The American Chemistry Council (ACC) US Chemical Production Index rose by 0.3% in January, following a revised 0.6% gain in December, 2013. Production increased in all seven regions of the US for the third consecutive month. Compared to January 2013, total chemical production in all regions increased by 0.3% year-over-year.
The ACC reported that US exports of chemicals grew 0.4% in 2013, while chemical imports declined by 1.0%, expanding the chemical industry trade surplus to $3.4 billion. The US chemical industry typically has a surplus in all its major segments with the exception of pharmaceuticals and agricultural chemicals.
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.
Draft legislation for overhaul of the Toxic Substances Control Act was proposed in the House of Representatives on February 27. Among other points, it would require the EPA to divide all commercial chemicals on the market into two categories: low or high priority, depending on risk to human health or the environment. Chemical industry trade associations have welcomed the draft, while environmental activists are speaking out against it. With increased bipartisan support there could be a vote before elections this fall.
The EPA issued on March 3 long-awaited rules to reduce sulfur content of gasoline by 67% in 2017. The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers said that the rules would raise gas prices by 10 cents per gallon and incur billions of dollars in capital costs. EPA administrator Gina McCarthy disagreed and said that the increase would be less than one cent per gallon.
A new experiment by scientists at the US Food and Drug Administration has found that bisphenol A (BPA) doesn’t affect the health of rats fed low doses. European studies have indicated that BPA poses no risk to infants. Some scientists have said that the FDA study is flawed and the controversy continues.
The Canadian government is lending $10 million to a Quebec firm for the construction of a commercial scale bio-based chemical plant, the first of its kind in Canada. A succinic acid plant will be built in Sarnia, Ont. and will have a capacity of 30,000MT/year.
Dow Chemical turned down a request that the company spin off its petrochemical businesses. This was in response to Daniel Loeb, CEO of Third Point, whose company has taken a $1.3 billion stake in Dow.
BASF reported an increase of 16% in net income for Q4 2013 year on year to €1.14 billion.
US chlor-alkali average operating rates increased to 86% in January 2014 from December’s 84%. New production from Westlake’s Geismar, LA plant was to come on line in March, adding 350,000 electrochemical units (ECU), representing 350,000 MT of chlorine and 385,000 MT of caustic soda of annual production. Dow Chemical and partner Mitsui are preparing for start-up of an 800,000 ECU/year facility in Freeport, Texas which will replace older, existing equipment.
The US Geological Survey reported that US production of soda ash in 2013 was a record high at 11.4 million tons.
The House of Representatives passed legislation on March 4 that aims to boost energy efficiency of commercial buildings.
Supreme Court Justice Anthony Kennedy recently suggested that he believed that the EPA overstepped its bounds in the way that it requires greenhouse gases be regulated under permits for power plants.
Senator Manchin, D-WV and Rep. Whitfield, R-KY are seeking to pass a measure that would eliminate the carbon capture requirement for new coal-fired power plants and delay the EPA carbon emission rules for existing plants. The House passed such legislation on March 6, but it’s not likely to come up for a Senate vote. The administration is against the bill, and it risks a presidential veto.
Electric car maker Tesla Motors says that is considering sites in Nevada, Arizona, New Mexico, and Texas for a massive battery factory that would employ approximately 6,500 people. The company has not specified locations, but plans to start construction this year with completion in 2017. Cost is estimated at between $4 and $5 billion.
According to Russia Business Directory, the chemical industry accounts for 10.4% of the total output of Russian processing industry and 5.4% of export profits. The industry employs more than 740,000 people. It was stated the Russian chemical industry accounts for 1.1% of world output, but has 15% of world ammonia and carbamide(urea) production.
Brazil’s chemicals trade deficit increased by 13.6% in 2013, reaching a total of $32 billion. Brazil imported $46.1 billion in chemical products last year, an increase of 7.3% year on year.
Mitsui Chemicals is closing multiple plants in Japan and bringing in a new CEO. It is one of Japan’s largest chemical companies with sales of $17.6 billion in its last fiscal year. But it has not shown a profit in three of the past four years.
China’s economy grew by a healthy 7.7% in 2013, and is expected to grow at a rate of 7.4% in 2014. The national target is 7.5%.
China’s producer price index in January was 1.6% lower year to year and was viewed by some as a sign of continued slowness in the manufacturing sector.
China’s consumer price index increased at an annual rate of 2.5% in January at no change from December.
