Chemical Industry News

QUOTE OF THE DAY
Patriotism is supporting your country all the time, and your government when it deserves it.
—Mark Twain

U.S. chemical production was flat in April; remains up 4.4 percent over one year ago according to the American Chemistry Council (ACC). The U.S. Chemical Production Regional Index (U.S. CPRI) was flat in April, as measured on a three-month moving average (3MMA). This followed an upwardly revised flat growth rate in March and a 0.2% gain in February.

Also measured on a 3MMA basis, chemical production by segment was mixed. There were gains in the output of coatings, chlor-alkali, pesticides, adhesives, consumer products, other specialties, industrial gases, synthetic rubber, plastic resins, and organic chemicals. These gains were offset, however, by declines in the production of fertilizers, acids, phosphates, sulfates, synthetic fibers, and pharmaceuticals.

Politics play too big a role in the Environmental Protection Agency’s proposed regulations, say a group of Senate Republicans. But the EPA Science Advisory Board Reform Act would “assist [the agency] in crafting and issuing appropriate environmental regulations,” said Sen. Mike Rounds, R-S.D., chairman of an Environment and Public Works Committee subpanel, during a hearing on the bill. The White House has issued a veto threat for the bill, which would overhaul the EPA’s scientific advisers.

Borealis and Agrifos Partners are in the early stages of forming a joint venture to build a world-scale ammonia production facility on the Texas Gulf Coast. Borealis would have rights to 40% of the ammonia from the site to help expand its global nitrogen business.

National Association of Chemical Distributors (NACD) sent a letter and supplemental information to the Occupational Safety and Health Administration asking for an immediate, short-term administrative stay through Dec. 1 regarding the agency’s enforcement of its Hazard Communication Standard rulemaking for companies’ chemical products previously labeled and stored in their existing inventory. The current deadline for complying is June 1.

In 2015, there is a tremendous amount of interest in India on the part of the global plastics industry. India’s industry is projecting that the country will double its per person use of plastics by 2020, as a growing consumer class increasingly wants the smartphones, computers, cars and better food packaging that are more common in other places.

DuPont is emphasizing new products to maintain growth in China. Roger Kant, the company’s marketing director for packaging & industrial polymers in the Asia Pacific highlighted several new products and technologies for the China market that included Elvaloy phthalate-free plasticizers for PVC and meat packaging using a combination of DuPont Surlyn resin, with EVOH barrier and a tough layer of either nylon or polyester.

The rise of the U.S. plastics industry and increase in chemical manufacturing will add 462,000 jobs across the nation in the next 10 years, according to data from the American Chemistry Council. More than $130 billion chemical-related investments have been proposed in the U.S. since 2010. “Companies are restoring jobs to the United States as new manufacturing is increasingly being located here at home,” said Steve Russell, vice president of plastics for ACC.

The Environmental Protection Agency’s Integrated Risk Information System needs “more tangible signs of progress,” the American Chemistry Council says. A recent progress report to Congress showed work on several of the recommendations from the National Research Council. However, IRIS must improve its criteria for reviewing evidence, its responsiveness to stakeholder input and its problem formulation and scoping process, ACC said.

The Federal Energy Regulatory Commission has asked the Environmental Protection Agency to include a safety valve to protect grid reliability in its Clean Power Plan. With a safety valve, states could ask the EPA for temporary exemption from compliance. FERC offered to help the EPA to assess such requests if the EPA allows the provision.

PTT Global Chemical and Marubeni plan to choose a third partner for a proposed $5 billion ethane cracker project in Ohio. The project, planned for Belmont County, could bring hundreds of long-term jobs to the area.

Rep. John Shimkus, R-Ill., is expected to officially introduce the Toxic Substances Control Modernization Act (TSCA. The full House Energy and Commerce Committee will likely review the bill in early June, and the bill may reach the House floor by the end of the month. “Our goal is to lock it down with the agreement that we have, unless there’s big buy-in on both sides” to make changes, Shimkus said.

At the 2015 Central Region Meeting on June 8-10 at the Eaglewood Resort in Itasca, Illinois, ICC Compliance Center’s Emily Walter will review the three major deadlines for compliance with the new Hazcom 2012 requirements. A discussion of what each deadline includes and who needs to comply, and an examination of OSHA’s recently published enforcement guidance and how it impacts the deadlines will be included. Understanding the deadlines and enforcement guidance will help companies stay compliant every step of the way.

The U.S. Centers for Disease Control and Prevention and other groups are urging people to stop urinating in pools as it depletes the chlorine and produces an irritant that can sting people’s eyes. Meanwhile, the smell commonly thought to come from chlorine is actually from “chemicals that form when chlorine mixes with pee, sweat and dirt from swimmers’ bodies,” said Chris Wiant, Chair of the Water Quality and Health Council. Therefore, pool users should shower before getting in and refrain from urinating in the pool, experts advise.

The Vie from Jamestown - Oil & Gas

Oil & Gas Related

Shale oil companies are edging closer to their big debts becoming a bigger problem. Moody’s Investor Service believes 7.4 percent of U.S. oil producers over the next year could default on the risky debt that fueled the nation’s shale boom if crude stays cheap.

Private land and mineral rights owners say they are seeing sluggish revenues from royalty payments as shale producers default on debts and go bankrupt amid a slump in oil prices.

“Thanks to hydraulic fracturing and horizontal drilling, the U.S. is experiencing a renaissance in domestic oil and natural gas production. The benefits for U.S. consumers — as well as manufacturers, the travel and tourism industry and frankly our entire economy — are hard to overstate,” John Felmy, chief economist with the American Petroleum Institute, said in a conference call with reporters.

The Environmental Protection Agency’s proposal to lower the ground-level ozone limit would “throw thousands­­—if not millions—of jobs into jeopardy,” writes Michael James Barton, energy adviser at ARTIS Research. The American Chemistry Council has determined that 211 shale-related projects worth $135 billion could be threatened by the standards.

The U.S. is about to change the global LNG market forever. When the first tanker carrying liquefied natural gas from shale fields leaves the Sabine Pass terminal in Louisiana in December, it will turn consumers into traders with more bargaining power. That will transform a market dominated by long-term contracts into one where spot trading gains prominence, similar to crude oil.

Significant U.S. exports will likely boost gas prices, currently at about $3 a million British thermal units, Energy Aspects Ltd. said in a report for UniCredit SpA on Tuesday. U.S. gas may converge toward European levels, now at about $7 a million Btu, the analysts said.

LNG trade will exceed $120 billion this year, overtaking iron ore as the second most valuable commodity after oil, Goldman Sachs Group Inc. said in a March report. LNG is gas cooled to minus 160 degrees Celsius (minus 256 degrees Fahrenheit) so it occupies 600 times less space.

Ten Senate Democrats implored President Obama Thursday to nominate a new head for the Pipeline and Hazardous Material Safety Administration (PHMSA), which has not had a leader in seven months. The letter came two days after an oil pipeline on California’s coast leaked an estimated 105,000 gallons of oil into the the Pacific Ocean, which washed onto the beaches of Santa Barbara County.
Since 2010, the benchmark price for natural gas futures contracts has mostly held below $5 per million British thermal units (MMBtu). Frequently, the price has dipped as low as $2 per MMBtu, as drillers from Pennsylvania to Texas have raised output from previously uneconomical gas deposits buried in shale and other hard-to-drill rock.

Demand for gas is also growing from a surprising source: Fleets of trucks switching from costly diesel fuel to cheaper compressed or liquefied natural gas to save on fuel costs.

Sens. Joe Manchin, D-W.Va., Lisa Murkowski, R-Alaska, Heidi Heitkamp, D-N.D., and Bob Corker, R-Tenn., on Tuesday unveiled a bill that would lift the ban on U.S. crude oil exports. The legislation would provide “triggers to stop exports if gas prices increase or if our economy is adversely affected,” said Manchin. He added that allowing oil exports would benefit U.S. national security interests.

Royal Dutch Shell’s deal with BG Group that we’ve been watching since last month may not likely signal a wave of major mergers and acquisitions in the oil and natural gas industry, contrary to several observers’ predictions, writes Reuters reporter Clyde Russell. He notes that other companies could follow, but at “a smaller scale,” as they seek to complement their businesses with additional assets. “It will take sustained, lower commodity prices to knock valuations to the level where mega-mergers may make sense again,” Russell wrote.
Cleanup continues for the California oil spill, and experts are now saying that it could have been way worse than it was. The pipeline was carrying 1,300 barrels of oil an hour, which is below its capacity of 2,000 barrels.

The Middle East’s OPEC oil cartel just ramped up its war on the US shale gas industry as new data from Saudi Arabia shows that oil exports in March reached their highest level in 12 years, with production at record levels.

Morgan Stanley says the U.S. shale boom is over and the industry is getting more efficient — because it has to. After a conference in Houston with the oil and gas industry, MS’s research team writes that the industry is weathering the downturn in oil prices by increasing efficiency. This included the willingness by operators to look at new solutions, technologies, and approaches to project development that perhaps would not have gained traction without the downcycle.

