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.

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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.

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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.

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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.

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Chemical Industry News – November

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The American Chemistry Council (ACC) US Chemical Production Index declined by 0.4% in September, following a revised 0.2% decline in August and a gain of 0.2% in July. Compared to September 2012, chemical production in all regions increased by 1.4%, following an August 1.8% year to year increase. Comparing the first nine months of 2013 to those of 2012, total chemical production rose 1.1% nationally, with five of the seven regions posting gains.

The ACC’s Chemical Activity Barometer (CAB) rose by 0.6% in October, representing the fourth consecutive monthly increase in the CAB. The year over year monthly moving average showed an increase of 2.8% over a year ago.

A House Energy and Commerce subcommittee was to review the Chemical Safety Improvement Act during the week of November 11. The legislation was introduced by Senators David Vitter, R-LA, and the late Frank Lautenberg, D-NJ. This will be the first time that the House panel considers reform of the Toxic Substances Control Act (TSCA).

DuPont announced on October 24 that it will spin-off its titanium dioxide unit into a separately traded public company within 18 months. DuPont expects that the new business will have annual sales of about $7.2 billion, with the remaining businesses showing $28 billion in annual sales.

US chlor-alkali average operating rates were 85% in August, 1.7% lower than a year earlier.

Dow Chemical is selling it polypropylene licensing and catalyst operation to W. R. Grace for $500 million. This was seen as part of a $1.5 billion divestiture program announced by Dow earlier this year.

Plastic bottles returned for recycling increased by 161 billion pounds in 2012.  The recycling of polyethylene bottles increased by 45.3 million pounds during the same period.

ICIS named Westlake Chemical as the ICIS Company of the Year for 2013. The award was made for outstanding financial performance in 2012. Westlake net income reached a new record, having increased by 49% from 2011 to $396 million.

Methanex has sped up the schedule for the relocation of one of its methanol plants from Santiago, Chile to Geismar, LA. It is expected to be on-line next year.

BASF and Yara International ASA (Norway) announced on October 18 that they are considering a joint venture to invest in a world scale ammonia plant on the US Gulf Coast. BASF and Yara said that Yara has expertise in the global ammonia network and BASF is a major ammonia consumer for its downstream manufacturing operations.

Swiss-based Clariant will sell its detergents and intermediates business to International Chemical Investors Group for $64 million.

Brenntag CEO Steve Holland recently stated that the company plans to spend between €200-250 million on acquisitions. Approximately 45% of Germany-based Brenntag’s revenue comes from Europe, 40% from North America and the remainder from Asia-Pacific and Latin America. Brenntag now has over 450 sites in 70 countries.

The Grangemouth, UK INEOS oil refinery and petrochemicals complex appears to have averted a complete shut-down with last-minute union concessions.

The US Supreme Court agreed to review parts of the EPA’s greenhouse gas rule and will probably hear the case early in 2014, with a ruling in July. The court is expected to decide whether the EPA can require greenhouse gas permits for stationary sources of pollution, e.g., power plants, factories, and refineries.

The EPA’s chief air pollution regulator and Sen. Joe Manchin, D-WVA were expected to testify on November 13 on a draft bill that would limit the agency’s proposed carbon emissions rules for power plants. Manchin was quoted as saying that the EPA’s proposed regulations are not attainable because the technologies to achieve them aren’t yet viable.

According to the Department of Energy, US carbon dioxide (CO2) emissions dropped by 3.8% last year, falling to the lowest level in almost twenty years. Part of the reduction was attributed to increased natural gas production, making the US the biggest developer of natural gas in the world.

The Japanese government on November 15 announced a decision to reduce targeted greenhouse gas emissions after its nuclear power industry was shut down as a result of the Fukushima disaster. The government’s new target is a 3.8% cut versus 2005 levels by 2020. This is the reverse of the previous target of 25%. The Japanese decision was criticized at UN climate talks in Warsaw. Natural gas and coal consumption in Japan were up as compensation for the shutdown of fifty nuclear plants.

