The American Chemistry Council (ACC) US Chemical Production Index declined by 0.3% in August following an upwardly revised gain of 0.2% in July. Compared to August 2012, chemical production in all regions increased by 1.2% following July’s 1.4% year to year increase. Comparing the first eight months of 2013 to those of 2012, total chemical production rose 0.8 % nationally, with five of the seven regions posting gains.

The ACC’s Chemical Activity Barometer (CAB) rose by 0.4% in August, with forecasts suggesting economic growth into 2015. The year over year monthly moving average showed an increase of 3.3% over a year ago.

The recent ICIS top 100 worldwide chemical companies listing showed BASF in the number one position, followed by Sinopec, ExxonMobil, Dow Chemical, SABIC, and Shell. The 100 companies reported sales totaling $1.39 trillion in 2012, down 0.7% from 2011. A similar regional report for North America put ExxonMobil in first position, followed by Dow Chemical, DuPont, Agrium, Chevron Phillips Chemical, PPG Industries, Ecolab, Praxair, Huntsman, and Mosaic.

US chlor-alkali average operating rates were 93% in August, an increase from July, but slightly lower than August, 2012.

On September 30, LyondellBasell opened its Houston Technology Center, which had been relocated from the Philadelphia, PA area.

Rockwood Holdings completed the sale of its Performance Additives and Titanium Dioxide (TiO2) businesses to Huntsman in a deal worth $1.3 billion, of which $1.1 billion was in cash. Huntsman has also acquired Oxid’s business for $75 million. Oxid manufactures and markets specialty urethane polyols.

Chevron Phillips Chemical has received board approval for its planned Gulf Coast petrochemical project. It includes an ethane cracker and two polyethylene units. Completion is expected by 2017.

Saudi Hydrogen Peroxide Company has begun building a hydrogen peroxide plant at Jubail Industrial City. The parent companies are Solvay and Sadara Chemical. The new facility will have a capacity in excess of 300,000 MT/year, with start-up expected in 2015.

The Environmental Protection Agency (EPA) recently announced ChemView, which is available on the EPA website.  It enables users to compare chemicals by use and by health or environmental effects.

The EPA issued a statement that withdrew a proposal under the Toxic Substances Control Act (TSCA) to list chemicals that “may pose a concern.” Eight phthalates were included, including DIDP, DHP, and DINP. The EPA intends to continue with its evaluation of 83 materials named in the TSCA Work Plan chemicals listing.

The EPA was expected to propose standards establishing stricter pollution limits for gas-fired power plants than for coal-fired ones. This rule would impose greenhouse gas limits on power plants for the first time as well as require utilities to install carbon controls on coal plants. Members of Congress have asked the agency to hold additional listening sessions on its planned greenhouse gas regulations for existing power plants. It was pointed out that none of the sessions scheduled through the end of November are in states that produce or consume the most coal.

The current governmental shutdown had a heavy impact on the EPA, with 1,069 employees out of 16,205 considered as essential. This also stopped the clock on renewable fuel standards work for 2014.

According to Rep. Peter Welch (D-VT) the federal requirement for gasoline refiners to mix biofuel, e.g. ethanol is a “flop.” Major poultry and chain restaurant groups as well as the oil and gas industry have opposed the standard.

LyondellBasell and Oiltanking Stolhaven Antwerp announced on October 3 a ten year agreement for the storage and handling of glacial acetic acid and vinyl acetate monomer in Antwerp. Oiltanking Stolhaven will invest in new stainless steel storage capacity and rail loading capability at Antwerp.

Chinese exports increased 5.5% in September from a year earlier. This followed the August 7.2% year-on-year rise.

China’s consumer price index increased at an annual rate of 2.5% in September, following 2.6% in August and 2.7% in July.

China’s industrial output rose 10.2% in September.

Angela Merkel’s party won a resounding victory in Germany’s elections on September 22. This was interpreted as strong support for Germany’s stable economy and low unemployment achieved by her Christian Democrat Party. Although Ms Merkel’s emphasis on fiscal discipline has divided Europeans, it has won widespread backing from German voters.

Germany’s business climate continued to grow in September 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 August at 12.0%.  The lowest rates among member states were Austria at 4.9% and Germany at 5.2%.