“It will take many years until we see oil prices anywhere near the $100 mark,” Petroliam Nasional Bhd. President and Chief Executive Officer Wan Zulkiflee Wan Ariffin said at a conference in Kuala Lumpur. “We’ve underestimated the resilience of U.S. shale production. ‘We’re still grappling our way to climb out of this big drop.”
Tokyo Gas Co Ltd, Japan’s biggest gas utility, is looking to invest in more U.S. shale gas production as a hedge to liquefied natural gas (LNG) imports from the United States to start next year, a company executive said. The company has inked contracts to buy 1.9 million tonnes per year (tpy) of LNG from U.S. producers and aims to invest in an equal volume in the upstream sector, said Shigeru Muraki, a board member and executive adviser at Tokyo Gas.

Pumping a barrel of oil out of the Eagle Ford Shale could get $10 to $15 cheaper by summer 2016 as service companies cut costs and operators tune up their wells, analysts say. The oil slump hasn’t stopped producers in the South Texas play from getting better at targeting oil-rich rock in lateral sections of their horizontal wells, speeding up their pressure pumping systems and adopting better technologies for bringing wells into production. Those efforts could help lift wells’ initial production rates by an average 33 percent in the Eagle Ford, even as service companies cut prices for drilling tools, proppant and rigs by an average 16 percent this year, Wood Mackenzie analysts said.

Adapting the technology that powered the shale oil boom in Texas to the deserts of Saudi Arabia and elsewhere could produce 141 billion barrels of crude, research firm IHS said. Horizontal drilling and hydraulic fracturing, alongside other technological breakthroughs in recent years, could pump that much oil out of 170 older, largely unproductive fields around the world, from the Middle East to Latin America to Russia.

 

The View from Jamestown - Economy

The Economy

According to Bloomberg, the weekly consumer sentiment index dropped to 42.4 in the period ended May 17, the lowest since mid-December, from 43.5 as fewer consumers said now was a good time to spend. Such angst, particularly among lower-income households, probably has its roots in steadily climbing prices at the gas pump and limited wage gains.

Retail sales rose less than expected in March after declining for three consecutive months. Since the U.S. began collecting data in 1967, only twice has it seen three-month stretches of waning retail sales in non-recessionary times.

Businesses have remained upbeat all year, particularly in the U.S. This seems incongruous with slower growth and suggests that the recent slowdown will prove temporary. Businesses remain steadfast in their optimism over sales, investment, and hiring. Credit is also freely flowing. Pricing is sturdy, despite heightened deflation concerns in much of the world, and sales are healthy.

Legislation aimed at granting “fast track” powers to President Barack Obama as he seeks to cement the Pacific trade deal cleared a key procedural hurdle in the Senate this morning, with Republicans and a handful of Democrats joining to break a filibuster. A full vote is expected by Saturday, setting the stage for a contentious House debate on the legislation.

The U.S. will hold new talks with Cuba today, with the two countries believed to be on the brink of opening embassies and normalizing diplomatic relations. “We’re closer than we have been in the past, and I think my counterparts are coming up here with a desire to get this done,” a top State Department official said.

U.S. economy is edging closer to recession. Government information released in May indicates that growth actually contracted quarter over quarter. Barclays Capital and JPMorgan (JPM) both lowered U.S. Q1 GDP estimates to negative 1.1% after disappointing factory order data revisions last Thursday. Now, it even looks as if the second quarter is imperiled. Retail sales for April were disappointing. Again, economists had expected that a decline in gasoline prices would boost consumption, which hasn’t happened.

Wall Street Journal—Consumer prices rose for the third consecutive month in April, the latest sign of firming inflation.

Federal Reserve Chairwoman Janet Yellen said the central bank is on track to raise interest rates this year but will likely proceed cautiously.

U.S. home building surged in April to the highest level since before the recession officially began, a sign of thaw in the housing market during the critical spring selling season.

A weaker euro helped boost exports of goods from the Eurozone to the rest of the world in March, pushing the currency area’s trade surplus higher and aiding its economic recovery.

China’s factories showed little sign of a rebound in May, in the latest indication that any near-term upturn in the world’s second-largest economy will be driven more by stimulus than a broad-based recovery.

American households across the wealth spectrum increasingly face sharp swings in monthly income and spending, a finding that underscores the unpredictability that has become a hallmark of the U.S. labor market since the recession.

NEW DELHI, India — When Narendra Modi became prime minister a year ago on a promise to revive India’s once-sparkling economy, inflation was running at 9% and economic growth had slowed to less than 5% — half the pace of two years earlier. Today, inflation is down to 5%, and the International Monetary Fund forecasts India’s economy will grow 7.5% this year, outpacing China’s growth for the first time since 1999.

Fed Chair Janet Yellen: “If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy,” she said. “To support taking this step, though, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term.”

The Future of Shale Oil & Gas—Opinions Differ

Shale Plays in the Lower 48
[Click Map to Enlarge]

Ohio shale and gas production shifts south

A Columbus Dispatch article by Dan Gearino said that the Ohio Department of Natural Resources report on second-quarter results show the center of Ohio shale development shifting south to Noble County and Antero Resources Corp.

The top two natural-gas wells are located in Monroe County; both are owned by Hall Drilling.

Carroll County presently has the most oil and gas wells and the largest production. However, it lags in new development and in production per well.

FULL ARTICLE

 

Arguments for and against shale oil & gas developments may surprise you

An oilprice.com article by Euan Mearns questions whether we understand the concept of the controversial so-called energy debate. Whereas many think it is about the pros and cons of renewable energy and the environmental sensibilities of shale developments, the crisis may not be about those issues at all.

The crises for many countries could be abut the legal imperative to reduce their carbon dioxide (CO2) emissions relative to the value of 1990. The second order of importance is economic.

FULL ARTICLE

 

Why the shale oil and gas revolution won’t end any time soon

The Bangkok Post’s writer John Kemp questions the sustainability of the North American oil and gas boom. He says that doubts center on rapidly declining output from many shale wells after they are initially drilled. Although that may be true, supporters have every reason to believe that is not an issue. Kemp convincingly presents both sides of the issue in his comprehensive report.

FULL ARTICLE

 

Are drillers producing more debt than oil as they pursue fortunes in shale?

Asjylyn Loder seems to think so in a Bloomberg News article addressing that question.

Floyd Wilson, chairman and CEO of Halcon Resources Corp. wrote off $1.2 billion last year after disappointing results in two key prospects. Since Wilson took over the company, Halcon’s shares have dropped by about half, trading at $5.67 on Sept. 5.

Apparently this does not discourage Wilson, who claims that politicians and investors are buying into the vision of a domestic energy renaissance.

FULL ARTICLE

 

The long supply chain, not Big Oil that keeps the industry pumping

That’s what Jennifer A. Dlouhy reports in a fuelfix.com article on Sept. 9.

The American Petroleum Institute released a report documenting the nearly 30,000 businesses across the country that supply the oil and gas industry with products, equipment, and services, Dlouhy said.

Does that offset the losses suffered by investors in the oil fields where production is dwindling?

READ THE FULL ARTICLE AND SEE IF YOU AGREE

Domestic Shale Oil & Gas Production Take the Spotlight in Stabilizing U.S. Economy

The View from Jamestown - ShaleOil

Shale gas output growth just beginning

Matt Smith, commodity analyst at Schneider Electric says that the shale-driven growth in U.S. natural gas production is still likely “in the first half” of the game. He went on to say, “As natural gas prices gradually increase, we should see more production coming online because it’s incentivized by these higher prices. And so the unconventional gas story in the U.S. has a log way to run yet.” Although some countries can experience surging production from shale, they will not be able to replicate the U.S. boom, he added.

North Dakota tops 1M barrels per day

North Dakota oil production rose from 977,000 barrels per day in March to more than 1 million barrels per day in April, data from the state Department of Mineral Resources shows. Most of the output came from the Bakken Shale play and the Three Forks formations.

Domestic petrochemical exports expanding because of increased U.S. shale production

ExxonMobil Chemical President Steve Pryor said that the U.S. is joining the Middle East as a major petrochemical exporter because of the shale boom. Eventually, U.S. shale gas will find its way to Asia and Latin America in the form of resin pellets, according to the article. The American Chemistry Council estimates a total of $71.7 billion in new shale-related petrochemical investments.

Iraq’s impact on oil prices mitigated by U.S. shale boom

Nansen Saleri, CEO at Quantum Reservoir and former head of reservoir management at Saudi Arabian Oil said that the U.S. shale boom, which has driven growth in crude oil production, has prevented oil prices from increasing at a higher rate amid the crisis in Iraq. “Were it not for the increase in U.S. production that’s gained close to 2 million barrels a day, we would see a $20 to $30 rise in prices,” he said.

Even non-producing states benefit from U.S. gas boom say industry experts

In a Fuel Fix article, IHS Vice Chairman Daniel Yergin told Congress’ Joint Economic Committee that the surge in domestic natural gas production is contributing to the economic growth of U.S. states, even in states that don’t drill. Yergin said that approximately one-fourth of the 2.1 million jobs related to unconventional production can be found in those nonproducing states. Business leaders also noted that other industries are gaining from the boom.