The EPA announced that it is scaling back its 2014 ethanol blending requirement. The amount of ethanol that must be blended into US fuel supplies has been reduced from 16.55 billion gallons to 15.21 gallons. Earlier this year the refining industry warned the EPA that refiners were reaching the maximum amount of ethanol that could be safely blended into the fuel supply, known as the “blendwall.” The continually increasing ethanol mandate has been blamed for driving up food and fuel costs, as about 40% of US corn supply is diverted to ethanol production. The volume of nitrogen fertilizer used in corn production increased by one billion pounds from 2005 to 2010, and an additional billion pounds are estimated to have been used since then.

With the focus on the government shutdown and avoidance of default on the national debt, little attention was paid to the US Postal Service default on a mandatory $5.6 billion payment for the health care of future retirees. This was the third default in slightly over one year. Postmaster General Patrick Donahoe has stated the need for Congress to implement administrative reforms in the system. The Postal Service was expected to report a fiscal year 2013 loss of approximately $6 billion.

Chinese exports increased 5.6% in October from a year earlier. The Chinese General Administration of Customs reported a trade surplus of $31.1 billion for October , the biggest this year.

China’s consumer price index increased at an annual rate of 3.2% in October, below the government target of 3.5% for the 10th month. Producer prices fell at 1.5%, the 20th straight monthly decline, and more than estimated earlier.

The Chinese government has a growth target of 7.5% for 2013, which would be the smallest rate of increase in more than twenty years. Beijing has said that it would accept slower growth as it tries to move the economy to domestic consumption rather than reliance on investment and exports.

China’s industrial output rose 10.3% in October.

Germany’s business climate continued to grow in October for the fifth month in a row. Munich-based Ifo, an economic research group, reported that its monthly business climate index for Germany rose to 107.7 in September from 107.6 in August. The survey represents responses from firms in construction, manufacturing, wholesaling and retailing.

Unemployment across the seventeen European Union countries that use the euro was reported for September at 12.2%. The September, 2012 reading was 11.6%.  The lowest rates among member states were Austria at 4.9% and Germany at 5.2%. The highest rates among member states were Greece at 27.6% and Spain at 26.6%.

Inflation in the Euro zone was reported at 0.7% in October, the lowest since November, 2009.

Shippers dependent on a single railroad to move their freight have asked regulators and legislators for relief. Commodity producers in some rural locations complain that the lack of transport options leaves them at the mercy of a single carrier, which is able to set its own rates. The shippers argue that the Surface Transportation Board, which is supposed to be looking after their interests, favors railroads in its rulings.

The Association of American Railroads(AAR) on November 14 urged the Department of Transportation to press for improved federal tank car regulations by requiring that all tank cars used to transport flammable liquids be retrofitted or phased out, and that new cars be built to more stringent standards. The AAR estimates that approximately 92,000 tank cars are now moving flammable liquids, with 78,000 of them requiring retrofit or phase out based on its proposal.

Total carload rail volume for the first 45 weeks of 2013 was down 0.5% from the same point in 2012. Intermodal volume was up 4.1% compared to the same period. Petroleum products shipments were up 25.4%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 1.4%, matching the August gain.

Wind farm and greenhouse gas farm, together

Shale Oil and Gas Related

OPEC has dismissed its earlier prediction that North American shale oil production will be “a source of marginal additions” to global supply.

Growing production from the Eagle Ford shale formation is helping to fuel a renaissance in Texas oil. Production in August yielded approximately 664,000 barrels of crude per day, compared with a rate of 446,000 barrels per day a year earlier.

The International Energy Agency (IEA) annual World Energy Outlook issued on November 12 said that the US will surpass Russia and Saudi Arabia as the world’s top energy producer by 2015 and will be close to energy self-sufficiency within the next twenty years. The IEA stated that crude oil prices will increase to $128/barrel by 2035, with a 16% increase in consumption.

