MH Daily Bulletin: November 29

News relevant to the plastics industry:

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Supply

• Oil prices increased about 1% Monday, rising from their lowest levels in nearly a year. Prices have fallen 35% since June.
• Oil futures rose in mid-day trading today on hopes that China would relax its COVID-19 controls, with WTI up 2.47% at $79.15/bbl, Brent up 2.88% at $85.59/bbl, and U.S. natural gas up 1.64% at $7.31/MMBtu.
• Traders and analysts are worrying about a potentially oversupplied global crude market in the coming months.
• Falling global oil demand could spur OPEC to cut output at the group’s next meeting on Sunday, Dec. 4.
• The UAE’s national oil company will cut 5% of December crude shipments to Asia on fears of an oversupply. At the same time, the nation is moving up short-term plans for boosting oil production.
• The average U.S. gasoline price is now $3.52 per gallon according to AAA. Some traders say prices could fall below $3 per gallon by Christmas. 
• New York City electricity prices could be up to 30% higher this winter than last year, the state’s grid operator said.
• The U.S. will offer over 950,000 acres of Alaskan land for new oil and gas drilling next month.
• More oil news related to the war in Europe:
  • EU ministers continue to disagree over the terms of a G7 cap on the price of Russian crude with just a week left to implement the plan. Russia’s flagship oil is already trading well below rumored targets of $65-$70 per barrel.
  • Tanker rates, already in one of their longest-ever stretches of ultra-high prices, will likely keep rising as sanctions on Russia force ships to take longer routes to new trading partners.
  • Russian crude shipments to China, India and Turkey were 3.5 times higher than pre-invasion levels in November.
  • The EU and the U.K. are set to raise their combined LNG import capacity by 34% by 2024.

• Ukraine resumed regular blackouts across the country Monday as it continues repairing infrastructure damaged by Russia.
• Saudi Aramco refining unit Luberef is pushing forward with an initial public offering in Riyadh that could raise around $1 billion.
• Italian lawmakers are working on a 50% one-off windfall tax on surplus income of energy companies next year.
• Shell will buy Denmark’s Nature Energy Biogas for $2 billion, marking the latest renewables push by a major oil company.
• BP may scrap its 70-year-old Statistical Review of World Energy, a benchmark publication of global oil, gas and coal use, as the firm pushes further into renewables.
• Britain’s Rolls-Royce says it successfully tested the world’s first aircraft engine running on hydrogen.
• The Intergovernmental Negotiating Committee, comprising representatives of governments, businesses and civic organizations, began developing a binding international instrument to end plastics pollution. 

Supply Chain

• In the latest labor action news:
  • The U.S. president and over 400 trade groups say Congress should pass legislation to end an ongoing labor standoff between rail workers and freight railroads.
  • South Korea took the unprecedented step of ordering thousands of striking truckers in the cement industry to return to work as daily losses from the trucker strikes top $220 million, officials say.
  • Austrian rail traffic ground to a halt Monday as workers held a 24-hour strike in a dispute over pay.
  • Construction was temporarily halted on a $900 million port being built in southern India by Adani Group after community protests turned violent.
  • Workers at Chile’s Escondida mine, home to the largest copper deposit in the world, accepted a new offer from BHP Group and will not move forward with a strike. 
• Apple could lose production of over 6 million iPhone Pro units this year due to COVID-19 disruption at the world’s biggest iPhone factory in Zhengzhou.
• The pace of global shipping activity will lose steam next year as trade weakens, the United Nations says. Xeneta warns that shippers could idle as much as 1 million TEUs of capacity across the world.
• The American Trucking Association’s for-hire truck tonnage index fell 2.3% from September to October, the largest monthly decline since the start of the pandemic.
• Package carriers say they have enough capacity to handle this year’s holiday shipping.
• Major shipping lines plan to pass along to customers the costs of complying with Europe’s new emissions trading system.
• Freight forwarder DB Schenker is reducing its chartered flights amid declining airfreight demand.
• Airbus is expected to miss its 2022 delivery goals.
• A record 689.4 million square feet of U.S. industrial space is in the pipeline, largely motivated by retailers’ need for more space to house inventory.
• In the latest news from the auto industry:
  • Volkswagen’s plant in Chengdu, China, halted production due to rising COVID-19 cases.
  • Toyota posted a 23% rise in October output across the globe, beating its own target for a third month as chip shortages ease.
  • Five years in the making, Tesla’s Class 8 electric truck completed its first 500-mile trip with a load weighing 81,000 pounds.
  • U.S. truck-trailer orders soared 171% in October despite worries of a weak economy.
• Japanese chip equipment supplier Ferrotec is reconfiguring its supply chain to access both the U.S. and China markets.
• Indian exporters say a new tax on freight charges is starting to affect outbound business.
• By 2030, Amazon aims to deliver 500 million urban packages a year by drone.
• PepsiCo U.K. will start using fuel derived from cooking oil to power its trucks.
• Supply-chain disruptions continue to push up global food prices even as inflation shows signs of cooling.
• Prices for chicken breasts in the U.S. have plunged about 70% since June after poultry companies boosted production.