Study reveals that oil and gas capital spending declined in 2013

According to an Oil & Gas Journal article, Deborah Byers, oil and gas leader at Ernst & Young said that capital expenditures by U.S. oil and natural gas firms in 2013 decreased by 7% from 2012, leading to a 9% gain in oil and gas reserves and strong energy prices. The decrease “is due in part to the advancement in technologies and processes that are making exploration and production less expensive and more efficient,” she said.

ExxonMobil shale gas exploration with Turkey almost certain

Turkish energy ministry official Salami Incedalci said that ExxonMobil and state-controlled Turkish Petroleum Corp. could team up on shale natural gas exploration in parts of Turkey.

The Reuters Newswire confirmed the claim in a report that quoted a Turkish energy official as saying that U.S. oil firm ExxonMobil is in talks with state-run Turkish Petroleum Corporation over a venture to explore for shale gas in the country’s southeast and northwest regions.

According to the report, Exxon held talks with TPAO in 2012 to cover a partnership in shale, but the negotiations were inconclusive. Turkish officials say talks have since advanced and are likely to result in an agreement.

The partnership could take the sting out of the possible loss in revenues suffered in the Iraq conflict if the crisis is not resolved in the near future.

Major New U.S. Chemical Manufacturing Projects seen at Risk Under EPA Rules

EPA_Suit

ICIS news reports that billions of dollars’ worth of new chemical sector and other manufacturing projects may be in jeopardy because of federal pre-construction environmental requirements, industry officials told a U.S. House panel last Wednesday.

The report, authored by ICIS writer Paul Hodges, who studies key influences shaping the chemical industry said that 8 in a hearing before the House Subcommittee on Energy and Power, a top chemicals industry official warned that some of the many new U.S. chemicals production facilities now on the drawing board ultimately could be abandoned because of time-consuming, laborious and confusing federal environmental permitting processes on new construction.

In her testimony on a draft bill aimed at accelerating and clarifying permitting processes at the Environmental Protection Agency (EPA), American Chemistry Council (ACC) regulatory and technical affairs director Lorraine Gershman noted that “As of this week, 177 chemical industry projects valued at $112bn in potential ne U.S. investment have been announced”, with at least 62% of that from foreign investors.

However, she said, “All of these projects must undergo a lengthy and complex environmental permitting process filled with challenges that could derail the investment”.

“Problems include uncertainty as to the schedule for obtaining a final pre-construction permit, a requirement that companies use emission modeling programs that cannot adequately accommodate site-specific data, and the need to address public input and legal challenges,” she said.

And, “once a project is significantly delayed, the project is often scrapped, and companies make plans to proceed elsewhere,” Gershman added.

Gershman was joined by Ross Eisenberg, vice president for energy and resources at the National Association of Manufacturers (NAM) who complained to the panel that the EPA often alters pre-construction permit criteria while investors are already in the permit application process, creating “conditions that derail the project”.

Chemical Industry News – February

Chemical Industry News - FEBRUARY 2014

Chemical Industry News – February 2014

The American Chemistry Council (ACC) US Chemical Production Index rose by 0.8% in December, following a gain of 0.3% in November. The gain was seen to be driven by increases in the Gulf Coast and Ohio Valley regions. Production increased in all seven regions of the US for the second consecutive month. Compared to December 2012, total chemical production in all regions increased by 1.4% year-over-year, following a gain of 1.5% in November. Comparing twelve months of 2013 to those of 2012, total chemical production rose 1.2% nationally.

The ACC’s Chemical Activity Barometer (CAB) rose by 0.2% in January. The CAB has shown a gain for nine consecutive months and it is up 2.6% over a year earlier.

A House Energy and Commerce subcommittee hearing in early February was expected to discuss chemical testing and reporting under the Toxic Substances Control Act. Work continues on a bipartisan bill from Sens. David Vitter, R-LA and the late Frank Lautenberg, D-NJ. Senator Vitter is also hopeful that a revised version of the Chemical Safety Improvement Act will be introduced soon and will clear Congress this year.

The European Commission has determined that the use of high molecular weight phthalates in certain toys and child care products poses no risk to infants. The decision was in line with the conclusions presented last August by the European Chemicals Agency (ECHA).

Dow Chemical reported a net income or $963 million for the fourth quarter of 2013 compared to a net loss of $761 million for the same period a year earlier.
BP and the Chinese Academy of Sciences have formed a joint venture to build two methanol plants in the State of Washington. Each facility is expected to cost $1 billion. The plants will be used to process natural gas into methanol for export to China.

The Celanese-Mitsui joint venture methanol plant start-up may be delayed until the third quarter of 2015, instead of the planned second quarter because of delayed EPA approval.
BASF entered into a joint venture with Sinopec to produce isononyl alcohol (INA) in Maoming, China. The plant is expected to start up in 2015.
BASF has announced a reduction, based on decreased demand, of 120,000 MT/year latex capacity for paper production. The company also plans to build a world-scale methylglycinediacetic acid (MGDA) plant at Evonik’s facility in Theodore, AL. The $90 million project is expected to start up in the second half of 2015.
SABIC is discussing possible investment in the U.S. shale gas industry, and is expected to enter the market this year. No estimates of size or type of investment were given.
US chlor-alkali average operating rates declined to 84% in December 2013 from November’s 85%.
The EPA notified oil industry groups on January 23 that it would reconsider its target for advanced ethanol made from grasses and trees, as producers struggle to produce it. The industry had petitioned the EPA to reconsider a mandate of 6 million gallons based on capability of one million gallons.

European countries dependent on Russia for natural gas are forming a group to lobby Washington in an effort to loosen export restrictions so that they can buy the fuel from the US. Most of the countries involved are in Eastern Europe. Their efforts are supported by America’s Natural Gas Alliance and the American Petroleum Institute.

The EPA published re-proposed carbon dioxide limits for new power plants on January 8, setting separate standards for coal-fired and natural gas-fired generating units. The rule revised an April 2012 proposal, in which the EPA had intended to set a single standard for both types of plants. According to the EPA, modern natural gas plants are essentially able to meet the new standard. The rule will make it very difficult for new coal-fired plants to be built in the US; utilities will only be able to build them if they are able to capture 20 to 40% of the carbon they emit and store it underground. The technology to do this is carbon capture and storage (CCS). Members of Congress and fossil fuel industry leaders are on record as saying that the CCS technology needed to meet the standard isn’t ready for commercial use. A 60 day comment period was established on the proposal. Legal challenges from industry are expected.

A Wall Street Journal report on California’s new Ivanpah solar energy plant noted that costs are approximately four times as much as a conventional gas-fired plant, but will produce less electricity. There are concerns about wildlife with dozens of dead birds being reported at the site. The project cost is estimated at $2.2 billion. It covers a desert area over roughly five square miles.

Legislation introduced in the Rhode Island House of Representatives intends to extend the life of the state’s central landfill by redirecting food waste for the production of energy and compost. The measure would phase in a requirement that all non-residential food waste be separated.

The US Postal Service lost $354 million in the financial quarter ending December 31 but was far less than the $1.3 billion loss in the comparable quarter for the previous fiscal year. The cost of a first class stamp was increased from 46 to 49 cents on January 26. The Postal Service lost $5 billion in the past fiscal year, down from $15.9 billion in 2012. Congress continues to work on fixing the agency’s financial problems.

The latest information available indicated that Russian production of chemicals and petrochemical products increased 3.3% year over year in the first half of 2013.
China’s economy grew by a healthy 7.7% in 2013, although signs of a slowdown emerged late in the year. This reflected a cooling in economic growth from the double-digit rates reported in the past.
China’s producer price index in December was 1.4% lower year to year and was viewed by some as a sign of slowness in the manufacturing sector.
China’s consumer price index increased at an annual rate of 2.5% in December down from 3.0% in November.

China’s exports rose an unexpected 10.6% from a year earlier in January, while imports increased 10%, resulting in a trade surplus of $31.9 billion.

Germany indicated that it is preparing a third rescue package for Greece provided that Greece implements austerity measures. The new loan would be worth between €10 and €20 billion. The IMF has been at odds with Germany and other lenders over the need to write off Greece’s debt.

Germany’s business climate continued to grow, but slightly, in January. Munich-based Ifo, an economic research group, reported that its monthly business climate index for Germany rose to 110.6 in January from 109.5 in December. 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 unchanged at 12.0% for December. It was 11.9% a year earlier. The lowest rates among member states were Austria at 4.9%, Germany at 5.1% and Luxembourg at 6.2%. The highest rates among member states were Greece at 26.1% and Spain at 25.8%. However, during the same period sales rebounded 1.6% versus a year ago.

Inflation in the Euro zone was reported at 0.8%, down from 0.9% in November. This was less than half of the European Central Bank’s ceiling, which indicated economic weakness in parts of the region.
The Railway Supply Institute Committee on Tank Cars has called on the US Department of Transportation (DOT) to consider new safety measures for tank cars carrying crude oil and ethanol. The committee proposed additional safety requirements on newly-built railway tank cars, a prohibition on other older cars. It was estimated that it will take ten years to modify many existing tank cars.

