COVID-19 Bulletin: June 21

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Supply

• Crude prices rallied to a fourth straight week of gains last week, regaining ground Friday after Thursday’s dip over inflation concerns and a stronger-than-expected U.S. dollar. 
• Natural gas futures ended Friday at $3.215/MMBtu, nearly double the same time last year as the summer air-conditioning season begins. U.S. gas demand last week rose for the fourth straight week to a new pandemic high. 
• Crude prices were higher in mid-day trading this morning, with the WTI up 2.9% to $73.69/bbl and Brent up 1.9% to $74.87/bbl, while natural gas was off 1.3% to $3.17/MMBtu.  
• Amid increasing U.S. oil demand, West Texas Intermediate could reach the same price as global benchmark Brent crude for the first time in five years. 
• Industry experts told OPEC to expect limited U.S. oil output growth for the remainder of the year, while forecasting a strong rise in shale output for 2022. 
• The number of active U.S. oil and gas rigs increased by 9 last week, bringing the total number in operation to 470, up by 204 compared to this time last year, with 100 additional rigs opened already in 2021. 
• An international consortium led by U.S. firm EIG will acquire a 49% stake in Saudi Aramco’s pipelines, as the world’s largest oil producer makes more moves to raise cash to maintain investor dividends. 
• China is launching a probe into its soaring coal prices, pledging to crack down on supply hoarders after the average price for the commodity hit a record high last month. 
• Our most recent list of force majeure and allocation announcements from suppliers is here. 

Supply Chain

• Power operators in Texas and California warned that rolling blackouts could be needed if residents did not conserve energy during evening peak-demand hours as an intense heat wave gripped the region. The U.S. Southwest’s extreme heat continued into Friday, while some coastal areas began to cool down over the weekend. 
• A substantial drop in water levels at California’s second largest reservoir is likely to force the closure of a hydroelectric power plant in Northern California for the first time in its 50-year history. 
• U.S. tropical depression Claudette killed at least 13 people in Alabama after dropping large amounts of rain in much of the deep south, causing flash flooding that stretched into Georgia and the Carolinas Sunday. The storm is now expected to travel up the Atlantic coast, hitting the eastern U.S. and parts of Canada before dissipating Tuesday. 
• Experts expect this year’s hurricane season in the U.S. to be more active than average. 
• Four years after Hurricane Maria, frustration is mounting over Puerto Rico’s still-fragile power supply after two outages last week left more than a million people in darkness. 
• Canadian electricity provider Just Energy Group hopes to recover $100 million from Texas under a new bill that covers certain costs from February’s extreme winter storm. The company was forced to seek protection from creditors as prices in electricity markets soared during the crisis.
• Subaru will shut down production at its plants in Gunma, Japan, in July due to the global semiconductor shortage. 
• Germany’s southern state of Bavaria is holding talks with Intel about building a chip factory to help counter supply chain issues caused by the semiconductor shortage. 
• Supply-chain disruptions and labor shortages could persist through the end of the year or longer, economists predict, as the rebound of U.S. manufacturing lags surging demand. 
• Commodities are seeing their worst week since the start of the pandemic, with both gold and copper posting significant declines. 
• The U.S. Senate approved a $250 billion bill to increase government spending on research aimed to boost the domestic supply of minerals essential for growing technologies such as electric vehicles, satellites and wind turbines. 
• The White House’s $75 billion plan to increase passenger travel on existing U.S. freight rail lines is facing heavy opposition from the nation’s seven major freight carriers. 
• Cathay Pacific Airways operated 24% more freighter flights and 18% more cargo-only passenger flights in May compared to one month prior.  
• Walmart is looking to ramp up its just-in-time inventory replenishment process, a leaner way of restocking shelves that also has the potential to cause shortages such as those experienced during the pandemic. 
• Stanley Black & Decker will increase spending on supply-chain partnerships by up to 10 percentage points this year, a response to months-long disruptions to its battery and chip supply. 
• The International Maritime Organization is introducing new measures to ban the use of heavy fuel in the Arctic Ocean by July 2024. The organization ended a meeting last week with largely underwhelming resolutions to address carbon emissions. 
• Our logistics team reports that bulk trucking firms are refusing to book long-haul, out of network loads due to extreme capacity constraints.
• Logistics conditions remain strained, with trucking demand exceeding availability and continued congestion at ports primarily due to increased volume of ships and containers. Clients are advised to provide expanded lead times on orders to help ensure delivery dates.

