Shale Oil & Gas

refinery_
The last couple of weeks of 2014 are proving to be interesting as well as exciting for the petrochem, polymer, and overall plastics industries. According to respected voices in the plastics industry and economic analysts abroad, the slump in oil prices could be a boon to plastics manufacturers and boost the general economy on a global scale. With natural gas futures dropping below $3, and warm temperatures through the end of the year, the transition from coal to gas is going smoothly, with nothing scary on the horizon. 2015 could be a banner year for plastics, and prosperity for American businesses since oil prices affect 25% of America’s GDP.

Slumping Oil Prices Boost 25% of U.S. Economy

Russian journalist Kristian Rouz, in a Sputnik News article, wrote that although the oil and gas prices have suffered a major downturn causing some setbacks within the industry, the depreciating oil prices will trigger prosperity in business that could account for as much as 25% of America’s GDP.

Full Story

Plunging Oil Could Deliver Windfall to Consumers, Manufacturers

A comprehensive article by plastemart.com, a respected voice in the industry, explains in detail the effects of low energy prices on the oil and gas industries as well as the benefits of low prices to consumers and manufacturers on a global level.

The article clearly explains the impact of low oil prices on the petrochemical and naphtha industries. It goes on to address the indices predicting the underperformance of European countries when compared to North America. It also paints a clear picture of the differences of the impact on America as opposed to Japan, followed by the new capacities and expansions that can be expected in the petrochem and polymer industries.

The report culminates in a prediction from the Chief Economist at HIS who said, “Positive fundamentals are in place for the momentum in the global economy to improve during 2015,” which expects global growth to pick up to 3% from an estimated 2.7% this year.

Full Story

Oil Prices Prompt Drillers to Scrap Old Rigs

Bloomberg Business Week reports that old rigs are being retired at an abnormal rate due to offshore drilling rig contractors attempting to maintain high profit pictures amid current oil market conditions.

Full Story

Natural Gas Dips Below $3

According to Bloomberg News reporter Naureen S. Malik, natural gas dipped below $3 per million BTU for the first time since 2012. Balmy temperatures resulted in low prices, “We don’t see anything scary in the forecast,” said Stephen Schork, president of Schork Group, Inc. a consulting group in Villanova, PA.

Full Story

The Future of Shale Oil & Gas—Opinions Differ

Shale Plays in the Lower 48
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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

Chemical Industry News – March

Chemical Industry News - March 2014 - The Chemical Company

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

World Shale Oil&Gas Latin America Summit

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 Economy

Wall Street

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.

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 – July

Chemical Industry News July 2013

The American Chemistry Council (ACC) US Chemical Production Index increased by 0.1% in May 2013 following a downwardly revised 0.2% decline in April. Compared to May 2012, chemical production rose in all regions by 0.9% following April’s 0.5% year to year increase. Comparing the first five months of 2013 to those of 2012, total chemical production rose 0.7% nationally.

The ACC’s Chemical Activity Barometer (CAB) rose by 0.3% in June, following a revised 0.1% increase in May. The year over year monthly moving average showed an increase of 3.5% over a year ago.

The TSCA reform bill is supported by the ACC and other groups, including the Environmental Defense Fund.
Senator Debbie Stabenow, D-MI, has introduced the Qualifying Renewable Chemical Production Tax Credit Act of 2013, which would cut taxes for American renewable chemicals producers.

The ACC filed a lawsuit in federal district court challenging new EPA requirements for antimicrobial pesticides, which are used to disinfect or sanitize and as ingredients in coatings and paints.

An EPA proposal aimed at requiring energy and chemical companies to disclose emissions-calculating methods has drawn criticism from the chemical industry, as it could expose trade secrets.

The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced on July 2. It will delay enforcement of a requirement of the Affordable Care Act for a year.

President Obama revealed on July 2 a package of separate actions focused on curbing US greenhouse gas (GHG) emissions, with an apparent focus on coal-fired electrical generation. His plan also covers home appliance efficiency standards, fuel mileage rules for over the road trucks, and new subsidies for wind farms. As recently as 2008, coal accounted for more than 50% of US electric generation but dropped to 37% in 2012. He also declared that he will approve the Keystone XL pipeline “only if this project does not significantly exacerbate the problem of carbon pollution.” It’s anticipated that if the project isn’t approved, the Alberta oil will end up in China.

Evonik announced on June 20 that it is introducing a new generation of PVC plasticizers with the product name of ELATURE. Production is at the company’s facility in Marl, Germany.

The European Chemicals Agency reported that 6,600 materials were registered under the first two phases of the REACH chemicals registration program. The next target date of May, 2018 will require registration of chemicals supplied in volumes of one to one hundred MTs per year. There is speculation in the industry that smaller or less profitable businesses may cease operations as a result.

Netherlands-based DSM plans to license its cellulosic ethanol technology after its first commercial plant in Iowa is completed. The plant is projected to make 20 to 25 million gallons of fuel per year from corn waste (husks, crop waste); production is expected to start early in 2014.