The National Transportation Safety Board has recommended rules that it said will protect people and the environment along routes where trains haul crude oil.
Total carload rail volume for January increased 0.4% overall compared with January 2013. Intermodal volume was up 1.3% compared to the same period in 2013 and was highest weekly average for any January on record. Petroleum products shipments were up 10.4%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 0.6% in December after surging 4.7% in November. The index was 6.2% higher year to year. Trucking serves as a barometer of the US economy, representing 68.5% of tonnage carried by all modes of domestic freight transportation.

 

SHALE OIL & GAS RELATED

Gas PricesAccording to a report from the IHS Cambridge Energy Research Associates, thanks to shale production, natural gas prices in North America will remain in the range of $4 to $5 per thousand cubic feet for at least twenty years.

Hess Corp. said that it plans to spend $2.85 billion for exploration and production on unconventional shale resources, primarily in North Dakota’s Bakken area.
ExxonMobil Corp plans to move up to 100,000 barrels per day of Canadian oil sands crude using a new rail terminal in Alberta that should be running by 2015.
Great Britain’s Prime Minister David Cameron has approved a move to encourage hydraulic fracturing. He predicted that developing the country’s shale reserves will cut energy costs, create 74,000 jobs, and boost investments by more than $4 billion.

The continuing Keystone XL oil pipeline issue cleared a major hurdle on January 31 when the State Department reported no major environmental objections to the proposed $7 billion project. The report stopped short of recommending approval. Canadian tar sands are likely to be developed regardless of U.S. action on the pipeline, with China the most probable customer. President Obama still wants to hear from other federal agencies before making his decision. Former Interior Secretary Ken Salazar has said that the pipeline is a ‘win-win” project and would be in the national interest. The White House has denied claims from former Energy Secretary Steven Chu that the decision is a political one.

Replacing the Keystone XL pipeline with freight trains could result in an average of six additional rail-related deaths per year, according to a State Department report. The fatality and injury estimates were based on data from both the Federal Railway Administration and the Pipeline and Hazardous Material Safety Administration.

 

THE ECONOMY

EconomyThe Congressional Budget Office estimated that the federal government incurred a budget deficit of $184 billion for the first four months of fiscal year 2014, $107 billion less than the shortfall reported for the same period a year ago. If lawmakers pass no additional legislation affecting spending/revenues, the federal government will end fiscal year 2014 with a deficit of $514 billion compared with a $680 billion deficit in fiscal year 2013. The US Treasury Department reported that on February 10, 2014 the federal debt was $17.262 trillion. The national debt has increased an average of $2.40 billion per day since September 30, 2012.
The CBO reported on February 4 that the economic effects of the Affordable Care Act (Obamacare) will result in a bigger reduction in working hours than previously estimated. The report said that by 2017, due partly to smaller companies reducing worker hours to avoid requirements that full time workers be offered health insurance, there will be the equivalent of 2 million fewer full time equivalent workers. In 2011 the CBO had estimated that the law would cause a reduction of 800,000 full time equivalent workers.
Personal income in December increased $2.3 billion or less than 0.1% according to the Bureau of Economic Analysis. In November, personal income increased 0.2 % or $29.8 billion.

The Bureau of Economic Analysis “advance” estimate showed an increase in Gross Domestic Product of 3.2% in the fourth quarter of 2013, that is, from the third quarter to the fourth quarter. It was noted that all the growth came from private spending and investment. In the third quarter real GDP increased 4.1%, in the second quarter, real GDP increased 2.5% and first quarter data showed an increase of 1.1%.

Current-dollar GDP, the market value of the nation’s output of goods and services, increased 4.6% or $189.6 billion in the fourth quarter to a level of $17,102.5 billion. In the third quarter current dollar GDP increased 6.2% or $251.9 billion to a level of $16,912.9 billion.
The Conference Board’s Leading Economic Index increased 0.1% in December to 99.4 (2004 = 100), following a 1.0% increase in November, and 0.1% increase in October.

The Conference Board Consumer Confidence Index which had increased in December, increased again in January. The index now stands at 80.7 (1985 = 100) up from 77.5 in December. November was reported at 72.0.

The Institute for Supply Management’s January Manufacturing Index registered 51.3%, a decrease of 5.2% from December’s seasonally adjusted reading of 56.5%, which was 0.3% below the November reading of 57.3%. This was after seven consecutive monthly increases. The Non-Manufacturing Report for January was 54%, an increase of 1.0% over December’s 53%, which was a decrease of 0.9% from November’s 53.9%.

In January, retail and food services sales adjusted for seasonal variations were $427.8 billion, a decrease of 0.4% from December but 2.6% above January 2013. Total sales for the twelve months ending January 2014 were up 3.4% from a year earlier.

Privately owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 986,000, which was 3.0% below the revised November rate 1,017,000, but is 4.6% above the December 2012 figure of 943,000.3.1% Single family authorizations in December were at a rate of 610,000, which was 4.8% below the revised November figure of 641,000.

Sales of new single family houses in December were at a seasonally adjusted rate of 414,000. This was 7.0% below the revised November rate of 445,000 but is 4.5% higher than the December 2012 number of 396,000.

The National Association of Realtors reported that total sales of existing homes increased 1.0% in December to a seasonally adjusted annual rate of 4.87 million from a downwardly revised November rate of 4.82 million and were 0.6% below the December 2012 rate of 4.90 million. The national median existing home price for 2013 was 11.5% above 2012. Distressed homes, foreclosures and short sales, accounted for 14% of December sales, at no change from October and November. They were 24% in December 2012.
New orders for manufactured durable goods in December decreased $10.3 billion or 4.3% to $229.3 billion. This decrease, down two of the three last months, followed a 2.6% increase in November.
December unfilled orders for manufactured durable goods increased $3.9 billion or 0.4% to $1061.5 billion. This number has increased for ten of the last eleven months.
Consumer Price Index for all urban consumers was increased 0.3% in December 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 rose 0.1% and has not posted a monthly increase larger than 0.1% since June 2013. The gasoline index increased 3.1% and fuel oil and electricity rose as well, accounting for a 2.1% increase in the energy index.
The seasonally adjusted Producer Price Index for finished goods increased slightly 0.4% in December. Prices for finished goods declined 0.1% in November, 0.2% in October and 01% in September. On an unadjusted basis, prices for finished goods increased 1.2% for the twelve months ended in December 2013, compared with a 1.4% increase in 2012.
Interest rate: Prime at 3.25%, unchanged since 12/16/08.

Industrial production increased 0.3% in December, for a fifth consecutive monthly increase. For the fourth quarter of 2013, it increased at an annual rate of 6.8%, the largest quarterly increase since the second quarter of 2010. The November gain was the largest since November 2012. Capacity utilization rate for total industry increased 0.1% to 79.2%, a rate 1.0% below its 1972 – 2012 average.
Unemployment: The January unemployment rate was little changed at 6.6% from the December 2013 rate of 6.7% as reported by the Bureau of Labor Statistics. The number of unemployed persons was reported at 10.2 million. Since October, the jobless rate has decreased by 0.6%. The long-term unemployed, i.e., jobless for 27 weeks and over was reported at 3.6 million in January, a decline of 232,000. Those individuals accounted for 35.8% of the unemployed. The number of long-term unemployed has declined by 1.1 million in the past twelve months; part of the decline has been attributed to people dropping out of the labor force. In December, North Dakota continued to lead the nation with the lowest state unemployment rate of 2.6%; Rhode Island and Nevada were highest at 9.1 % and 8.8% respectively.
The US Census Bureau and the Bureau of Economic Analysis through the Department of Commerce announced on February 6 that total December exports of $191.3 billion and imports of $230.0 billion resulted in a goods and services deficit of $38.7 billion, up from the November figure of $34.6 billion.

Extremely cold weather continued to drive up natural gas pricing. Henry Hub spot price rose on February 5 to $7.90/MMBTU an increase of $2.70/MMBTU. This was the highest Henry Hub has been since September, 2008. Regional price variations were pronounced and fluctuated with temperature shifts. March futures declined to the $5.00/MMBTU range. Working natural gas in storage at the end of January decreased and was 28.8 % lower than last year at that time, and 22.4% lower than the five year average.
Crude Oil: WTI trading at ~$100/bbl, little changed from a year earlier.

Inflation: Inflation rate for the twelve months ended in December reported at 1.5%; November was reported at 1.3%, October was reported at 1.0%, September at 1.2%. A rate of 1.8% for 2014 is foreseen by some economists. An average rate of 2.1% was reported for 2012.

U.S. Dollar: Trading at 102.6 Japanese yen; $Canadian 1.09; $1.36 = euro; The British pound sterling = $1.66.

Current U.S. Gold Price: Quoted at $1292.00/ounce. The record price of $1920/ounce was recorded in September, 2011.

 

Chemical Industry News – January

Chemical Industry News

Chemical Industry News - January 2014 - The Chemical Company

The American Chemistry Council (ACC) US Chemical Production Index rose by 0.3% in November, following three consecutive monthly declines. Production increased in all seven regions of the US during the month.  Compared to November 2012, chemical production in all regions increased by 1.5% year-over-year, following a revised gain of 1.7% in October. Comparing the first eleven months of 2013 to those of 2012, total chemical production rose 1.3% nationally, with six of the seven regions posting gains.

The ACC’s Chemical Activity Barometer (CAB) rose by 0.1% in December. Following an increase of 0.1% in November, the CAB remains up 2.8% over a year earlier and is at its highest point since June 2008.