TransCanada Corp. expects a US ruling on the 1700 mile $5.3 billion Keystone XL pipeline project, pending since 2008, to be made in the first quarter of 2014. The US State Department has also asked rail industry executives about delivering 830,000 barrels per day of Canadian crude to Gulf Coast refineries, as Keystone would do.

The IEA reported that Marcellus Shale natural gas production is growing faster than expected. Daily volume is 12 billion cubic feet, the equivalent of about 2 million barrels of oil per day, and more than six times the 2009 production rate.

The Economy

MoneyThe Congressional Budget Office reported that the federal government incurred a budget deficit of $680 billion in fiscal year 2013. This was $409 billion less than the deficit in fiscal year 2012. The fiscal year that just ended was the first since 2008 in which the deficit was less than $1 trillion. As a share of GDP, the deficit declined from 6.8% in 2012 to 4.1% in 2013. In 2007, the deficit was 1.1% of GDP.

Net spending by the government was $84 billion less in 2013 than in 2012. It was 20.8% of GDP in 2013, lower than the 22% recorded in 2012, but still above the 40 year average of 20.4%. The US Treasury Department reported that on November 10, 2013 the federal debt was $17.16 trillion. The national debt has increased an average of $2.69 billion per day since September 30, 2012.

The US Treasury has reported $9.7 billion loss on the sale of nearly all of the shares it received from its $49.5 bailout of General Motors.

Personal income in September increased $67.4 billion or 0.5% according to the Bureau of Economic Analysis. In August, personal income increased 0.5% or $65.6 billion.

The Census Bureau reported on November 6 that the number of people living in poverty last year held steady at nearly 50 million. But government programs appear to have lessened the impact, especially on children and the elderly.

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

The Bureau of Economic Analysis advance estimate showed an increase in Gross Domestic Product of 2.8% at an annual rate during the third quarter of 2013, that is, from the second quarter to the third quarter. In the second quarter, real GDP increased 2.5%. First quarter data showed an increase of 1.1%. Revised fourth quarter 2012 real GDP increased 0.4%. Current-dollar GDP, the market value of the nation’s output of goods and services, increased 4.8% or $16,857 billion. In the second quarter, current dollar GDP increased 3.1% or $125.7 billion to a level of $16,661 billion. In the first quarter current dollar GDP increased 2.8% or $115.0 billion.

The Conference Board’s Leading Economic Index increased 0.7% in September, to 97.1 (2004=100), following a 0.7% increase in August and a revised 0.4% increase in July.

The Conference Board Consumer Confidence Index which had decreased in September to 80.2 (1985=100) decreased sharply in October to 71.2.

The Institute for Supply Management’s October Manufacturing Index registered 56.4%, an increase of 0.2% from the September reading of 56.2%. The October reading is the highest of the year. The Non-Manufacturing Report for October was 55.4%, up from September’s 54.4% indicating continued growth in the non-manufacturing sector.

In September, retail and food services sales adjusted for seasonal variations were $425.9 billion, a decrease of 0.1% from August but 3.2% above September 2012. July through September 2013 sales were up 4.5% from the same period a year ago.

Privately owned housing starts in July of 943,000 were 2.7% above the revised June estimate of 918,000 and were 12.4% above the July 2012 rate of 839,000. No data for September and October will be available for total privately owned housing starts, new residential sales, single family housing starts until the end of November. Single family housing starts in August were at a rate of 627,000 or 3.0% above July. New single home sales in August of 421,000 were 7.9% above July’s adjusted annual rate of 390,000. July was 14.1% below the revised June rate of 455,000.

After hitting the highest level in almost four years, the National Association of Realtors reported that sales of existing homes declined 1.9% in September to a seasonally adjusted annual rate of 5.29 million from a downwardly revised 5.39 million in August, but are 10.7% above the September 2012 rate of 4.78 million. Prices were up 11.7% from September 2012, and reflected the tenth consecutive month of double-digit year-to-year increases. Distressed homes, foreclosures and short sales, accounted for 14% of September sales, up from 12% in August.

