The American Chemistry Council (ACC) US Chemical Production Index declined by 0.4% in September, following a revised 0.2% decline in August and a gain of 0.2% in July. Compared to September 2012, chemical production in all regions increased by 1.4%, following an August 1.8% year to year increase. Comparing the first nine months of 2013 to those of 2012, total chemical production rose 1.1% nationally, with five of the seven regions posting gains.
The ACC’s Chemical Activity Barometer (CAB) rose by 0.6% in October, representing the fourth consecutive monthly increase in the CAB. The year over year monthly moving average showed an increase of 2.8% over a year ago.
A House Energy and Commerce subcommittee was to review the Chemical Safety Improvement Act during the week of November 11. The legislation was introduced by Senators David Vitter, R-LA, and the late Frank Lautenberg, D-NJ. This will be the first time that the House panel considers reform of the Toxic Substances Control Act (TSCA).
DuPont announced on October 24 that it will spin-off its titanium dioxide unit into a separately traded public company within 18 months. DuPont expects that the new business will have annual sales of about $7.2 billion, with the remaining businesses showing $28 billion in annual sales.
US chlor-alkali average operating rates were 85% in August, 1.7% lower than a year earlier.
Dow Chemical is selling it polypropylene licensing and catalyst operation to W. R. Grace for $500 million. This was seen as part of a $1.5 billion divestiture program announced by Dow earlier this year.
Plastic bottles returned for recycling increased by 161 billion pounds in 2012. The recycling of polyethylene bottles increased by 45.3 million pounds during the same period.
ICIS named Westlake Chemical as the ICIS Company of the Year for 2013. The award was made for outstanding financial performance in 2012. Westlake net income reached a new record, having increased by 49% from 2011 to $396 million.
Methanex has sped up the schedule for the relocation of one of its methanol plants from Santiago, Chile to Geismar, LA. It is expected to be on-line next year.
BASF and Yara International ASA (Norway) announced on October 18 that they are considering a joint venture to invest in a world scale ammonia plant on the US Gulf Coast. BASF and Yara said that Yara has expertise in the global ammonia network and BASF is a major ammonia consumer for its downstream manufacturing operations.
Swiss-based Clariant will sell its detergents and intermediates business to International Chemical Investors Group for $64 million.
Brenntag CEO Steve Holland recently stated that the company plans to spend between €200-250 million on acquisitions. Approximately 45% of Germany-based Brenntag’s revenue comes from Europe, 40% from North America and the remainder from Asia-Pacific and Latin America. Brenntag now has over 450 sites in 70 countries.
The Grangemouth, UK INEOS oil refinery and petrochemicals complex appears to have averted a complete shut-down with last-minute union concessions.
The US Supreme Court agreed to review parts of the EPA’s greenhouse gas rule and will probably hear the case early in 2014, with a ruling in July. The court is expected to decide whether the EPA can require greenhouse gas permits for stationary sources of pollution, e.g., power plants, factories, and refineries.
The EPA’s chief air pollution regulator and Sen. Joe Manchin, D-WVA were expected to testify on November 13 on a draft bill that would limit the agency’s proposed carbon emissions rules for power plants. Manchin was quoted as saying that the EPA’s proposed regulations are not attainable because the technologies to achieve them aren’t yet viable.
According to the Department of Energy, US carbon dioxide (CO2) emissions dropped by 3.8% last year, falling to the lowest level in almost twenty years. Part of the reduction was attributed to increased natural gas production, making the US the biggest developer of natural gas in the world.
The Japanese government on November 15 announced a decision to reduce targeted greenhouse gas emissions after its nuclear power industry was shut down as a result of the Fukushima disaster. The government’s new target is a 3.8% cut versus 2005 levels by 2020. This is the reverse of the previous target of 25%. The Japanese decision was criticized at UN climate talks in Warsaw. Natural gas and coal consumption in Japan were up as compensation for the shutdown of fifty nuclear plants.
The EPA announced that it is scaling back its 2014 ethanol blending requirement. The amount of ethanol that must be blended into US fuel supplies has been reduced from 16.55 billion gallons to 15.21 gallons. Earlier this year the refining industry warned the EPA that refiners were reaching the maximum amount of ethanol that could be safely blended into the fuel supply, known as the “blendwall.” The continually increasing ethanol mandate has been blamed for driving up food and fuel costs, as about 40% of US corn supply is diverted to ethanol production. The volume of nitrogen fertilizer used in corn production increased by one billion pounds from 2005 to 2010, and an additional billion pounds are estimated to have been used since then.
With the focus on the government shutdown and avoidance of default on the national debt, little attention was paid to the US Postal Service default on a mandatory $5.6 billion payment for the health care of future retirees. This was the third default in slightly over one year. Postmaster General Patrick Donahoe has stated the need for Congress to implement administrative reforms in the system. The Postal Service was expected to report a fiscal year 2013 loss of approximately $6 billion.