The ACC issued a report in December entitled “2013 Chemical Industry Situation and Outlook: American Chemistry is Back in the Game”, saying that chemical sales in the US will reach $1 trillion by 2018 and that R&D spending will rise to $68.7 billion. The outlook for Europe is less optimistic with a Eurozone growth of 1% in 2014.

WR Grace announced that it had completed the acquisition of Dow Chemical’s polypropylene licensing and catalyst business in a $500 million cash transaction.

Nova Chemicals is moving forward with several projects in the Sarnia, Ontario, Canada area and is evaluating options for a new $1 billion polyethylene plant.

Phillips 66 will sell Phillips Specialty Products to Berkshire Hathaway for approximately $1.4 billion in stock. The company produces chemicals related to pipeline flow potential. The agreement is expected to be finalized by mid-year.

Axiall is planning a $3 billion ethane cracker in Louisiana pending approval from their board of directors.

Cargill announced that it is to built a new ethanol plant in Saxony Anhalt, Germany, with an investment of ~$82 million. The new facility will serve the beverage, cosmetics, and pharmaceuticals industries.

On December 8, 2013 Sysco Corp. of Houston agreed to purchase US Foods of Rosemont, IL in a deal valued at approximately $3.5 billion.

The Society of Chemical Manufacturers and Affiliates (SOCMA) has called for the re-authorization of the miscellaneous tariff bill, which provides tariff relief for US companies that import chemicals not available in this country. SOCMA stated that chemical import duties can add 5 – 25% to total cost.

Andrew Liveris, Chairman, President and CEO of Dow Chemical was once again named number one chemical industry power player by ICIS.

It has been reported that Exxon’s new cracker in Singapore allows the company to bypass the refining process and to process crude oil directly into petrochemicals. This new technology helps to reduce raw material costs, energy consumption, and carbon emissions. According to Exxon, it is the most feed-flexible cracker that they’ve ever built.

US chlor-alkali average operating rates rose to 85% in November 2013 from October’s 79%.

The EPA was scheduled to publish re-proposed carbon dioxide limits for new power plants on January 8, setting separate standards for coal-fired and natural gas-fired generating units. The rule would revise an April 2012  proposal,  in which the EPA had intended to set a single standard for both types of plants. The new standards aren’t expected to result in significant CO2 reductions because the power generating sector is already investing in lower cost, cleaner natural gas-fired generating units.

The US Navy has announced that it is moving rapidly toward making regular purchases of biofuel for its warships and jet aircraft by 2015.  The Secretary of the Navy said that this was part of a joint venture with the US Agriculture Department.

Odebrecht, Brazil’s major contractor, is considering the development of an ethane cracker and three polyethylene plants in a project called Ascent, according to Governor Tomblin of West Virginia. In addition, Braskem, also a Brazilian company, would be responsible for petrochemical related activities as well as marketing the polyethylene

Russian production of chemicals and petrochemical products increased in the January – November 2013 period according to Rosstat, the national statistical agency.

China became the world’s largest trading nation in 2013, overtaking the US. This ranking is based on annual trade in goods, and China passed the $4 trillion mark for the first time last year. Exports were reported to have risen 7.9% to $2.21 trillion and imports to have risen 7.3% to $1.95 trillion. Total trade rose 7.6% over the year to $4.16 trillion. US data for 2013 hasn’t yet been published but with trade totaling $3.15 trillion in the first eleven months of the year, it’s unlikely to beat China. Economists forecast that the Chinese economy will expand 7.5% in 2014.

On January 9 US lawmakers proposed a bill to give the White House the power to fast-track international trade agreements as 2014 looks to be a hectic year of trade negotiations. The proposed legislation would allow an up-or-down vote without amendments.

China’s consumer price index decreased at an annual rate of 1.5% in December. Producer prices remained level.

China’s monthly industrial output in excess of 10% continues to exceed the government annual target of 7.5%.

Germany’s business climate continued to grow, but slightly, in December. Munich-based Ifo, an economic research group, reported that its monthly business climate index for Germany rose to 109.5 in November from 109.3 in October. The survey represents responses from firms in construction, manufacturing, wholesaling and retailing. Their expectations regarding business developments rose to their highest level since spring 2011.

Unemployment across the seventeen European Union countries that use the euro was reported unchanged at 12.1% for November. The lowest rates among member states were Austria at 4.7%, Germany at 5.2% and Luxembourg at 5.9%. The highest rates among member states were Greece at 27.4% and Spain at 26.7%. However, during the same period sales rebounded 1.6% versus a year ago.

Inflation in the Euro zone was reported at 0.8%, down from 0.9% in November. This was less than half of the European Central Bank’s ceiling, which indicated economic weakness in parts of the region.

The head of safety for CN Rail says that the rail industry wants to phase out older model tank cars that have been implicated in several recent accidents. This problem could involve as many as 80,000 sub-standard cars in use across North America. The Association of American Railroads (AAR) and Regional Railroad Association has proposed a new safety standard that would require shippers to upgrade tank cars. The Canadian and US governments have been reluctant to deal with this huge number of cars, in part because of the cost and logistics of an overhaul.

Total carload rail volume for 2013 was down 0.5% from 2012. Intermodal volume was up 4.6% compared to the same period. Petroleum products shipments were up 29.8%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 2.7% in November, after falling 1.9% in October. Compared with November 2012, year-over-year increase was 8.1%.

Kinder Morgan Energy Partners entered into an agreement to purchase American Petroleum Tankers and State Class Tankers for $962 million in cash. This will result in Kinder Morgan adding maritime tanker service.

Shale Oil and Gas Related

The Chemical Company - Chemical Industry News - Shale Oil and Gas RelatedThe New York State Energy Planning Board long-term plan, which was supposed to have been completed in September 2012 was released on January 7, 2014 for a 60 day public comment period. It calls for expanding the use of natural gas for heating and power generation, but takes no position on the use of hydraulic fracturing. Over the past year Governor Cuomo has said that he’s waiting for his health commissioner to complete a review, with no deadline for a decision.

Canadian Prime Minister Stephen Harper recently said that he remains confident that the Keystone XL pipeline will eventually be built even as President Obama delays making a decision on the $5.4 billion project. Oil sands developers are planning to double output by 2025 and are counting on Keystone XL to connect their crude oil to the Gulf Coast, the world’s largest refining center. According to the American Petroleum Institute, buying oil from Canada makes sense because for every US dollar spent on Canadian products, such as oil, up to 89 cents is returned in the form of imports of US goods to Canada.

The operator of the $2.3 billion pipeline between Cushing, OK and the Gulf Coast expects to begin shipping oil on January 22.

Royal Dutch Shell has renewed its option to buy the Horsehead site in Monaca, PA as it continues to evaluate whether or not to proceed with a $2 billion ethylene plant in the area. However, demolition of a zinc oxide plant at the site is taking place.

The Economy

Chemical Industry News - January 2014 - The EconomyThe Congressional Budget Office estimated that the federal government incurred a budget deficit of $182 billion for the first three months of fiscal year 2014, $111 billion less than the shortfall reported for the same period a year ago. The federal government incurred a $680 billion deficit in fiscal year 2013. This was $409 billion less than the deficit in fiscal year 2012. The US Treasury Department reported that on January 4, 2014 the federal debt was $17.312 trillion. The national debt has increased an average of $2.67 billion per day since September 30, 2012.

An omnibus spending bill of $1.012 trillion was revealed on January 13; a House vote on it was expected on January 14 and for it to be before the Senate by the weekend. The bill covers the entire federal discretionary budget for fiscal 2014 and fills in the details of the earlier agreement between Democrats and Republicans. Passage of the bill will ensure that the government will stay open until October 1.

Personal income in November increased $30.1 billion or 0.2% according to the Bureau of Economic Analysis. In October, personal income decreased 0.1% or $10.8 billion.

China, the largest foreign creditor of the US, bought more Treasuries in October than any other foreign investor. This was taken as a sign that the US is still considered a global financial safe haven in spite of the recent shutdown and threat of default. China’s holdings increased by $10.7 billion to $1.305 trillion, according to Treasury Department data. The US government debt held by foreign entities continues in excess of $5.6 trillion.

The Bureau of Economic Analysis third estimate showed an increase in Gross Domestic Product of 4.1% in 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 6.2% or $251.9 billion to a level of $16,912.9 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.

A report by the National Association for Business Economics estimated that US GDP should grow by 2.8% in 2014.

The Conference Board’s Leading Economic Index increased 0.8% in November to 98.3 (2004 = 100), following a revised 0.1% increase in October, and a 1.0% increase in September.

The Conference Board Consumer Confidence Index which had decreased in November rebounded in December to 78.1 from 72.0 in November.

The Institute for Supply Management’s December Manufacturing Index registered 57%, the second highest reading for the year and just 0.3% below the November reading of 57.3%. The December reading is the seventh consecutive monthly increase. The Non-Manufacturing Report for December was 53%, a decrease of 0.9% from November’s 53.9%, but indicating continued growth in the non-manufacturing sector at a slower rate.

In November, retail and food services sales adjusted for seasonal variations were $432.3 billion, an increase of 0.7% from October and 4.1% above November 2012.

