme drought conditions in the Midwest farm belt. A coalition of US meat and poultry producers said that with reduced corn harvests, ethanol production would use about 40% of the crop. This amount is mandated by the Renewable Fuels Standard and requires 13 billion gallons of corn-based ethanol for blending into the gasoline supply.

The World Bank has warned that global food prices jumped by 10% in the month of July, raising fears of soaring prices. The bank said that the US heat wave and a drought in parts of Eastern Europe were to blame in part for the rising costs. From June to July this year, corn and wheat prices rose by 25% while soybean prices increased by 17%. Only rice showed a decrease of 4%. The World Bank also said that the use of corn to produce ethanol biofuel in the US was also a key factor in the price rise. Overall, the World Bank’s Food Price Index, which tracks the price of internationally traded food commodities, was 6% higher than July of 2011 and 1% over its previous peak in February, 2011.

The Bank of England recently lowered GDP growth forecasts from 0.8% to zero for 2012. France forecast a minor contraction of 0.1% for the third quarter, which would match second quarter results.

The Obama administration welcomed Russia’s entry in the World Trade Organization as its 156th member, but said that US export business would be at a disadvantage if Congress doesn’t repeal Russia’s Cold War-era trade status. The specific legislation, the Jackson-Vanik amendment to the Trade Act of 1974 tied bilateral trade policy to human rights, depriving the then-Soviet Union of permanent normal trade relations in order to pressure Moscow to allow Jewish emigration. The Obama administration and various business leaders have been pushing Congress to remove the legislation, stating that it had outlived its usefulness.

Philipp Roesler, German economy minister, has rejected calls for Greece to get more time to accomplish economic reforms, saying that the Greek government needs to respect the bailout deal reached with its international creditors. The Greek government has said that it needs a two year extension from its creditors. The question of how to avoid a Greek debt default and a possible chain reaction among other ailing European economies has preoccupied EU leaders.

Germany’s seasonally adjusted unemployment rate remained at 6.8% in August. The number of jobless rose by a seasonally adjusted 9,000. Following two years of strong economic growth, the German economy grew by only 0.3% in the second quarter.

On September 12 the German Constitutional Court ruled that President Joachim Gauck could sign the European Stability Mechanism and fiscal pact. The action was welcomed by eurozone leaders and was seen as a move toward resolving the debt crisis.

On September 15, more than 150,000 Portuguese demonstrated against planned tax increases that have destroyed the consensus behind austerity programs. Tens of thousands marched in Spain, seen as the next country in need of a bail-out.

Unemployment in the eurozone remained at 11.3 % in July. This represents an increase of 1.2% from a year earlier and is the highest level since the euro was formed in 1999.

China’s exports were up only 1% in July year-on-year compared to 11.3% the month before. Imports rose 4.7% year-on-year, down from June’s 6.3%. Chinese trade surplus dropped to $25.1 billion from $31.7 billion the previous month.

China urged countries gathered at a recent Asia-Pacific Economic Cooperation meeting to create stronger regional economic ties. Chinese president Hu Jintao announced a $157 billion government spending program to boost infrastructure as well as pledging support for greater trade liberalization.

Car sales in China continue to show growth, with an increase of 8.2% year on year in July, but indicating lower numbers from June results.

AMR Corp., the parent company of American Airlines, has entered a non-disclosure agreement with US Airways that will allow the companies to discuss possible merger.

BP PLC confirmed that it is selling its interests in a number of oil and gas fields in the deepwater US Gulf of Mexico to Plains Exploration and Production Company for a total of $5.55 billion. This move was seen as part of a previously announced plan to divest up to $38 billion in assets.

The Savage System announced that it completed a BNSF Railway Co. – served crude oil terminal near Trenton, ND. The terminal will handle crude oil drawn from the Bakken Shale and Williston basin, and will facilitate transportation to refineries. The terminal consists of truck receiving stations, pipeline connections, crude oil tanks, and a double loop track designed to handle two 118-car trains.

A report released by the US Department of Transportation (DOT) on August 8 states that the amount of freight carried by the for-hire transportation industry, which comprises trucking, rail, inland waterways, pipelines, and air, in June was 16.1% higher than the April 2009 recession low. Cargo growth at ports from coast to coast has been seen. The busiest port in terms of yearly twenty foot equivalent units (TEL’s) was the Port of Los Angeles/Long Beach followed by the Port of New York/New Jersey.

The American Trucking Association reported that tonnage was unchanged in July after increasing 1.1% in June, and falling 1.0% in May. Compared with July 2011, the tonnage index was up 4.1%. Year-to-date, tonnage was up 3.7% compared with the same period last year.