China’s February exports dropped 18.1% from a year earlier. Imports increased 10.1%, resulting in a trade deficit of $23 billion.
According to a revised German government forecast, the country’s economy should expand by 1.75% this year and 2.0% in 2015.
Germany’s business climate continued to grow in February. Munich-based Ifo, an economic research group, reported that its monthly business climate index for Germany (2005 = 100) rose to 111.3 from 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 January, stable since October 2013. The lowest rates among member states were Austria at 4.9%, Germany at 5.0% and Luxembourg at 6.1%. The highest rates among member states were Greece at 28.0% and Spain at 25.8%.
February inflation in the Euro zone was reported at 0.8%, unchanged from January and December and down from 0.9% in November. At numbers less than 1%, this is considered by the European Central Bank as the “danger zone.”
BNSF Railway Co. intends to buy its own fleet of up to 5,000 new crude oil tank cars with safety features that exceed the latest standards adopted by the industry more than two years ago. The railroad is owned by Berkshire Hathaway and is a major mover of crude oil by rail throughout the US. Railcars are usually owned by companies that lease them to shippers.
Total carload rail volume for February decreased 0.4% overall compared with February 2013. Intermodal volume was up 1.1% compared to the same period in 2013 and was the 51st consecutive year over year monthly increase for intermodal volume.
The American Trucking Association reported that seasonally adjusted for-hire truck tonnage decreased 4.3% in January after a decline of 0.8% in December. The index was 1.2% higher year to year.
Shale Oil and Gas Related
BASF has ruled out the possibility of importing shale gas from the US for use in its European petrochemical operations.
The American Petroleum Institute has urged the federal government to increase liquefied natural gas (LNG) exports amid the continuing crisis in Ukraine. Chevron Corp. Chairman John Watson said that there are more than enough reserves in North America to expand exports. A special permit is required from the US government to send LNG to countries that don’t have a free trade agreement with Washington.
According to the American Chemistry Council, potential US chemical industry investment linked to plentiful and affordable natural gas from shale formations has topped $100 billion.
The International Energy Agency (IEA) stated that oil demand in 2014 would be greater than last year based on stronger economic growth. Global production of crude oil is expected to increase in 2014 and 2015, with the US leading the way. At the same time, OPEC output is expected to decrease.
The southern leg of the Keystone XL oil pipeline, known as the Gulf Coast Project, is expected to begin deliveries. This section runs from Cushing, Oklahoma to the US Gulf Coast, and does not require White House approval, unlike the northern Keystone XL which crosses the Canadian-US border.
A new Washington Post-ABC News poll shows that Americans support the idea of constructing the Keystone XL oil pipeline between Canada and the US by a nearly three to one margin, with 65% saying that it should be approved. The poll also indicated that the public thinks that the project will create a significant number of jobs.
Canadian Natural Resources Ltd. will pay $3.125 billion in cash in order to buy conventional oil and gas assets in Western Canada.
Canadian oil exports to the US increased 10% in 2013, averaging more than 2.5 million barrels per day.
The chief executive of the International Energy Agency, Maria van den Hoeven, said in an interview with The Christian Science Monitor that US oil and natural gas production will plateau, and then go down from 2025 onward.
The 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 March 5, 2014 the federal debt was $17.448 trillion. The US population is approximately 317 million, so each citizen’s share of the debt is roughly $55,000. The national debt has increased an average of $2.65 billion per day since September 30, 2012.
The $3.9 trillion federal budget released on March 4 would, according to some analysts, exceed the ceiling agreed to in December of last year with $56 billion in new stimulus spending.
The CBO recently concluded that the Affordable Care Act would result in the net loss of the equivalent of 2.5 million full time workers. This was followed by a CBO report stating that the higher minimum wage proposed by the administration would cost the economy as many as one million jobs.
The IMF modified its growth forecast for the world economy to 3.7% in 2014 and 3.9% in 2015, based on anticipated growth in advanced economies.
Personal income in January increased $43.9 billion or 0.3% according to the Bureau of Economic Analysis. In December, personal income decreased less than 0.1 % or $5.5 billion.
The Bureau of Economic Analysis second estimate showed an increase in Gross Domestic Product of 2.4% in the fourth quarter of 2013, that is, from the third quarter to the fourth quarter. This was revised from an earlier figure of 3.2%. 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 4.0% or $167.8 billion in the fourth quarter to a level of $17,080.7 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 0.3% in January to 99.5 (2004 = 100) following no change in December, and a 0.9% increase in November.