Privately owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,007,000, which was 3.1% below the revised October rate of 1,039,000, but is 7.9% above the November 2012 rate of 933,000. Single family authorizations in November were at a rate of 634,000, which was 2.1% above the October figure of 621,000.

Sales of new single family houses in November were at a seasonally adjusted rate of 464,000. This was 2.1% below the revised October rate of 474,000 but is 16.6% higher than the November 2012 number 398,000.

The National Association of Realtors reported that total sales of existing homes declined 4.3% in November to a seasonally adjusted annual rate of 4.9 million from an October rate of 5.12 million and were 1.2% below the November 2012 rate of 4.96 million. Prices continue to increase and were up 9.4% from November 2012. Distressed homes, foreclosures and short sales, accounted for 14% of November sales, at no change from October.

New orders for manufactured durable goods in November increased $8.2 billion or 3.5% to $241.6 billion. This increase, up three of the last four months, followed a 0.7% decrease in October.

November unfilled orders for manufactured durable goods increased $10.5 billion or 1.0% to $1058.5 billion. This number has increased for nine of the last ten months.

Consumer Price Index for all urban consumers was unchanged in November 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 rose slightly, after an increase of 0.1% in October, and no change in September. The gasoline index dropped 1.6% and natural gas fell as well, offsetting increases in electricity and heating oil.

The seasonally adjusted Producer Price Index for finished goods decreased slightly 0.1% in November. Prices for finished goods fell 0.2% in October and 01% in September. On an unadjusted basis, prices for finished goods increased 0.7 % for the twelve months ended in November 2013.

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

Inflation: Inflation rate for the twelve months ended in November reported at 1.2%; October was reported at 1.0%, September at 1.2%. An average rate of 2.1% was reported for 2012.

Industrial production increased 1.1% in November, after having edged up an adjusted 0.1% in October and 0.7% in September. The November gain was the largest since November 2012.  Capacity utilization rate for total industry increased 0.8% to 79.0%, a rate 1.2% below its 1972 – 2012 average.

Unemployment: The December unemployment rate declined to 6.7% from the November 2013 rate of 7.0% as reported by the Bureau of Labor Statistics. The number of unemployed persons was reported at 10.4 million, down from the 10.9 million from a month earlier. Employers added an unexpectedly low 74,000 jobs in December and a reported 374,000 people left the work force. Most economists had projected a 200,000 jobs gain. The long-term unemployed, i.e., jobless for 27 weeks and over was reported at 3.9 million in December, down from 4.1 million. Those individuals accounted for 37.7% of the unemployed. The number of long-term unemployed has declined by 894,000 in the past twelve months. North Dakota continued to lead the nation with the lowest state unemployment rate in November of 2.6%; Rhode Island and Nevada were highest at 9.0 % with Michigan, and Illinois not far behind.

The US Census Bureau and the Bureau of Economic Analysis through the Department of Commerce announced on January 7 that total November exports of $194.9 billion and imports of $229.2 billion resulted in a goods and services deficit of $34.3 billion, down from the October figure of $40.6 billion.

Crude Oil: WTI trading at ~$93/bbl, little changed from a year earlier.

Extremely cold weather in the Northeast drove up natural gas pricing. Henry Hub spot price closed on January 7 at $4.35/MMBTU, with a reported increase up to $4.54. Regional price variations were pronounced.  February futures reported in the $4.20/MMBTU range. Working natural gas in storage at the beginning of January decreased and was 15.1% lower than last year at that time, and 10.1% lower than the five year average.

The U.S. Dollar trading at 104.8 Japanese yen; $Canadian 1.09; $1.37 = euro; . The British pound sterling = $1.65.

Current U.S. gold price quoted at $1247.00/ounce. The record price of $1920/ounce was recorded in September, 2011.

Chemical Industry News – December

Chemical Industry News - December 2013 - The Chemical Company

Chemical Industry News – December

The American Chemistry Council (ACC) US Chemical Production Index edged lower by 0.2% in October, following a revised 0.3% decline in September, a 0.2% decline in August and a gain of 0.2% in July. Compared to October 2012, chemical production in all regions increased by 1.5% year over year, following a gain of 1.7% in September. Comparing the first ten months of 2013 to those of 2012, total chemical production rose 1.2% nationally, with five of the seven regions posting gains.

The ACC’s Chemical Activity Barometer (CAB) rose by 0.1% in November. Following slight downward revisions for September and October the CAB remains up 2.8% over a year earlier and is at its highest point since June 2008.

Dow Chemical is planning to spin off or sell about 40 manufacturing facilities over the next two years. They include Gulf Coast chlor-alkali and chlor-vinyl plants as well as its global chlorinated organics plants in the US, Germany, Italy, South Korea, Brazil, and China. These businesses account for approximately $5 billion in annual revenue and employ about 2000 workers.

A House Energy and Commerce subcommittee met on November 13 in order to review the Chemical Safety Improvement Act.

DuPont announced that it will sell its Glass Laminating Solutions/Vinyl unit, which supplies the automotive, architectural, and industrial industries, to Japan’s Kuraray Co. Ltd. The business has 600 employees in six manufacturing facilities in the US, Europe, and Asia and reported sales of approximately $500 million last year.

US chlor-alkali average operating rates remained at 79% in October and are not expected to increase until the new year.

The startup of Westlake Chemical’s new chlor-alkali plant in Geismar, LA is expected within weeks. Full operation is expected in 2014, with total capacity of 350,000 electrochemical units (ECU) per year.

Manufacturers of polystyrene food containers have been given until January 1, 2015 to present evidence to New York City that food-contaminated containers can be recycled economically. If not successful, a proposed ban on such containers will take effect July 1, 2015.

An updated EPA regulatory agenda issued on November 26 stated plans to develop regulations aimed at addressing climate change, securing chemicals, providing clean water and improving air quality. In its statement of priorities, the EPA confirmed that it intends to issue performance standards for CO2 emissions from existing and modified power plants in 2014.  EPA Administrator Gina McCarthy promised that the agency would be “really flexible” in implementation. There was no reference to a Department of Energy report that stated that US carbon dioxide (CO2) emissions dropped by 3.8% last year, falling to the lowest level in almost twenty years.

Formosa Plastics Group has applied for permits for a $2 billion expansion of its Texas operations, including an ethane cracker and downstream product capacity.

On December 5, Royal Dutch Shell announced that it would not move ahead with a proposed 140,000 barrel/day gas to liquids project on the US Gulf Coast. Development costs were cited as a reason for dropping the project.

OCI N. V., a Netherlands-based fertilizer company said on November 21 that it plans to build what would be the largest methanol plant in the US in Beaumont, TX. The plant will be built by its subsidiary, Natgasoline. Cost is estimated in excess of $1 billion, and production is estimated at 1.75 million tons of methanol per year. OCI N. V. operates another methanol plant in Beaumont, with an annual capacity of 730,000 tons. Additional methanol capacity is also planned for the Gulf Coast by Valero, Methanex, and Celanese.

General Motors and Detroit Renewable Energy have combined to develop a renewable energy project that will turn solid municipal waste from Metro Detroit into process steam used to heat and cool GM’s Detroit-Hamtramck assembly plant. The steam will travel 8300 feet through a pipe originating at Detroit Renewable Power.

On November 15 the U.S. Postal Service reported a fiscal year 2013 loss of $5 billion. This was down from approximately $16 billion in fiscal 2012. The Postal Service benefited from growth in its shipping and packages business as well as cost cutting programs.

At a meeting of the World Trade Organization (WTO) on December 7 in Indonesia agreement was reached in the first major accord in the group’s 18 year history. It is designed to smooth commerce at borders and to safeguard food security programs in developing nations. This was the first multilateral agreement negotiated by all of the WTO’s 159 member countries. US business groups, including the Chamber of Commerce, praised the new pact.

Chinese exports increased 12.7% over a year earlier in November, a number higher than what was anticipated. October increased 5.6%. The Chinese General Administration of Customs reported a trade surplus of $33.8 billion for November, the biggest since January, 2009.

China’s consumer price index increased at an annual rate of 3.0% in November, down from 3.2% in October. Producer prices fell again by 1.4%.

China’s monthly industrial output in excess of 10% continues to exceed the government annual target of 7.5%.

Germany’s business climate continued to grow in November. Munich-based Ifo, an economic research group, reported that its monthly business climate index for Germany rose to 109.3 in November from 107.4 in October. The survey represents responses from firms in construction, manufacturing, wholesaling and retailing. Their expectations regarding business developments rose to their highest level since spring 2011.

Unemployment across the seventeen European Union countries that use the euro was reported for October at 12.1%, down from 12.2% in September. The October, 2012 reading was 11.7%.  The lowest rates among member states were Austria at 4.8%, Germany at 5.2% and Luxembourg at 5.9%. The highest rates among member states were Greece at 27.3% and Spain at 26.7%.

Inflation in the Euro zone was reported at 0.9%, up from 0.7% in October. This was less than half of the European Central Bank’s ceiling, which indicated economic weakness in parts of the region.