Chinese exports increased 5.6% in October from a year earlier. The Chinese General Administration of Customs reported a trade surplus of $31.1 billion for October , the biggest this year.
China’s consumer price index increased at an annual rate of 3.2% in October, below the government target of 3.5% for the 10th month. Producer prices fell at 1.5%, the 20th straight monthly decline, and more than estimated earlier.
The Chinese government has a growth target of 7.5% for 2013, which would be the smallest rate of increase in more than twenty years. Beijing has said that it would accept slower growth as it tries to move the economy to domestic consumption rather than reliance on investment and exports.
China’s industrial output rose 10.3% in October.
Germany’s business climate continued to grow in October for the fifth month in a row. Munich-based Ifo, an economic research group, reported that its monthly business climate index for Germany rose to 107.7 in September from 107.6 in August. The survey represents responses from firms in construction, manufacturing, wholesaling and retailing.
Unemployment across the seventeen European Union countries that use the euro was reported for September at 12.2%. The September, 2012 reading was 11.6%. The lowest rates among member states were Austria at 4.9% and Germany at 5.2%. The highest rates among member states were Greece at 27.6% and Spain at 26.6%.
Inflation in the Euro zone was reported at 0.7% in October, the lowest since November, 2009.
Shippers dependent on a single railroad to move their freight have asked regulators and legislators for relief. Commodity producers in some rural locations complain that the lack of transport options leaves them at the mercy of a single carrier, which is able to set its own rates. The shippers argue that the Surface Transportation Board, which is supposed to be looking after their interests, favors railroads in its rulings.
The Association of American Railroads(AAR) on November 14 urged the Department of Transportation to press for improved federal tank car regulations by requiring that all tank cars used to transport flammable liquids be retrofitted or phased out, and that new cars be built to more stringent standards. The AAR estimates that approximately 92,000 tank cars are now moving flammable liquids, with 78,000 of them requiring retrofit or phase out based on its proposal.
Total carload rail volume for the first 45 weeks of 2013 was down 0.5% from the same point in 2012. Intermodal volume was up 4.1% compared to the same period. Petroleum products shipments were up 25.4%.
The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 1.4%, matching the August gain.
Shale Oil and Gas Related
OPEC has dismissed its earlier prediction that North American shale oil production will be “a source of marginal additions” to global supply.
Growing production from the Eagle Ford shale formation is helping to fuel a renaissance in Texas oil. Production in August yielded approximately 664,000 barrels of crude per day, compared with a rate of 446,000 barrels per day a year earlier.
The International Energy Agency (IEA) annual World Energy Outlook issued on November 12 said that the US will surpass Russia and Saudi Arabia as the world’s top energy producer by 2015 and will be close to energy self-sufficiency within the next twenty years. The IEA stated that crude oil prices will increase to $128/barrel by 2035, with a 16% increase in consumption.
TransCanada Corp. expects a US ruling on the 1700 mile $5.3 billion Keystone XL pipeline project, pending since 2008, to be made in the first quarter of 2014. The US State Department has also asked rail industry executives about delivering 830,000 barrels per day of Canadian crude to Gulf Coast refineries, as Keystone would do.
The IEA reported that Marcellus Shale natural gas production is growing faster than expected. Daily volume is 12 billion cubic feet, the equivalent of about 2 million barrels of oil per day, and more than six times the 2009 production rate.
The Congressional Budget Office reported that the federal government incurred a budget deficit of $680 billion in fiscal year 2013. This was $409 billion less than the deficit in fiscal year 2012. The fiscal year that just ended was the first since 2008 in which the deficit was less than $1 trillion. As a share of GDP, the deficit declined from 6.8% in 2012 to 4.1% in 2013. In 2007, the deficit was 1.1% of GDP.
Net spending by the government was $84 billion less in 2013 than in 2012. It was 20.8% of GDP in 2013, lower than the 22% recorded in 2012, but still above the 40 year average of 20.4%. The US Treasury Department reported that on November 10, 2013 the federal debt was $17.16 trillion. The national debt has increased an average of $2.69 billion per day since September 30, 2012.
The US Treasury has reported $9.7 billion loss on the sale of nearly all of the shares it received from its $49.5 bailout of General Motors.
Personal income in September increased $67.4 billion or 0.5% according to the Bureau of Economic Analysis. In August, personal income increased 0.5% or $65.6 billion.
The Census Bureau reported on November 6 that the number of people living in poverty last year held steady at nearly 50 million. But government programs appear to have lessened the impact, especially on children and the elderly.
The US government debt held by foreign entities is in excess of $5.6 trillion, with China holding $1.3 trillion of it. China remains the top creditor. Japan is a close second, holding $1.1 trillion.
The Bureau of Economic Analysis advance estimate showed an increase in Gross Domestic Product of 2.8% at an annual rate during the third quarter of 2013, that is, from the second quarter to the third quarter. In the second quarter, real GDP increased 2.5%. First quarter data showed an increase of 1.1%. Revised fourth quarter 2012 real GDP increased 0.4%. Current-dollar GDP, the market value of the nation’s output of goods and services, increased 4.8% or $16,857 billion. In the second quarter, current dollar GDP increased 3.1% or $125.7 billion to a level of $16,661 billion. In the first quarter current dollar GDP increased 2.8% or $115.0 billion.