The US Postal Service announced on August 3 its first-ever default on $5.5 billion in payments due to the Treasury. A similar amount is 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.  The House and Senate have each taken a different approach to solving the problem.

Shale oil and gas-related:

The US Geological Survey issued a new estimate of technically recoverable domestic oil and gas. The amounts, 32 billion barrels of crude oil and 291 trillion cubic feet of natural gas, represent about 10% of the overall US oil and gas endowment.

TransCanada Corp., the company behind the Keystone XL pipeline, has proposed re-routing the US portion in order to obtain environmentalist group support. It has offered an alternate route to the Nebraska Department of Environmental Quality for evaluation. The company has begun construction of the Canadian part of the pipeline. The changes offered did little to modify environmentalist positions. President Obama delayed a final decision on the US leg of the pipeline until after the national election. GOP presidential candidate Mitt Romney stated that he would approve the pipeline on his first day in office. Some union groups back the project, saying that it will create needed jobs. The AFL-CIO has not stated a formal position.

A Citigroup commodities researcher stated that reindustrialization of the US brought about by higher natural gas production could create 3.6 million jobs by the end of the decade.

Lower cost US shale gas has given companies such as Dow Chemical Co. and DuPont Co. an estimated 8% profit advantage over industry giant BASF. The company’s huge Ludwigshafen, Germany flagship site consumes as much gas-generated power as Denmark.

The amount of carbon dioxide being released into the atmosphere in the US has fallen dramatically to its lowest level in 20 years. Energy Department officials said that the biggest reason is that cheap and plentiful natural gas has resulted in many power plant operators switching from coal. Both government and industry experts said that the biggest surprise was how rapidly the electric industry moved away from coal. In 2005, coal was used to produce about half of all electric power in the US; the Energy Information Agency said that it fell to 34% in March, the lowest level since it began keeping records almost 40 years ago.

         Governor Mario Cuomo stated on August 22 that New York has no timetable for issuing new regulations on fracking. Environmentalists and drillers have been waiting for a decision since June, when he said that a final report would be released shortly. In 2008 the state placed a moratorium on fracking based on water contamination concerns. Since then, the state’s Department of Environmental Conservation has been studying fracking. In June, the New York Times said that Cuomo was considering a plan to limit drilling to the poorer counties in the southern tier bordering Pennsylvania. A Quinnipiac University poll reported that the majority of voters in upstate New York support Marcellus shale drilling.

New York City Mayor Michael Bloomberg released a study that showed NYC needs natural gas to make complete its conversion away from heavy heating oil use in the city. ICF International has estimated that by 2030, 80% of the city’s natural gas supply would be coming from the Marcellus and Utica shale deposits, up from the current 25%.

THE ECONOMY

A survey released by the World Economic Forum said that the US dropped further down a global ranking of the world’s most competitive economies, moving from 5th position last year to 7th spot. This was its fourth year of decline. Switzerland and Singapore retained their respective number one and two positions.

According to Census Bureau annual data, last year the median income of American households dropped to its lowest level since 1995. Median income adjusted for inflation fell 1.5% below its 2010 level and 4.1% below 2009.

The Congressional Budget Office estimated that the federal government incurred a budget deficit of $1.17 trillion for the first eleven months of fiscal 2012, $70 billion less than the deficit recorded in the same period in fiscal 2011. The US Treasury Department reported that on September 4, the federal debt topped $16 trillion. It stood at $5.7 trillion in 2001.

The US government debt held by foreign entities hit a record $5.29 trillion in June, according to Treasury Department data released on August 16. In January 2009 the US government owed $3.07 trillion to foreign entities, which is an increase of 72.3%. China was the top creditor, with Japan a close second.

The US House of Representatives approved a 6 month stopgap government funding bill, which was seen as bipartisan resolve to avoid a budget showdown ahead of the November election.

The Bureau of Economic Analysis reported an updated estimate for the second quarter 2012 Gross Domestic Product growth at an annual growth rate of 1.7%, that is, from the first quarter to the second quarter. This is an increase from the initial estimate of 1.5%. In the first quarter, real GDP increased 2.0%. 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 3.3% or $127.8 billion in the second quarter to a level of $15,606.1 billion. Revised first quarter increase was reported as 4.2% or $157.3 billion.

The Conference Board’s Leading Economic Index increased 0.4% in July to 95.8 (2004=100) following a 0.4 % decrease in June a 0.3% increase in May.

The Conference Board Consumer Confidence Index which had increased slightly in July, declined in August. It stands at 60.6 (1985=100) down from an adjusted 65.4 in July. It is now at its lowest level since November 2011.  