The ACC filed comments on December 5 with the Pipeline and Hazardous Materials Safety Administration (PHMSA) urging the agency to adopt an effective strategy for further improving rail safety that recognizes the importance of preventing rail accidents as well as improving tank car designs. The ACC urged the PHMSA to conduct a thorough analysis and prioritize enhancements on the construction of new tank cars.

The Association of American Railroads (AAR) and Regional Railroad Association proposed new a new safety standard that would require shippers to upgrade DOT-111 tank cars in order to avoid explosions during derailment accidents. The American Petroleum Institute and other energy groups responded that the rail industry should improve its own business practices and make other fixes instead.

Total carload rail volume for the first 48 weeks of 2013 was down 0.5% from the same point in 2012. Intermodal volume was up 4.3% compared to the same period. Petroleum products shipments were up 7.2%.

The port of Miami restored its rail connection in October at a total project cost of $49 million. The port is undertaking a massive expansion in anticipation of a widened Panama Canal opening in 2015.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage decreased 2.8% in October, and was the first decrease since July. In September there was an increase of 0.5%. Compared with October 2012, year-over-year increase was 8%.

Shale Oil and Gas -Related

December 2013 Chemical Industry Abundant low cost natural gas in the U.S. has led to 134 new plants and expansions in the chemicals, plastics, tire, steel, and energy industries since June according to Kevin Swift, ACC economist and managing director.

Gas supply from the Marcellus Shale has surged as companies use improved technologies to increase well efficiency. A Bloomberg report anticipated that production from the formation may jump 37% from a year earlier in November. The gas from the Marcellus comes from about 5,000 wells.

In its revised November forecast, OPEC sees demand for 2013 up by 34,000 barrels/day to a total of 860,000 barrels/day.

A record number of 400 shale wells may be drilled outside the U.S. during 2014, with most of them in China and Russia. Maria van den Hoeven, executive director of the International Energy Agency said that this will be a revolution, but not everywhere at the same time and not a copy of the U.S. experience. Conditions that aided the US success don’t exist in Europe or Asia.

China has the largest shale gas reserves, followed by Argentina.

TransCanada Corp. expects to be delivering oil on January 3, 2014 to Texas on the southern portion of the Keystone XL pipeline, enabling more crude oil to be shipped from the hub in Oklahoma. The pipeline can carry 700,000 barrels/day to Port Arthur, TX. The $5.4 billion Keystone XL project entered its sixth year of US review in November.  TransCanada Corp. once again changed the project start date, this time into 2016.

Federal land managers intend to reissue a right of way for a 678 Mile natural gas pipeline from Wyoming to Oregon after completion of environmental review.

The Economy

December 2013 Chemical Industry News - The EconomyThe Congressional Budget Office reported that the federal government incurred a budget deficit of 231 billion for the first two months of fiscal year 2014, $61 billion less than the shortfall reported for the same period a year ago. The federal government incurred $680 billion deficit in fiscal year 2013. This was $409 billion less than the deficit in fiscal year 2012. The US Treasury Department reported that on December 4, 2013 the federal debt was $17.239 trillion. The national debt has increased an average of $2.73 billion per day since September 30, 2012.

House and Senate budget agreement is expected to be issued shortly for the first time since 2011. It was defined as a “cease-fire” between political parties with no major changes.

Personal income in October decreased $10.8 billion or 0.1% according to the Bureau of Economic Analysis. In September, personal income increased 0.5% or $67.4 billion.

The U.S. government debt held by foreign entities continues 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 second estimate showed an increase in Gross Domestic Product of 3.6% in 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 5.6% or $229.8 billion to a level of $16,890.8 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 0.2% in October, to 97.5 (2004=100), following a 0.9% increase in September and a 0.7% increase in August.

The Conference Board Consumer Confidence Index which had decreased in October, declined again in November to 70.4 from October’s 72.4. September was reported as 80.2 (1985=100).

The Institute for Supply Management’s November Manufacturing Index registered 57.3%, an increase of 0.9% from the October reading of 56.4%. The November reading is the highest of the year, and is the sixth consecutive monthly increase. The Non-Manufacturing Report for November was 53.9%, a decrease of 1.5% from October’s 55.4%, but indicating continued growth in the non-manufacturing sector at slower rate.

In October, retail and food services sales adjusted for seasonal variations were $428.1 billion, an increase of 0.4% from September and 3.9% above October 2012.

Privately owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,034,000, which was 6.2% above the September rate of 974,000, and 13.9% above the October 2012 figure of 908,000. Single family authorizations in October were at a rate of 620,000, which was 0.8% above the September figure of 615,000. Accurate data for new housing starts in September and October were not yet available due to lapse in federal funding.

Sales of new single family houses in October were at a seasonally adjusted rate of 444,000. This was 25.4% above the revised September rate of 354,000 and 21.6% higher than October 2012.

The National Association of Realtors reported that sales of existing homes declined for the second consecutive month in October, while prices continued to show year over year gains. Total existing home sales fell 3.2% to an annual rate of 5.12 million from 5.29 million in September, but were 6.0% higher than the October 2012 rate of 4.83 million. Prices were up 12.8% from October 2012, and reflected the eleventh consecutive month of double digit year-to-year increases. Distressed homes, foreclosures and short sales, accounted for 14% of October sales, at no change from September.

New orders for manufactured durable goods in October decreased $4.6 billion or 2.0% to $230.3 billion. This decrease followed two consecutive monthly increases.

October unfilled orders for manufactured durable goods increased $3.5 billion or 0.3% to $1045.4 billion. This number has increased for eight of the last nine months.

Consumer Price Index for all urban consumers decreased 0.1% in October on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.0% before seasonal adjustments. Food index rose 0.1% after no change in September and a rise of 0.1% in August. The gasoline index dropped 2.9% in October and led to the all items decrease for the month.

The seasonally adjusted Producer Price Index for finished goods decreased 0.2% in October. Prices for finished goods fell 0.1% in September after an increase of 0.3% in August. On an unadjusted basis, prices for finished goods increased 0.3 % for the twelve months ended in October 2013.

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

Crude Oil: WTI trading at ~$97/bbl, up from ~$89 a year earlier.

Inflation rate for the twelve months ended in October reported at 1.0%. September reported at 1.2% and August reported at 1.5%. The average rate of 2.1% was reported for 2012.

Industrial production decreased 0.1% in October, having increased an adjusted 0.7% 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 October was equal to its 2007 average and was 3.2% above its year-earlier level. Capacity utilization rate for total industry declined 0.2% to 78.1%, a rate 1.1% above the level of a year earlier, and 2.1% below its 1972 – 2012 average.

The November unemployment rate declined to 7.0% from the October 2013 rate of 7.3% as reported by the Bureau of Labor Statistics. The number of unemployed persons was reported at 10.9 million, down from the 11.3 million from a month earlier. Employers added 203,000 jobs in November. The long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.1 million in November. Those individuals accounted for 37.3% of the unemployed. The number of long-term unemployed has declined by 718,000 in the past twelve months. North Dakota, with its booming energy industry, continued to lead the nation with the lowest state unemployment rate in October of 2.7%; Nevada was highest at 9.3% with Rhode Island, Michigan, and Illinois not far behind.

The U.S. Census Bureau and the Bureau of Economic Analysis through the Department of Commerce announced on December 4 that total October exports of $192.7 billion and imports of $233.3 billion resulted in a goods and services deficit of $40.6 billion, down from the revised September figure of $43.0 billion. October exports were $3.4 billion higher than September and imports were $1.0 billion higher for the same period.

Henry Hub spot price closed on December 4 at $3.88/MMBTU, up $.09 from the beginning of the week. January 2014 contract reported in the $3.90/MMBTU range. Working natural gas in storage at the end of November was 5.2% lower than last year at that time, and 2.8% lower than the five year average.

The U.S. dollar trading at 102.7 Japanese yen; $1.35 = euro. The British pound sterling = $1.63. The Canadian dollar trading at US$1.07.

Current U.S. gold price quoted at $1229.20/ounce. The record price of $1920/ounce was recorded in September, 2011.

 

Chemical Industry News – November

TheViewHeaderBench

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.

Wind farm and greenhouse gas farm, together

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 Economy

MoneyThe 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.

Chemical Markets Update – November

Chemical Industry News - The View from Jamestown

 

The ideal scientist thinks like a poet and works like a bookkeeper.”

– Biologist, E.O. Wilson

 

The Chemical Company has completed the construction of its new worldwide corporate headquarters (seen above).  This new, state-of-the-art facility is less than 1 mile from our old facility and was designed from the ground up to fit the needs of The Chemical Company, its customers and the future.  The main building features a secure, disaster proof, state-of-the-art IT facility, voice over IP telephone system, video conferencing, perimeter security, high-definition video surveillance system throughout the entire campus, multiple generator standby power back-up, complete kitchen, gym, campus WIFI network to name just a few of the main features. Our unified application platform provides unparalleled access to order tracking, shipment tracking and real-time inventory management worldwide. This information can be accessed on any Internet enabled device to provide the highest level of customer service.

The Chemical Company has also begun the process to upgrade our ISO system to 14001 and include Responsible Care.  This is scheduled to be complete by Q1 of 2014.  The Chemical Company is and always has been committed to continuous improvement in health, safety and environmental performance.