Markets

• The U.S. reported 8,520 new COVID-19 cases and 170 deaths on Saturday and just 3,892 cases and 83 deaths yesterday.
• The highly transmissible Delta variant of COVID-19 now makes up more than 10% of new infections in the U.S., overwhelmingly in unvaccinated people. 
• With more U.S. hospitals reporting zero COVID-19 patients, facilities are cautiously returning to pre-pandemic protocols amid muted joy from healthcare workers. 
• With just 40% of its residents vaccinated against COVID-19, Arizona’s largest county is seeing one of the U.S.’s last remaining spikes in virus hospitalizations. Wyoming, largely unvaccinated compared to other states, is also facing rising hospitalizations.
• St. Cloud, Minnesota, reported no new COVID-19 cases last week, a milestone. 
• With 80% of residents vaccinated against COVID-19, Vermont’s seven-day average of virus deaths hit zero last week, alongside just seven new cases per day. 
• New Jersey has fully vaccinated 70% of its adult population against COVID-19 nearly two weeks ahead of deadline. 
• California dropped its mask-mandate for employees in the state, alongside rolling out a new, digital COVID-19 proof-of-vaccine tool late last week. 
• Nearly 900 people were given expired COVID-19 vaccine doses in New York City’s Times Square last week. 
• Plagued with production problems, Johnson & Johnson’s single-shot COVID-19 vaccine, once seen as a potential breakthrough in helping the U.S. combat the virus, now accounts for less than 4% of total vaccines administered. 
• A new study looking at the lingering effects of COVID-19 shows that people who recovered from the virus could suffer long-term loss of brain tissue. 
• People who relocated to exotic locations during the pandemic’s remote work boom are finding unexpected challenges, mostly stemming from a lack of cell reception and reliable Wi-Fi. 
• The airline industry is struggling to keep up with recent demand as customers report longer wait times with phone operators and longer lines at security checkpoints and airport restaurants and shops. American Airlines cut roughly 1% of planned flights in the first half of July to avoid operational strain.
• Alongside the rebound in air travel is a rebound in airline incidents:

• The U.S. extended restrictions on non-essential border crossings with Canada and Mexico until July 21.  
• The U.S. Department of Housing and Urban Development is hoping that a change in the way it assesses student debt will help qualify more lower-income workers for federal government-backed mortgages. 
• The number of U.S. homes for sale increased 6.7% in early June compared to the same time last month, providing a slight easing in the tight housing market, where inventory remains 38% below the same time last year. Half of home buyers who used mortgages in April put at least 20% down, a record, as would-be buyers with insufficient cash reserves are locked out of the market. 
• Norwegian Cruise Line extended suspensions for three of its cruise lines through September.  
• Boeing’s largest 737 MAX 10 model took its maiden flight on Friday, furthering the company’s recovery from the 20-month safety groundings over two crashes of its smaller 737 MAX model. 

International

• A Reuters poll of medical experts expects India to get hit with a third wave of COVID-19 infections by October, with the virus remaining a health threat for at least another year. The country reported 53,449 new infections and 1,427 deaths Sunday. 
• The World Health Organization is warning that the highly transmissible Delta variant of COVID-19 is quickly becoming the globally dominant variant of the disease. 
• COVID-19 vaccinations in previously lagging Asian nations have picked up in recent weeks, accounting for roughly three-quarters of new shots administered globally. 
• Brazil passed half a million total COVID-19 deaths Saturday. With only 11% of its population vaccinated, the hard-hit nation faces a prolonged outbreak as winter arrives in the southern hemisphere. 
• Despite ready access to vaccines, COVID-19 infections in Russia are surging, with only one-eighth of the population vaccinated against the virus. The highly transmissible Delta variant accounts for over 89% of new COVID-19 cases in Moscow, where daily infections hit an all-time high Friday.
• Germany has fully vaccinated over 50% of its population against COVID-19, a milestone, as officials warn about slightly rising infections with the Delta variant. 
• Italy will impose a five-day quarantine on travelers from the U.K. over fears of spreading COVID-19 variants. 
• Spain will end an outdoor mask-wearing mandate June 26. 
• New Zealand will begin administering COVID-19 vaccines to its general population in July in one of the world’s slowest vaccine rollouts. Australia is not far behind, with only 4% of its adult population vaccinated as the nation struggles with sporadic, small outbreaks. 
• South Korea is loosening more pandemic restrictions July 1. 
• A Brussels court is ordering AstraZeneca to deliver roughly 10 million more doses of its COVID-19 vaccine to the EU after the bloc filed a lawsuit against the company for failing to meet its contract obligation. 
• Mexico City, facing a rise in COVID-19 cases, is returning to remote schooling just two weeks after students returned to classrooms.  
• The U.S. raised its travel warning to Level 3, “Reconsider Travel,” for the Mexico states of Baja and Guanajuato due to crime risks.  
• Mexico’s president expects the country’s GDP to return to pre-pandemic levels by the third quarter after its economy grew 24.8% in May compared to last year. 
• Up to 20,000 employees of French car maker Renault will be eligible to work remotely for three days a week. 

Our Operations

• M. Holland’s 3D Printing group offers a rapid response alternative for producing selected parts where resin availability is tight during prevailing force majeure. For more information, email our 3D Printing team.
• Market Expertise: M. Holland offers a host of resources to clients, prospects and suppliers across nine strategic markets. To arrange a videoconference or meeting with any of our Market Managers, please visit our website.

Thank you,

M. Holland Company

We will provide further COVID-19 bulletins as circumstances dictate. For all COVID-19 updates and notices, please refer to the M. Holland website.