New orders for manufactured durable goods in September increased $8.2 billion or 3.7% to $233.4 billion. This increase, up for five of the past six months, followed a revised 0.2% August increase.

September unfilled orders for manufactured durable goods increased $8.6 billion or 0.8% to $1041.2 billion. This number has increased for seven of the last eight months.

Consumer Price Index for all urban consumers increased 0.2% in September on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.2% before seasonal adjustments. Food index was unchanged in September after rising 0.1% in August. The gasoline index increased 0.8% in September after a decline of 0.1% in August and an increase of 1.0% in July.

The seasonally adjusted Producer Price Index for finished goods decreased 0.1% in September after an increase of 0.3% in August and no change in July. On an unadjusted basis, prices for finished goods increased 0.3 % for the twelve months ended in September 2013.

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

Inflation: Inflation rate for the twelve months ended in September reported at 1.2%. August reported at 1.5%. This followed a July rate of 2.0%. The average rate of 2.1% was reported for 2012.

Industrial production increased 0.4% in September after an increase of 0.4% in August and having been unchanged in July. The level of the index for total industrial production in September was equal to its 2007 average and was 3.2% above its year-earlier level. Capacity utilization rate for total industry increased 0.4% to 78.3%, a rate 3.2% above the level of a year earlier, and 1.9% below its 1972 – 2012 average.

Unemployment: The October unemployment rate was little changed from the September 2013 rate of 7.3% as reported by the Bureau of Labor Statistics. The number of unemployed persons was reported at 11.3 million. Employers added 204,000 jobs in October. The long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.1 million in October. Those individuals accounted for 36.1% of the unemployed. North Dakota, with its booming energy industry, continued to lead the nation with the lowest state unemployment rate in September of 3.0%; Nevada was highest at 9.5% with Illinois, Rhode Island and Michigan not far behind.

The US Census Bureau and the Bureau of Economic Analysis through the Department of Commerce announced that total August exports of $189.2 billion and imports of $228.0 billion resulted in a goods and services deficit of $38.8 billion, up from $38.6 billion in July.

Crude Oil: WTI trading at ~$95/bbl, up from ~$86 a year earlier; prices expected to trend lower near year-end.

Natural Gas: Pipeline expansions to New York City and New Jersey were completed on schedule on November 1, increasing consumer access to the Marcellus Shale field. Prices for New York customers have come down. With the advent of colder weather, Henry Hub spot price closed on November 3 at $3.68/MMBTU, up $.23 from the beginning of the week. December 2013 contract reported in the $3.56/MMBTU range. Working natural gas in storage at the end of October was 2.0% lower than last year at that time, but 1.5% higher than the five-year average.

The US dollar trading at 99.3 Japanese yen; $1.34 = euro. The British pound sterling = $1.60. The Canadian dollar trading at US$1.05.

Current US gold price quoted at $1277.30/ounce. The record price of $1920/ounce was recorded in September, 2011.

Chemical Industry News

Chemical Industry News

The American Chemistry Council (ACC) US Chemical Production Index was unchanged in June following an increase of 0.1% in May. Compared to June 2012, chemical production rose in all regions by 1.1% following May’s revised 0.9% year to year increase. Comparing the first six months of 2013 to those of 2012, total chemical production rose 0.8 % nationally.
The ACC’s Chemical Activity Barometer (CAB) rose by 0.2% in June, following a revised 0.1% increase in May. The year over year monthly moving average showed an increase of 3.9% over a year ago.

The ACC showed support for President Obama’s recent executive order to review US chemical safety regulations. It seeks to work with the EPA, Department of Homeland Security, Department of Labor, and OSHA in order to formulate best practices.
The US chemical industry is in a period of resurgence due mainly to inexpensive natural gas. Prices have fallen by three-fourths since 2005 and a number of companies are either expanding or moving to the US.