In plasticizer news, the United States Environmental Protection Agency (EPA) has issued a statement withdrawing a proposal under the Toxic Substances Control Act (TSCA) to list “chemicals that may pose a concern.”  Eight phthalates plasticizers were on the list and would have arbitrarily been labeled as chemicals of concern.  The list did include Butyl Benzyl Phthalate, DiOctyl Phthalate, Diisononyl Phthalate, and Diisodecyl Phthalate.  The EPA did state its intent to continue the evaluation of 83 products named in the TSCA Work Plan Chemicals listing. The Work Plan Chemicals identified on the June 2012 EPA listing that are of direct interest to RXN clients includes (in order of appearance) 2-EH based bromates, benzene, DOA, naphthalene, phthalic anhydride, orthoxylene, and paraxylene.


Product Updates

Adipic Acid                   25 kg, 500 kg and 1,000 kg Bags (In Stock and Available Now!)

NatureFlexx 509          Phthalate Free General Purpose Plasticizer.  Available in Totes (2200 lbs.) and Drums.  (In stock and immediately available)

Malic Acid                        25 kg Bags (In stock and available now!)

Bio- Succinic Acid       Myriant’s North American Bio-Succinic Acid unit is now on line. 2000 lb. supersacks and 25 kg bags available.

Vestinol 9 DINP            The Chemical Company offers bulk trucks and split loads (w/ eso or dop) of DINP to North America.

Ammonium Bromide       25 kg Bags in stock and immediately available.


Critical Raw Material Markets

Raw Material Trends Legend

Check the real-time commodities tracker at thechemco.com for up to the minute info.

Benzene:   U.S. benzene contracts for November settled down $.27 per gallon to $4.10 per gallon from $4.37 per gallon in October.  Spot prices are in the $4.11 $4.14 per gallon range and expected to fall.   

n-Butane:  Normal Butane prices are trading in the low $1.40’s per gallon.  Pricing has trended lower recently and maintained its price below October’s price average of $1.48 per gallon.  

Ethylene:   U.S. Contract Price for October has not yet settled.  September settled at $.46 per lb.  This is a roll-over from August.  Recent trades are in the high $.40’s per lb.  

Natural Gas: NYMEX NG pricing has steadily moved lower.  Current NYMEX pricing is $3.50 per mmbtu.   Pricing has trended lower since mid- October.  

Oil: Current WTI crude has moderated lower to $95 per barrel.  Demand is good in North America but less demand in Asia is noted.  

Orthoxylene: October contracts settled up $.03 per lb. to $.64 per lb.  It is speculated that prices will retreat the same value for November.  UP

Propylene: Contract pricing for October settled at $.675 per lb. for Polymer Grade and $.65 per lb. for Chemical Grade.  Down $.025 per lb. from September.   November is expected to roll at October prices.  


New & Updated Technical Information

 

 

 

 

 

 

 

Chemicals Markets

Adipic Acid

Adipic Acid pricing is stable.  Ammonia and Benzene prices are trading range bound.  And supply is balanced due to recent capacity restrictions in the EU.  TCC has Adipic Acid in stock and immediately available in 1,000 Kg. Sacks, 500 Kg. Sacks and 25 Kg. bags.   

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

 

Ammonia

November pricing in Tampa decreased US$10/ ton to $480/ton.  

 

Antimony Trioxide

Demand for antimony trioxide remains weak.  Current offers are in the low $4.00/ lb. range for full truckloads.  Buyers continue to keep inventories to a minimum and use alternate chemistries where possible.  Small bags and sacks are immediately available. 

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

 

Dicyandiamide

Prices are stable and expected to remain as such until the end of the year.   We are keeping a close eye on energy demand and increased freight costs from China.  The Chemical Company has both bags and sacks in stock and immediately available. 

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

 

Epoxidized Soybean Oil

Soybean prices have been relatively stable, check thechemco.com for real time soybean pricing on our commodities ticker.  Epoxidized Soybean Oil Supply is healthy with new players pushing prices lower.  ESO Pricing has stabilized for the moment.  TCC offers bulk, split trucks, drums and totes or epoxidized soy bean oil. 

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

 

Fumaric Acid

Fumaric Acid Pricing is stable but long lead times are noted.  Due to much lower butane values North American producers are enjoying a low cost production position.   Order early for rateable supply.   

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

 

Glycol (Mono, Di and Tri)

Ethylene – U.S. Contract Price for October and November has not yet settled.  September settled at US$.46/ lb. a roll over from August.

MEG – Spot prices are 46-48 cts/ lb. fob Gulf but pushing lower in line with Asia spot values.  

DEG – U.S. producers have announced no price change for November.  Spot prices are in the mid to high $.40’s per lb. fob Gulf. 

TEG – Demand and pricing surge in October. Producers announce increases in October totaling US$.23- $.26/ lb.  Pricing is now well in excess of US$1.00/ lb.

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

 

Isophthalic Acid

PIA pricing is stable.  Supply and demand also remain stable.

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

 

Maleic Anhydride

Supply is balanced to tight in North America due to turnarounds and producer interruptions.  Molten Prices have remained stable with small increases the exception.  Many are surprised that pricing remained steady with Maleic’s major feedstock n-butane in decline.  Briquette prices have stabilized but one major offshore producer is taking a turnaround in May and June.  TCC offers Molten Maleic Anhydride to North America and has 25 Kg. bags of Maleic Anhydride Briquettes in stock.   

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

 

Melamine

Melamine supply remains tight and pricing level.  TCC has Melamine in stock and available. 

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

 

Malic Acid

Malic Acid Pricing has stabilized but there are significant lead times for both domestic and imported material.  Low butane costs have made North American producers the most competitive in the world.   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 November will increase US$.15/ gallon to US$1.80/ gallon.  Spot pricing is currently approx. US$1.58- $1.59/ gal.   UP

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

Notes:

Limited natural gas curtailments continue in Trinidad.

Another SABIC Ar Razi unit will have an extended turnaround.

There are rumours of some operating issues in southeast Asia.

 

Nitric Acid:

Nitric Acid pricing is stable and availability is good.   Ammonia pricing has been relatively flat. 

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

 

Phenolic Resins:

Phenol pricing has shifted only moderately lower.  This is mainly due to an over-supply of benzene, hence lower benzene pricing.   On the other hand, Formaldehyde prices have inched higher as methanol pricing have found a new and higher market price.   

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

 

Phthalic Anhydride:

Phthalic Anhydride pricing will increase by $.03/ lb. in November in line with the US$.03/ lb. October orthoxylene price increase.  Orthoxylene will likely fall $.03/ lb in November.  UP

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

 

Plasticizers and Plasticizer Alcohols

Plasticizer demand in North America is considered slow and extremely competitive.  North American pricing has been under pressure as Eastman looks to fill their capacity and from inexperienced importers. 

Plasticizer alcohol demand is also considered slow.  Over capacity of 2-EH in Asia is pushing Isononyl Alcohol and 2 PH Alcohol pricng lower.  Limited 2-EH of Chinese origin is seen outside of the PRC. 

For more information please contact Forest Goodman at forest@thechemco.com

 

TCC Plasticizers available

Note:  Please contact TCC for further details.

Non (ortho)- Phthalate:

ChemFlexx Dibenzoate Esters

ChemFlexx Di-2-ethylhexyl 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 (Tri-2-ethylhexyl Trimellitate)

ChemFlexx DOA (Di-2-ethylhexyl Adipate)

ChemFlexx 8 10 Trimellitate

ChemFlexx DOTP (Di-2-ethylhexyl Terephthalate)

Oxsoft 3G8 (Triethylenglycol-di-(2-ethylhexanoate))

Oxsoft DUO 1

Oxsoft DUO 2

 

Phthalate

Vestinol 9 DiIsononyl Phthalate (DINP)

“ChemFlexx 206” Functional Linear Phthalate Replacement

“ChemFlexx 208” Low Temp Functional Linear Phthalate Replacement

ChemFlexx DOP (Di-2-ethylhexyl Phthalate)

ChemFlexx DUP (DiUndecyl Phthalate)

DMP (DiMethyl Phthalate)

Brominated DOP

ChemFlexx 9 11 Phthalate

ChemFlexx L9 Phthalate

 

Styrene monomer

Styrene pricing decreased slightly for November in line with lower benzene values (down $.27/ gallon).   NA demand remains slow.   

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

 

Urea

Current granular barge pricing of Urea is US$270 – $310/ ton and trading higher.  Prills are reported at $310- $315/ ton fob Gulf.   Prices increased suddenly during the last week of October as the open window for Chinese exports closed.  It is still too early to see whether this higher pricing will stick.  UP

 

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

 

Contact TCC

The Chemical Company
P.O. Box 436
Jamestown, RI 02835
Phone: (401) 360-2800
Website: thechemco.com
Email: Info@thechemco.com

ATTENTION:  TCC has moved.  Our new address is:

The Chemical Company
P.O. Box 436
44 Southwest Ave.
Jamestown, RI 02835
Phone: (401) 360-2800
Website: thechemco.com
Email: Info@thechemco.com

Chemical Industry News – October

Bridge_NewLense

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.

Oil well pump jacks

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.

Money 2

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.