The Conference Board Consumer Confidence Index which had increased in January fell in February. The index now stands at 78.1 (1985 = 100), down from 79.4 in January.80.7 (1985 = 100) up from 77.5 in December.
The Institute for Supply Management’s February Manufacturing Index registered 53.2%, an increase of 1.9% from January’s reading of 51.3%, which was a decrease of 5.2% from December’s seasonally adjusted reading of 56.5%. The Non-Manufacturing Report for February was 54.6%, a decrease of 1.7% from January’s 56.3%, but reflecting growth at a slower rate.
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 January were at a seasonally adjusted annual rate of 937,000, which was 5.4% below the revised December rate 991,000, but is 2.4% above the January 2013 figure of 915,000. Single family authorizations in January were at a rate of 602,000, which was 1.3% below the revised December figure of 610,000.
Sales of new single family houses in January were at a seasonally adjusted rate of 468,000. This was 9.6% above the revised December rate of 427,000 and is 2.2% higher than the January 2013 number of 458,000.
The National Association of Realtors reported that total sales of existing homes fell 5.1% in January to a seasonally adjusted annual rate of 4.62 million from a December rate of 4.87 million and were also 5.1% below the January 2013 rate of 4.87 million. The national median existing home price for January was up 10.7% from January 2013. Distressed homes, foreclosures and short sales, accounted for 15% of January sales, compared with 14% in December and 24% in January 2013.
New orders for manufactured durable goods in January decreased $2.2 billion or 1.0% to $225.0 billion. This decrease, down three of the last four months, followed a December decrease of 5.3%.
January unfilled orders for manufactured durable goods increased $0.6 billion or 0.1% to $1061.1 billion. This number has increased for eleven of the last twelve months.
Consumer Price Index for all urban consumers increased 0.1% in January on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.6% before seasonal adjustments. Food index rose 0.1% and has not posted a monthly increase larger than 0.1% since June 2013. The electricity index posted its largest increase since March, 2010; gas and fuel oil rose as well whereas the gasoline index decreased.
The seasonally adjusted Producer Price Index for finished goods increased 0.2% in January, following a 0.1% increase in December and no change in November. On an unadjusted basis, prices for finished goods increased 1.2% for the twelve months ended in January 2014.
Interest rate: Prime at 3.25%, unchanged since 12/16/08.
Inflation: Inflation rate for the twelve months ended in January 2014 reported at 1.6%; December was reported at 1.5%, November at 1.3%. A rate of 1.8% for 2014 is foreseen by some economists. An average rate of 2.1% was reported for 2012.
Industrial production decreased 0.3% in January, after having risen 0.3% in December, which was a fifth consecutive monthly increase. For the fourth quarter of 2013, it increased at an annual rate of 6.8%. Total industrial production in January was 2.9% above the rate of a year earlier. Capacity utilization rate for total industry decreased 1.6% to 78.5%, a rate 1.6 % below its 1972 – 2013 average.
Unemployment: The February unemployment rate was little changed at 6.7% from the January rate of 6.6% as reported by the Bureau of Labor Statistics. The number of unemployed persons was reported at 10.5 million. The long-term unemployed, i.e., jobless for 27 weeks and over was reported at 3.8 million in February, an increase of 203,000. Those individuals accounted for 37% of the unemployed. The number of long-term unemployed has declined by 901,000 in the past twelve months. In December, North Dakota continued to lead the nation with the lowest state unemployment rate of 2.7%; Rhode Island and Nevada were highest at 9.3% and 9.0% respectively.
The US Census Bureau and the Bureau of Economic Analysis through the Department of Commerce announced on March 7 that total January exports of $192.5 billion and imports of $231.6 billion resulted in a goods and services deficit of $39.1 billion, up from the revised December figure of $39.0 billion.
Crude Oil: WTI trading at ~$103/bbl, an increase of ~ $10 from a year earlier.
Extremely cold weather continued to drive up natural gas pricing through February and into early March. Henry Hub spot price rose to $7.90/MMBTU on March 4, and then settled back down to $6.41/MMBTU. April contracts were trading at $4.52. Working natural gas in storage at the end of February decreased and was 43.2 % lower than last year at that time, and 38.8% lower than the five year average.
The US dollar trading at 102.4 Japanese yen; $Canadian 1.10; $1.37 = euro; The British pound sterling = $1.67.
Current US gold price quoted at $1338.00/ounce. The record price of $1920/ounce was recorded in September, 2011.