Domestic Markets

• The U.S. reported 59,717 new COVID-19 infections and 280 virus fatalities Monday.
• “BQ” subvariants of Omicron now account for the majority of U.S. cases, posing greater risks to people with compromised immune systems.
• Only 1 in 20 Americans have completely dodged COVID-19 infection during the pandemic, new research shows.
• U.S. life insurers paid a record $100 billion in death benefits in 2021 due largely to COVID-19 fatalities, an industry group said.
• The New York Fed suggested the central bank could start lowering interest rates as soon as 2024.
• The inverted yield curve between long-term interest rates and short-term rates, often a sign of impending recession, reached the largest spread since 1981.
• Spending on Cyber Monday, the biggest U.S. online shopping day, is expected to top $11 billion, a record, according to Adobe Analytics.

• U.S. orders for durable goods jumped 1% in October.
• The Dallas Fed’s index of Texas manufacturing activity remained well inside contraction territory in November:

• Dollar Tree’s quarterly comparable-store sales at its namesake stores grew 8.6%.
• Urban Outfitters’ quarterly net sales rose 3.9%, with a decline in sales for its Urban Outfitters brand offset by solid growth at its Anthropologie and Free People business units.
• Embattled Bed Bath & Beyond is struggling to keep its stores stocked for the holiday season with over 40% of its SKUs out of stock in October.
• Home-furnishings seller United Furniture Industries abruptly laid off all its employees and ordered all its over-the-road truck drivers back immediately as part of a shutdown.
• U.S. airports saw over 2.56 million travelers Sunday, surpassing pre-pandemic levels.
• Existing U.S. home sales have fallen for nine straight months as mortgage rates near 7%. Home prices could soon start to plunge as inventory builds, experts say.

International Markets

• China is boosting its police response to growing civil unrest over the nation’s strict COVID-zero policies. Nationwide infections hit a record 40,052 on Monday, roiling global commodities and equity markets.
• Bharat Biotech received approval in India for its nasal COVID-19 vaccine spray.
• Global trade growth is set to slow in the closing months of 2022 and into 2023, according to the World Trade Organization. Emerging economies could see the harshest impacts, S&P Global says.
• The European Central Bank says inflation in the 19-country euro zone has not peaked and may exceed current expectations, raising the case for a series of interest-rate hikes ahead.
• Euro-area economic sentiment rose in November for the first time in nine months:

• German inflation dipped across five states in November, suggesting cost pressures eased in Europe’s largest economy.
• Nearly all retailers surveyed in Germany plan to raise their prices ahead of the Christmas shopping season.
• Spain’s annual inflation rate fell to 6.8% in November, the lowest since January.
• South Korean exports will likely hit a record decline this month on a downcycle in the global tech industry. For the same reason, Taiwan has cut its GDP growth forecast for this year and next.
• Vietnamese smartphone production slumped 9.3% in November, a new sign that the country’s largest manufacturer, Samsung Electronics, is adapting to falling global demand.
• Analysts and policymakers say India is emerging as an alternative production base to China as U.S. companies diversify production.
• Moscow is asking India to consider shipping hundreds of products, including parts for cars, aircraft and trains, as sanctions squeeze Russia’s ability to keep vital industries running.

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