Inflation in the Euro zone was reported at 1.1% in September, the lowest in three years.

An effort is under way in Congress to push back the implementation date for greatly improved freight rail safety measures because it would be impossible to meet the December 2015 target.

Total carload rail volume was up 0.7% annually in September on major US railroads. Intermodal volume was up 4.4% compared to September 2012. Petroleum products shipments were up 10.4%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 1.4% in August.

Shale Oil and Gas-Related

The International Energy Agency said on September 12 that for the third quarter, booming shale oil and biofuels output will make the US the biggest producer of liquid fuels outside of OPEC, surpassing Russia.

Statoil (Norway) has discovered more than 550 million barrels of oil equivalent since the first of the year and has found more hydrocarbons than any other company in 2013.

US crude oil production rose 20.3% year on year in August, the highest output for the month in 25 years according to the American Petroleum Institute.

Latest opinions are that a decision on the 1700 mile $7 billion Keystone XL pipeline project, pending since 2008, is not expected from the administration until 2014. The State Department hasn’t yet finalized an environmental review that was expected to be complete by mid-summer. Polls indicate that a strong majority of Americans support the project.

The AFL-CIO and other organizations are strongly in support of the project.

Energy entrepreneur T. Boone Pickens has stated that the Keystone XL pipeline would eliminate the US dependence on OPEC. He said that the same amount of oil is available from Canada as from Saudi Arabia.

California governor Brown signed into law regulations for hydraulic fracturing (fracking). The state will require permits to use the drilling technique, and energy companies will have to disclose the ingredients used in the fracking fluid.

According to a recent ACC announcement, at the end of August, the global chemical industry had invested a total of $84.4 billion in 126 projects connected to the increased availability of US shale gas. Of the total, 54% is direct foreign investment.

YPF SA, Argentina’s largest company, and Dow Chemical Co.’s Argentine unit signed a final accord to invest $188 million in order to develop jointly the shale gas at the country’s Vaca Muerte formation.

Royal Dutch Shell has picked a site in Ascension Parish, Louisiana for a $12.5 billion plant that will convert natural gas into diesel, jet fuel, and other products. This facility would offer the benefit of displacing oil with cleaner natural gas.

The Economy

The Congressional Budget Office reported that the federal government incurred a budget deficit of approximately $750 billion from October 2012 through August 2013 (the first eleven months of fiscal 2013), more than $400 billion less than the shortfall recorded for the same period last year. The CBO estimates that the federal government incurred a deficit of $146 billion in August 2013, in contrast with the $191 billion deficit reported for the same period a year ago. Updated CBO figures are not currently available. The US Treasury Department reported that on October 8, 2013 the federal debt was $16.75 trillion. The national debt has increased an average of $1.85 billion per day since September 30, 2012.

Personal income in July increased $14.1 billion or 0.1% according to the Bureau of Economic Analysis. In June, personal income increased 0.3% or $38.2 billion.  Updated information from the BEA was not available at this time.

According to data released by the US Census Bureau on September 17, during the first four years of President Obama’s time in office, real median income of American households dropped by $2627 and the number of people in poverty increased by 6.7 million. The poverty level remained at 15% last year.

The US government debt held by foreign entities is in excess of $5.6 trillion, with China holding $1.3 trillion of it. In January 2009 the US government owed $3.07 trillion to foreign entities. China remains the top creditor. Japan is a close second, holding $1.1 trillion.

The Bureau of Economic Analysis second estimate of the second quarter 2013 Gross Domestic Product showed an increase at an annual rate of 2.5%, that is, from the first quarter to the second quarter. Revised first quarter data showed an increase of 1.1%, down from an earlier estimate of 1.8%, which was down from early estimate of 2.4%. Revised fourth quarter 2012 real GDP increased 0.4%. Current-dollar GDP, the market value of the nation’s output of goods and services, is estimated to have increased a revised 3.1% or $125.7 billion in the second quarter to a level of $16,661 billion. In the first quarter current dollar GDP increased 2.8% or $115.0 billion. In the absence of BEA data, independent economic sources indicated that the third estimate of the second quarter GDP increased at an annual rate of 2.5%.

The Conference Board’s Leading Economic Index increased 0.7% in August, to 96.6 (2004=100), following a 0.5% increase in July and no change in June.