The Institute for Supply Management’s Manufacturing Index for August registered 49.6%, a decrease from 49.8% in July and indicated contraction in this sector for the third consecutive month.  A reading below 50% indicates that the manufacturing economy is generally retracting. The Non-Manufacturing Report for August was 53.7%, higher than July’s 52.6% indicating continued growth at a slower rate.

In August, retail and food services sales adjusted for seasonal variations were $406.7 billion, an increase of 0.9% from July and 4.7% above August 2011. Total sales for the June through August 2012 period were up 4.0 % from the same period a year ago.

According to the trade group International Council of Shopping Centers, a group of 18 major retailers reported August sales rose 6% and reflected the industry’s best performance since March of this year. This report was in contrast with declining consumer confidence numbers.

Privately owned housing starts in July of 803,000 were 1.0% below the revised July estimate of 811,000 but were 24.5% above the revised August 2011 rate of 645,000. Single family housing starts in August were at a rate of 535,000 or 5.5% above the revised July figure of 507,000. New home sales increased 3.6% in July, to a seasonally adjusted annual rate of 372,000, and were 25.3% above the July 2011 figure of 297,000.

The National Association of Realtors reported that sales of existing homes rose 2.3% in July to a seasonally adjusted annual rate of 4.47 million from June’s adjusted level of 4.37 million. The national median existing home prices rose in July, up 9.4% from a year earlier.

US foreclosures declined in July after an increase in June. There were 58,000 finished foreclosures in July compared to 62,000 in June. The level was down from 69,000 a year earlier.

New orders for manufactured durable goods in July increased $9.4 billion or 4.2% to $230.7 billion. This increase, up for three consecutive months, followed a 1.6% June increase.

July unfilled orders for manufactured durable goods, up for two consecutive months, increased $7.8 billion or 0.8% to $996.3 billion.

Consumer Price Index for all urban consumers increased 0.6% in August on a seasonally adjusted basis, following no change in July. Over the last twelve months, the index increased 1.7 % before seasonal adjustments. The seasonally adjusted increase in all items was the largest since June 2009. About 80% of the increase was accounted for by the gasoline index, which rose 9.0%. The energy index had declined 0.3% in July on a seasonally adjusted basis.

The Producer Price Index for finished goods increased 1.7% in August, seasonally adjusted, following an increase of 0.3% in July and 0.1% in June. This was the largest monthly increase since a 1.9% bump in June 2009. On an unadjusted basis, prices for finished goods increased 2.0% for the twelve months ended August 2012, the largest advance since a 2.8% increase for the twelve month period ended March 2012.

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

Inflation: Inflation rose in August by 1.7%, the most in more than three years, driven by energy costs. The July rate was 1.4%. A revised average rate of 1.8% is projected for 2012.

The Agriculture Department forecast on August 31 that farm exports will set a sales record due to drought-induced smaller harvests. High prices for corn, soybeans, and wheat are expected to set an export sales record for the fiscal year ending September 30 of $143.5 billion. The US is the world’s largest agricultural exporter, shipping half of its wheat and soybeans and three quarters of its cotton to overseas buyers. China is the world’s largest cotton and soybeans customer.

Industrial production decreased 1.2% in August, after having risen 0.5% in July. At 96.8% of its 2007 average, total industrial production in August was 2.8% below its year-earlier level, due in part to hurricane shutdowns in the Gulf. Capacity utilization for total industry decreased 1.0% to 78.2%, a rate 2.1% below its 1972 – 2011 average.

Unemployment: The August 2012 rate declined slightly to 8.1% as reported by the Bureau of Labor Statistics and continued 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 5.0 million. Those individuals accounted for 40.0% of the unemployed. North Dakota led the nation with the lowest state unemployment rate in July of 3.0%, and Nevada was reported the highest at 12.0%.

Trade Deficit: For July 2012 the goods and services deficit increased to $42.0 billion from a revised June figure of $41.9 billion as exports decreased more than imports.

Crude Oil: Petrobras announced significant offshore discoveries. US proven reserves have increased 12.8%.  Present WTI spot price ~$96/bbl and holding, compared to ~$87/bbl  a year earlier.  

Natural Gas:  Henry Hub spot price closed on September 12 at $2.94/MMBTU. Working natural gas in storage remains above the five year average.

The US dollar trading at 78.4 Japanese yen; $1.31 = euro. The British pound sterling = $1.62. Canadian dollar trading at US$.97

Current US gold price quoted at $1771.60/ounce compared to the record price of $1920/ounce in September, 2011.

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