In her first public speech as new head of the EPA, Gina McCarthy urged companies to “embrace the opportunity of climate change” as reason to invest. The EPA has a deadline of September for issuing a new proposal for the first-ever rules limiting carbon dioxide emissions from new power plants.

According to a survey by Chemical and Engineering News the chemical industry slowed worldwide after a strong showing in 2011. The top fifty global chemical companies had 2012 sales of $961.8 billion, a drop of 1.8% from 2011. The sales growth for those same companies from 2010 to 2011 was 13.7%.

The US Chemical Safety Board, an independent investigative agency, said that it will consider identifying OSHA inaction regarding seven recommended moves as unacceptable. They want to see action to make changes to make refineries, chemical factories, and sugar plants safer. The Board investigates industrial accidents and issues recommendations to regulatory agencies such as the EPA and OSHA, as well as to companies, states and local authorities.

The Food and Drug Administration will no longer permit the use of bisphenol A (BPA) in packaging for baby formula. Its use was banned from baby bottles and cups in 2012. The FDA said that it still considers BPA to be safe for packaging, but took the action because manufacturers have already stopped its use in baby formula packaging. Industry people said that the move had more to do with market forces than chemical safety. BPA had been used as an ingredient in the epoxy lining material used in the metal cans used to package baby formula.

Dow Chemical Co., the largest US chemical manufacturer by sales, is considering selling its paint, construction, and chlorine businesses as they are susceptible to commodity price swings. Both Dow and DuPont are moving aggressively in the agricultural sector, where sales have been booming.

DuPont said on July 23 that it planned to exit its titanium dioxide paint pigments business in order to focus on its agricultural unit.
US chlor-alkali operating rates dropped in June, but are expected to climb back shortly. One major US manufacturer reported operating rate of 84% for the month.

Ground was recently broken for the construction of a new ammonia plant in Louisiana, the first new such facility in 25 years. The project consists of construction of Dyno Nobel’s $850 million ammonia plant with Cornerstone Chemical’s $175 million investment in upgrades at its Fortier manufacturing complex. Ammonia capacity has been estimated at 800,000 MT/year. Incitec Pivot, based in Australia, is the parent company of Dyno Nobel. Incitec manufactures a range of industrial explosives and fertilizers while Dyno Nobel manufactures industrial explosives and blasting services. Cornerstone makes key intermediate chemicals.

BASF plans additional investment for the production of fiber and plastics intermediates at its facilities in Geismar, LA and Caojing, China. No specifics were available but the investment was estimated to be in excess of 10 million euros.

Renewable chemicals company Myriant is in discussions with various companies to build its first commercial scale bio-based butanediol plant in Asia. Volume is estimated at 65,000 MT/year.

Chinese exports fell 3.1% year-on-year in June, down from a 1% growth factor in May.
China’s consumer price index increased by 2.7% in June, year on year.

Chinese Gross Domestic Product growth slowed to 7.5% in the second quarter, down from 7.7%. An average annual rate of 7.5% would be the lowest annual growth for China in twenty years.

Germany’s business confidence continued to rise in June. Munich-based Ifo, an economic research group, reported that its monthly business climate for Germany rose in April, May and June.

Germany plans to stop subsidizing solar energy by 2018 at the latest. The country has seen a wave of solar company insolvencies.

Unemployment across the seventeen European Union countries that use the euro fell in June, 24,000 fewer than in May, but remained at 12.1%. Among the member states, the lowest rates were Austria at 4.6% and Germany at 5.4%.
Inflation in the Euro zone remained at 1.6% year to year in July.

After the deadly derailment in Canada in July, the rail industry is dealing with the issue of tank car safety. Tougher standards were adopted several years ago and new tank cars were built to the standard, but existing ones were not retrofitted. It’s estimated that approximately 23% of the 310,000 US tankers meet the new rules. Last year, tank car rail shipments of crude oil were 233,811 carloads, a jump from 9,500 in 2008.