The Conference Board Consumer Confidence Index which had increased slightly in August, decreased in September to 79.7 (1985=100) down from 81.8 in August.

The Institute for Supply Management’s September Manufacturing Index registered 56.2%, an increase of 0.5% from the August reading of 55.7%. The September reading is the highest of the year. The Non-Manufacturing Report for September was 54.4%, and was 4.2% below the August reading of 58.6%, but indicating continued growth in the non-manufacturing sector.

In July, retail and food services sales adjusted for seasonal variations were $424.5 billion, an increase of 0.2% from June and 5.4% above July 2012. May through July 2013 sales were up 5.2% from the same period a year ago. Updated information was not available.

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 were available for total privately owned housing starts in August. 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.

The National Association of Realtors reported that sales of existing homes rose in August, with median prices showing double-digit year over year increases. Existing home sales increased 1.7% to a seasonally adjusted annual rate of 5.48 million, up from 5.39 million units in July. This was an increase of 13.2% from the same period a year ago. Sales have remained above year-ago levels for 26 months. Distressed homes, foreclosures and short sales, accounted for 12% of August sales, down from 15% in July. This was the lowest number since monthly tracking began in 2008. They were 23% in August 2012. Foreclosure filings fell 34% in August as first-time defaults dropped to the lowest level in almost eight years.

New orders for manufactured durable goods in August increased $0.3 billion or 0.1% to $224.9 billion. However, August orders were still 8.0% below the rate recorded in June.

July unfilled orders for manufactured durable goods increased $4.4 billion or 0.4% to $1034.3 billion. This number has increased for five of the last six months. There was no data available for August.

Consumer Price Index for all urban consumers increased 0.1% in August on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.5% before seasonal adjustments. Food index increased 0.1% in August after rising 0.1% in July. The gasoline index declined 0.1% in August after an increase of 1.0% in July.

The seasonally adjusted Producer Price Index for finished goods increased 0.3% in August after no change in July following an increase of 0.8 % in June. On an unadjusted basis, prices for finished goods increased 1.4 % for the twelve months ended in August 2013.

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

Inflation: Inflation rate in August reported at 1.5%. This followed a July rate of 2.0%, June rate of 1.8%, May rate of 1.4%, and April rate of 1.1%. The average rate of 2.1% was reported for 2012. It is expected to average 2.0% in 2013.

Industrial production increased 0.4% in August after having been unchanged in July. At 99.4% of its 2007 average, total industrial production in August was 2.7% above its year-earlier level. Capacity utilization rate for total industry increased 0.2% to 77.8%, a rate 0.6% above the level of a year earlier, and 2.4% below its 1972 – 2012 average.

Unemployment: Unofficial estimate for September of 7.2% was little changed from the August 2013 rate of 7.3% as reported by the Bureau of Labor Statistics. The number of unemployed persons was estimated at 11.2 million. Employers added 142,000 jobs in September. The long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.2 million in September. Those individuals accounted for 37.2% of the unemployed. North Dakota, with its booming energy industry, continued to lead the nation with the lowest state unemployment rate in July of 3.0%; Nevada was highest at 9.5 % with Illinois, Rhode Island and North Carolina not far behind.

According to data compiled by executive outplacement company Challenger, Gray and Christmas, ten companies have announced close to 75,000 job cuts this year, combined. The companies that are cutting the most jobs are in the financial services and retail industries, such as Wells Fargo, American Express, and J. C. Penney.

Barring the Commerce Department releasing data, consensus forecast among market economists was for a slight increase in the trade deficit for August of $39.5 billion up from the July number of $39.1 billion. Additional details were not available.

Crude Oil: WTI trading at ~$104/bbl, up from ~$92 a year earlier; prices expected to trend lower near year end.

Natural Gas: Henry Hub spot price closed on October 3 at $3.61/MMBTU, up $.09 from the beginning of the week. November 2013 contract reported in the $3.60/MMBTU range. Working natural gas in storage at the end of September was 4.3% lower than last year at that time, but 1.4% higher than the five year average.

The US dollar trading at 96.9 Japanese yen; $1.36 = euro. The British pound sterling = $1.61. The Canadian dollar trading at US$1.03.

Current US gold price quoted at $1324.30/ounce. The record price of $1920/ounce was recorded in September, 2011.