NOVA Chemicals is building a one billion pound per year linear low density polyethylene plant in Joffre, Alberta Canada in order to take advantage of low cost natural gas feed stock. The feedstock will be from the Bakken shale in North Dakota as well as off-gas from oil sands production in Alberta.

Linde will invest €70 million as well as manage the gas supply infrastructure for SIBUR, the Russian petrochemical company.

A bill banning the sale of polystyrene food service products proposed by New York City Mayor Bloomberg has been opposed by food industry representatives. Polystyrene foam takes hundreds of years to break down and NYC recyclers have difficulty in separating it at extra costs.

US chlor-alkali operating rate for May 2013 was reported stable at 87% of capacity. European operating rates were below 2012 level due in part to severe flooding in parts of Central Europe.

The US District Court for the District of Columbia recently struck down a rule implemented as part of the Dodd-Frank financial reform law requiring publicly traded extractive industry companies to report taxes, royalties, and other fees paid to foreign governments. The decision was hailed by industry groups that stated that such disclosure would hurt companies’ ability to compete.

Solvay will be closing its Portuguese soda ash facility by January, 2014. At the same time, the company is planning to expand capacity at its Green River, Wyoming operation.

Shintech (Japan) plans investing $500 million in further expansion of its Louisiana operation. Planned capacity increases are expected to be about 200,000 MT/year of caustic soda, 300,000 MT/year of vinyl chloride monomer (VCM) and 300,000 MT/year of polyvinyl chloride (PVC). Target completion date is 2015.

Chinese industrial output slowed in June, and employment figures also dropped at the fastest rate since the Asian financial crisis of 1998. The World Bank cut its growth forecast for China, saying that it would likely grow 7.7% compared to an earlier figure of 8.4%.

Petrobras, the state-owned Brazilian energy enterprise, has signed a letter of intent with Chinese petrochemical company Sinopec to study a possible joint venture to build and operate a planned refinery in Maranhao state, Brazil. The refinery would have a total capacity of 300,000 bbls per day.

The Chinese government has decentralized decision making regarding 177 refinery and petrochemical projects. For certain projects, approval from Beijing will not be required and authority will shift to local governments.

The Organization for European Cooperation and Development’s (OECD) Cooperative Chemicals Assessment Program was since the 1990’s the world’s only source of internationally agreed hazard assessments for large volume production chemicals. The program’s functions have now largely been taken over by Europe’s REACH program and various US activities and the program will be replaced by the end of next year. An OECD spokesman said that the organization should develop a new program based on new test methods.

The World Health Organization (WHO) has started a chemical risk assessment network in order to enhance global efforts to assess risks to human health from chemicals. It is expected to provide a forum for scientific exchange.

Unemployment across the seventeen European Union countries that use the euro hit a high of 12.1% in May, with the number of people out of work rising above nineteen million. Among the member states, the lowest rates were Austria at 4.7% and Germany at 5.3%. Youth unemployment in Spain and Greece has been reported at close to 60%.
Inflation in the Euro zone increased to 1.6% year to year in June, an increase from May’s 1.4%.

South Korea’s nine major companies have announced a plan to invest $2.45 billion over the next three years in order to prevent deadly chemical accidents. The plan is the result of a recent series of deadly accidents at Korean chemical plants.

Carload rail volume was up 2.7% annually in June on major US railroads. Intermodal volume was also up 2.7% compared with the same period last year. Total weekly traffic for carloads and intermodal units was up 1.2% annually. Petroleum products shipments were up 37.2%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 2.3% in May after falling an adjusted 0.2% in April.

Shale oil and Gas-related:

The EPA tabled a draft study that suggested that hydraulic fracturing (fracking) contaminated groundwater in Pavillion, WY. The agency stated that it “recognizes the state of Wyoming’s commitment to further investigation and efforts to provide clean water and does not plan to finalize or seek peer review of its draft Pavillion groundwater report.” The EPA further said that it plans to use the results of its ongoing national study to inform of its recommendations regarding fracking. The national study is expected in 2016.

Plentiful and inexpensive US shale gas is becoming a threat to the European petrochemical industry which is dependent on oil-based feedstock. European manufacturers, such as BASF, Ineos, and LyondellBasell are seen as particularly vulnerable.

Illinois is making plans to leverage abundant supplies of shale gas in order to fuel an economic revival. In early June, the Illinois legislature overwhelmingly endorsed the use of fracking as a first step.

According to the International Energy Agency, US natural gas production will accelerate from 2014 through 2018. Gas output will reach 797 billion cubic meters by 2018, 17% higher than last year. US shale production increased sixfold from 2007 to 2012.

Cuadrilla Resources, a British oil and gas company said that it was applying for a permit to hydraulically fracture an exploration well at Grange Hill, in Lancashire, England. The British government sees shale gas as possible replacement for the declining North Sea production. The UK formation is said to resemble the Barnett shale deposit in Texas.

The Economy

The Congressional Budget Office reported that the federal government incurred a budget deficit of $627 billion from October 2012 through May 2013 (the first eight months of fiscal 2013), almost $220 billion less than the shortfall recorded for the same period last year. The CBO’s updated estimates indicate a fiscal year deficit of $642 billion. The US Treasury Department reported that on July 2, 2013 the federal debt was $16.75 trillion. The national debt has increased an average of $3.81 billion per day since September 2007.

