U.S. and China Relations Improve, Tariffs on Hold

Trade relations between the US and China improved this weekend.

The Trump administration made meaningful actions to put the looming trade war with China on hold after Treasury Secretary Steven T. Mnuchin said they would refrain from implementing significant tariffs on various Chinese goods.

In a joint statement on May 19, China agreed to purchase increased amounts of U.S. goods, including agriculture, energy, and manufactured goods. However, China has not formally released a quantitative figure committing to the amount they will purchase, and when.

The announcement comes after President Trump announced tariffs of $150 billion on Chinese goods, including an initial $50 billion set to take effect in the coming weeks. China retaliated with tariffs of an equal scale, all of which has been in stalemate and a state of uncertainty over the past month.

The U.S. – China trade deficit reached $337 billion last year, by far the largest of any country.

These announcements come through a mix of the joint statement, statements by Treasury Secretary Mnuchin, and President Trump’s personal Twitter account.

President Trump is scheduled to meet with North Korean ruler Kim Jong Un in Singapore in early June, and the trade talks with China may be a precursor to assistance soliciting North Korea to give up their nuclear arsenal.

It is unforeseen and unpredictable what may happen with the U.S. and China trade relationship, and tariffs may likely not be entirely off the table. However, the recent news and announcements appear to be a sign toward deescalating potential trade war concerns and economic stability between nations.

 

Resources:

http://www.latimes.com/business/la-fi-china-us-trade-war-on-hold-20180520-story.html
https://www.cbsnews.com/news/trump-says-barriers-and-tariffs-with-china-are-coming-down/


https://abcnews.go.com/Politics/wireStory/us-china-beijing-commits-buying-american-goods-55297175

The Chemical Company Crude Oil

Crude Oil Inventories & Price in 2018: High Prices, Immediate Impacts

In early January 2018, oil prices hit their highest levels in more than three years. “U.S. crude oil inventories are at their lowest level since August 2015. OPEC is getting closer to its target of reducing OECD industrial stocks to the five-year average,” says PVM Oil Associates analyst Tamas Varga.

The Chemical Company Crude Oil

Data from the U.S. Energy Information Administration showed that crude inventories fell by almost 5 million barrels to 419.5 million barrels in the week of January 5, 2018. This drop is likely due to the extreme cold weather that stopped some onshore output in North America, which was expected to be short-lived. Production cuts led by OPEC and Russia that started in January 2017, and are set to continue throughout 2018, have underpinned charges. There is still downward pressure in the physical market, where the second and third largest OPEC producers have cut their prices to remain competitive.

The oil price decline that began mid-2014, when the price of oil was consistently over $110/bbl, has changed the fundamental economics of the global chemicals industry, and has brought about widespread uncertainty. Additional supply from North American shale oil and continued high production levels from OPEC are likely to make a slow but steady recovery.

Nonetheless, prices will need to recover over time to permit investment in production and exploration. Over the past ten years, oil prices have gone through at least two complete cycles, and more significant swings are likely to happen. During this time of ever-changing prices, setting short and mid-term plans will continue to be necessary.

Oil is one of the key ingredients in the manufacture of various chemicals and related products. Consequently, many chemical firms benefit from lower crude oil prices. However, companies using natural gas as opposed to oil for their feedstock do not enjoy those benefits, resulting in the cost of natural gas affecting chemical firms more than the price of oil in those cases.

Additionally, a substantial decline in crude oil prices would impact the market in other ways. It makes the economics of petroleum substitutes a great deal less attractive, including bio-based and battery chemicals. This issue is causing companies, from global powerhouses to niche firms, to reevaluate their strategies.

 

 

Sources:
https://www.cnbc.com/2018/01/10/oil-markets-near-3-year-highs-on-tighter-us-market.html
https://www.icis.com/resources/news/2018/04/10/10210537/us-on-pace-for-record-oil-natgas-production-in-2018/

The View from Jamestown: April 2018

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The View: Podcast Edition

The View from Jamestown: Podcast Edition is our bi-weekly podcast series that includes content from The View, interviews with industry professionals and business partners, tradeshow previews, and much more.

Click the album art to stream the April View from Jamestown podcast today.

Market Updates

No-Toxicity Ruling for DINP in Europe

This month, the European Chemicals Agency Risk Assessment Committee (RAC) concluded no classification is required for DINP after a lengthy research and analysis period. This comes after Denmark submitted a request to look into a ruling in 2015.

Read On Here

Crude Oil Hovers Above, Around $65/bbl

Crude Oil prices have ticked above $65/bbl two separate times so far in 2018, a price widely regarded as a major threshold for the petrochemical market.

Read On Here

U.S. Trucking Will Get Worse in 2018 Before it Gets Better

Throughout the months of trucking issues including driver shortages, ELD mandates and the winter weather, analysts believe the issues will continue getting worse before they get better.

This report from Bloomberg expects freight costs to rise as much as 12% in 2018, up from already inflated rates that the industry has been seeing through the last six to twelve months.

Read on here

Product Pricing Trends & Updates

  • U.S. Propylene spot prices mostly down
    • Polymer Grade: $.4275/lb
    • Refinery Grade: $.295/lb
  • U.S. contract Ethylene settles at 28.25cpp, down 1.75cpp from March
  • Crude Oil fell on Wednesday to $63.37/bbl, but has been hovering around $65/bbl all March
  • June ICE Brent settled down to $68.02/bbl
  • May NYMEX Nat Gas closed Wednesday at $2.718/mmBtu
  • April Benzene settled down 7cpg, to 299cpg. Was 306cpg in March

Pricing info & trends courtesy of: PetroChem Wire

Security of Supply | The Chemical Company

Security of Supply defines The TCC global strategy to ensure safety, and accountability as well as honest, long-term organic growth.

Our team includes a local technical sales staff based throughout the Americas, a dedicated EH&S team, our integrated logistics managers, vertically integrated producing partners, and committed high-quality customer expert team.

We monitor short-term trends and long-term opportunities, acting and investing when the market is right to bring the best value to our business partners and customers.

The Chemical Company produces weekly graphics with raw material market information and price changes. To follow along, follow TCC your platform of choice, including LinkedInFacebookInstagram & Twitter, and of course make sure you’re subscribed to The View.

Featured Product: April 2018

 

NatureFlexx ELO: Epoxidized Linseed Oil

All products are subject to availability, which fluctuates daily. Most products are available from TCC with approximately a one-week lead time.

For more information, click the graphic of the product, or visit thechemco.com.

Monthly Market Movers

Crude Oil: $63.50 (+ 3.55%)
Natural Gas: $2.669 (- 2.41%)
DOW: 23,995 (- 2.75%)
Nasdaq: 6,995 (- 3.75%)

As of: 4/3/2018, Yahoo Finance (Approximate monthly changes)

Dollars & Cents

$1.00 USD =

.815 EUR
.711 GBP
106.561 JPY
18.20 MXN

As of: 4/3/2018, xe.com

 

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DINP Reproductive Toxicity Classification Rejected by ECHA

The European Chemicals Agency’s Risk Assessment Committee (RAC) has concluded that no classification is required for reproductive toxicity for DINP after a lengthy research and analysis period(1,2). The ECHA concluded that there is no required classification regarding issues surrounding fertility and/or development.

The debate surrounding DINP classification was originally submitted by Denmark in 2015(1), leading to a large-scale scientific and industry debate on the proposal and potential hazards of the material.

The 6-page ECHA news release annex, 369-page review report and article from the European Plasticizers trade association are available here and linked below.