The Federal Railroad Administration issued rules on August 2 meant to prevent the kind of runaway fuel train accident that happened in Canada. Under the rules, rail cars carrying hazardous materials like combustibles may not be left unattended on main tracks or adjacent tracks unless specifically authorized.

Carload rail volume was down 0.3% annually in July on major US railroads. Intermodal volume was up 2.8%. Petroleum products shipments were up 28.0%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 0.1% in June after increasing 2.1% in May. It fell an adjusted 0.2% in April.

The Energy Information Administration said that world energy consumption will rise 56% in the next three decades, driven by growth in developing nations such as China and India. The report also predicted that fossil fuels will supply almost 80% of world energy through 2040; natural gas will grow 64%; renewable and nuclear will increase by 2.5% per year; coal consumption will rise 1.3% per year.

 

Shale Oil and Gas-related

In a preliminary study, Department of Energy researchers reported that there was no evidence that hydraulic fracturing chemicals contaminate water sources at a drilling site in Pennsylvania.

A Republican-sponsored House bill seeks to block the Department of the Interior’s proposed rules covering fracking on federal land. It proposes that the Department would be barred from imposing new rules in states that already have policies for the drilling process. US Interior Secretary Jewell defended the proposed federal regulations in testimony to the House Natural Resources Committee.

Valero Energy Corp. plans to build a $700 million methanol plant at its St. Charles, LA refinery based on low cost natural gas. This shift to petrochemicals represents a major expansion for Valero.

JBI, Inc., of Niagara Falls, NY announced an agreement with Crayola to take in expired markers from schools and overruns from Crayola and convert them to fuel. Crayola will pay the shipping for schools to send any brand of used markers to JBI. Crayola is reported to make 500 million markers per year at its Easton, PA facility.

Chesapeake Energy agreed to sell shale oil and gas assets in Texas and Louisiana to EXCO Resources for $1 billion. The deal is expected to finalize in the third quarter of 2013.

As shale oil production increases in the US, more natural gas liquids will be produced as well, creating the opportunity for the US to become a major exporter of NGL’s.

The Economy

The Congressional Budget Office reported that the federal government incurred a budget deficit of $512 billion from October 2012 through June 2013 (the first nine months of fiscal 2013), almost $400 billion less than the shortfall recorded for the same period last year. 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 $2.20 billion per day since September 30, 2012.

Personal income in June increased by $45.4 billion, or 0.3% compared to May. In May personal income increased by 0.4%, in April, personal income decreased by $5.6 billion or less than 0.1%.

The US government debt held by foreign entities is in excess of $5.7 trillion, with China holding $1.31 trillion of it, a May year to year increase of 13.1%. In January 2009 the US government owed $3.07 trillion to foreign entities. China remains the top creditor. Japan is a close second, holding $1.1 trillion.

The Bureau of Economic Analysis advance estimate of the second quarter 2013 Gross Domestic Product showed an increase at an annual rate of 1.7%, that is, from the first quarter to the second quarter. Revised first quarter data showed an increase of 1.1%, down from an earlier estimate of 1.8%, which was down from early estimate of 2.4%. Revised fourth quarter 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 2.4% or $98.1 billion to a level of $16,633 billion. In the first quarter current dollar GDP increased 2.8% or $115.0 billion.

The Conference Board’s Leading Economic Index was unchanged in June, remaining at 95.3 (2004=100), following a 0.2% increase in May and a 0.8% increase in April.

The Conference Board Consumer Confidence Index which had improved in June decreased slightly in July. It stands at 80.3 (1985=100) down from an adjusted 82.1 in June.

The Institute for Supply Management’s July Manufacturing Index registered 55.4%, an increase of 4.5% from June’s revised number of 50.9%, indicating expansion in manufacturing for the second consecutive month. The Non-Manufacturing Report for July was 56.0%, or 3.8% higher than the 52.2% reported for June, indicating continued growth.