The Conference Board’s Leading Economic Index increased 0.7% in September, to 97.1 (2004=100), following a 0.7% increase in August and a revised 0.4% increase in July.
The Conference Board Consumer Confidence Index which had decreased in September to 80.2 (1985=100) decreased sharply in October to 71.2.
The Institute for Supply Management’s October Manufacturing Index registered 56.4%, an increase of 0.2% from the September reading of 56.2%. The October reading is the highest of the year. The Non-Manufacturing Report for October was 55.4%, up from September’s 54.4% indicating continued growth in the non-manufacturing sector.
In September, retail and food services sales adjusted for seasonal variations were $425.9 billion, a decrease of 0.1% from August but 3.2% above September 2012. July through September 2013 sales were up 4.5% from the same period a year ago.
Privately owned housing starts in July of 943,000 were 2.7% above the revised June estimate of 918,000 and were 12.4% above the July 2012 rate of 839,000. No data for September and October will be available for total privately owned housing starts, new residential sales, single family housing starts until the end of November. Single family housing starts in August were at a rate of 627,000 or 3.0% above July. New single home sales in August of 421,000 were 7.9% above July’s adjusted annual rate of 390,000. July was 14.1% below the revised June rate of 455,000.
After hitting the highest level in almost four years, the National Association of Realtors reported that sales of existing homes declined 1.9% in September to a seasonally adjusted annual rate of 5.29 million from a downwardly revised 5.39 million in August, but are 10.7% above the September 2012 rate of 4.78 million. Prices were up 11.7% from September 2012, and reflected the tenth consecutive month of double-digit year-to-year increases. Distressed homes, foreclosures and short sales, accounted for 14% of September sales, up from 12% in August.
New orders for manufactured durable goods in September increased $8.2 billion or 3.7% to $233.4 billion. This increase, up for five of the past six months, followed a revised 0.2% August increase.
September unfilled orders for manufactured durable goods increased $8.6 billion or 0.8% to $1041.2 billion. This number has increased for seven of the last eight months.
Consumer Price Index for all urban consumers increased 0.2% in September on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.2% before seasonal adjustments. Food index was unchanged in September after rising 0.1% in August. The gasoline index increased 0.8% in September after a decline of 0.1% in August and an increase of 1.0% in July.
The seasonally adjusted Producer Price Index for finished goods decreased 0.1% in September after an increase of 0.3% in August and no change in July. On an unadjusted basis, prices for finished goods increased 0.3 % for the twelve months ended in September 2013.
Interest rate: Prime at 3.25%, unchanged since 12/16/08.
Inflation: Inflation rate for the twelve months ended in September reported at 1.2%. August reported at 1.5%. This followed a July rate of 2.0%. The average rate of 2.1% was reported for 2012.
Industrial production increased 0.4% in September after an increase of 0.4% in August and having been unchanged in July. The level of the index for total industrial production in September was equal to its 2007 average and was 3.2% above its year-earlier level. Capacity utilization rate for total industry increased 0.4% to 78.3%, a rate 3.2% above the level of a year earlier, and 1.9% below its 1972 – 2012 average.
Unemployment: The October unemployment rate was little changed from the September 2013 rate of 7.3% as reported by the Bureau of Labor Statistics. The number of unemployed persons was reported at 11.3 million. Employers added 204,000 jobs in October. The long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.1 million in October. Those individuals accounted for 36.1% of the unemployed. North Dakota, with its booming energy industry, continued to lead the nation with the lowest state unemployment rate in September of 3.0%; Nevada was highest at 9.5% with Illinois, Rhode Island and Michigan not far behind.
The US Census Bureau and the Bureau of Economic Analysis through the Department of Commerce announced that total August exports of $189.2 billion and imports of $228.0 billion resulted in a goods and services deficit of $38.8 billion, up from $38.6 billion in July.
Crude Oil: WTI trading at ~$95/bbl, up from ~$86 a year earlier; prices expected to trend lower near year-end.
Natural Gas: Pipeline expansions to New York City and New Jersey were completed on schedule on November 1, increasing consumer access to the Marcellus Shale field. Prices for New York customers have come down. With the advent of colder weather, Henry Hub spot price closed on November 3 at $3.68/MMBTU, up $.23 from the beginning of the week. December 2013 contract reported in the $3.56/MMBTU range. Working natural gas in storage at the end of October was 2.0% lower than last year at that time, but 1.5% higher than the five-year average.
The US dollar trading at 99.3 Japanese yen; $1.34 = euro. The British pound sterling = $1.60. The Canadian dollar trading at US$1.05.
Current US gold price quoted at $1277.30/ounce. The record price of $1920/ounce was recorded in September, 2011.