Personal income in May increased by $69.4 billion, or 0.5% compared to April. In April, personal income decreased by $5.6 billion or less than 0.1%. In March, personal income increased $36.2 billion or 0.3%.
The US government debt held by foreign entities is in excess of $5.7 trillion, with China holding $1.26 trillion of it, or approximately 20% of all the debt owned by foreign entities. 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 billion.

The Bureau of Economic Analysis revised estimate of the first quarter 2013 Gross Domestic Product showed an increase of 1.8%, that is from the fourth quarter of 2012 to the first quarter of 2013. The previous estimate was an increase of 2.4%. Revised fourth quarter real GDP increased 0.4%. In the third quarter, real GDP increased 3.1%. In the second quarter, real GDP increased 1.3%. Current-dollar GDP, the market value of the nation’s output of goods and services, increased at a revised rate of 3.1% or $120.0 billion in the first quarter of 2013 to a level of $15,984 billion. In the fourth quarter current dollar GDP increased 1.3% or $53.1 billion.

The Conference Board’s Leading Economic Index increased 0.1% in May to 95.2 (2002=100) following a 0.8% increase in April and a 0.3% decline in March.

The Conference Board Consumer Confidence Index which had improved in May increased again in June. It stands at 81.4 (1985=100) up from an adjusted 74.3 in May.

The Institute for Supply Management’s June Manufacturing Index registered 50.9%, an increase of 1.9% from May’s number of 49.0%, indicating expansion in manufacturing for the fifth time the first six months of 2013. The Non-Manufacturing Report for June was 52.2%, or 1.5% lower than the 53.7% reported for May, reflecting continued growth, but at a slower rate.

In May, retail and food services sales adjusted for seasonal variations were $421.1 billion, an increase of 0.6% from April and 4.3% above May 2012. March through May 2013 sales were up 3.7% from the same period a year ago.

Privately owned housing starts in May of 914,000 were 6.8% above the revised April estimate of 856,000 and were 28.6% above the May 2012 rate of 711,000. Single family housing starts in May were at a rate of 599,000 or 0.3% above the revised April figure of 597,000. New single home sales in May were at a seasonally adjusted annual rate of 476,000. This was 2.1% above the revised April rate of 466,000 and 29.0% above the May 2012 estimate of 369,000.

The National Association of Realtors reported that sales of existing homes rose in May. Existing home sales increased 4.2% to a seasonally adjusted annual rate of 5.18 million units, an increase of 12.9% from the same period a year ago. Distressed homes, foreclosures and short sales, accounted for 18% of May sales, unchanged from April, but the lowest number since monthly tracking began in 2008. They were 25% a year ago.

New orders for manufactured durable goods in May increased $8.0 billion or 3.6% to $231.0 billion. This increase, up three out of the last four months, followed a 3.6% increase in April.

May unfilled orders for manufactured durable goods increased $8.1 billion or 0.8% to $1,004.7 billion. This followed a increase of 0.3% in April.

Consumer Price Index for all urban consumers increased 0.1% in May on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.4 % before seasonal adjustments. Food index, which rose in April, declined 0.3% in May. The shelter index rose 0.3% and accounted for more than half of the May increase.

The Producer Price Index for all finished goods increased 0.5 % in May, seasonally adjusted, following decreases of 0.7% in April and 0.6% in March. On an unadjusted basis prices for finished goods increased 1.7 % for the twelve months ended in May 2013.

Interest rate: Prime at 3.25%, unchanged since 12/16/08.
Inflation: Inflation rate in May reported at 1.4%. The April rate was 1.1%, March rate was 1.5%, February rate was 2.0%, and January rate was 1.6%. The average rate of 2.1% was reported for 2012. It is expected to rise slightly in 2013 to approximately 2.0%.

Industrial production was unchanged in May, having decreased 0.4% in April and increased 0.4% in March after having increased 1.1% in February. For the first quarter as a whole, output increased at an annual rate of 5.0%, the largest gain since the first quarter of 2012. At 98.7% of its 2007 average, total industrial production in May was 1.6% above its year-earlier level. Capacity utilization rate for total industry decreased to 77.6%, a rate 0.2% below the level of a year earlier, and 2.6% below its 1972 – 2012 average.

Unemployment: The June 2013 rate was little changed at 7.6%, and has shown little movement since February. The number of unemployed persons was reported at 11.8 million, basically unchanged. The Bureau of Labor Statistics stated that the long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.3 million in June. Those individuals accounted for 36.7% of the unemployed. Over the past twelve months, the number of long-term unemployed has declined by one million. North Dakota continued to lead the nation with the lowest state unemployment rate in May of 3.2%; Nevada was reported highest at 9.5%, Illinois, Mississippi, and California close behind. An analysis completed for the US Conference of Mayors said that more than half of all US metro areas won’t regain the jobs lost in the recession until the second half of 2015 or later.