In June, retail and food services sales adjusted for seasonal variations were $422.8 billion, an increase of 0.4% from May and 5.7% above June 2012. April through June 2013 sales were up 4.6% from the same period a year ago.

Privately owned housing starts in June of 836,000 were 9.9% below the revised May estimate of 928,000 and were 10.4% above the June 2012 rate of 757,000. Single family housing starts in June were at a rate of 591,000 or 0.8% below the revised May figure of 596,000. New single home sales in June were at a seasonally adjusted annual rate of 497,000. This was 8.3% above the revised May rate of 459,000 and 38.1% above the June 2012 estimate of 360,000.

The National Association of Realtors reported that sales of existing homes declined in June, but stayed well above year-earlier levels. Existing home sales decreased 1.2% to a seasonally adjusted annual rate of 5.08 million units, an increase of 15.2% from the same period a year ago. Distressed homes, foreclosures and short sales, accounted for 15% of May sales, down from May’s 18%, and are the lowest number since monthly tracking began in 2008. They were 26% in June 2012.
New orders for manufactured durable goods in June increased $9.9 billion or 4.2% to $244.5 billion. This increase, up four out of the last five months, followed a 5.2% increase in May.

June unfilled orders for manufactured durable goods increased $21.4 billion or 2.1% to $1029.4 billion. This followed an increase of 1.1% in May.

Consumer Price Index for all urban consumers increased 0.5% in June on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.8% before seasonal adjustments, higher than the 1.4% reported for May. Food index, which declined in May, increased 0.2% in June. The gasoline index rose sharply in June and accounted for about two thirds of the all items increase.

The Producer Price Index for all finished goods increased 0.8 % in June, seasonally adjusted, following an increase of 0.5% in May and a decrease of 0.7% in April. On an unadjusted basis prices for finished goods increased 2.5 % for the twelve months ended in June 2013, the largest twelve month increase since March, 2012.
Interest rate: Prime at 3.25%, unchanged since 12/16/08.

Inflation: Inflation rate in June reported at 1.8%. The May rate was 1.4%, 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 increased 0.3% in June, having been unchanged in May. For the second quarter as whole, industrial production increased 0.6%. 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 99.1% of its 2007 average, total industrial production in June was 2.0% above its year-earlier level. Capacity utilization rate for total industry increased 0.1% to 77.8%, a rate 0.1% above the level of a year earlier, but 2.4% below its 1972 – 2012 average.

Unemployment: The July 2013 rate edged down to at 7.4%, and has shown little movement since February. The number of unemployed persons was reported at 11.5 million. Employers added 162,000 jobs in July, but part-time work accounted for more than 65% of them. The Bureau of Labor Statistics stated that the long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.2 million in July. Those individuals accounted for 37.0% of the unemployed. North Dakota, with its booming energy industry, continued to lead the nation with the lowest state unemployment rate in June of 3.1%; Nevada was highest at 9.6 % with Illinois, Mississippi, and Rhode Island not far behind. A new analysis by the Congressional Budget Office says that if Congress allows the next round of across the board sequester spending cuts to take place, as many as 1.6 million jobs could be lost.

June exports of $191.2 billion and imports of $225.4 resulted in a goods and services deficit for the month of $34.2 billion, down from a revised number for May of $44.1 billion.

Crude Oil: WTI trading at $104/bbl, up from ~$90 a year earlier.

Natural Gas: Henry Hub spot price closed on July 31 at $3.46/MMBTU. September 2013 contract reported at $3.69/MMBTU.

Working natural gas in storage increased at the end of July, but is still lower than last year and the five year average.

The US Dollar trading at 98.4 Japanese yen; $1.33 = euro. The British pound sterling = $1.53. The Canadian dollar trading at US$1.04.

Current US Gold price quoted at $1285.30/ounce. The record price of $1920/ounce was recorded in September, 2011.