The View from Jamestown – April 2013

“Think Positive and Good Things will Happen”

 by TCC CEO,  Nick Roach

Do we ever see a positive headline any more in the paper or on a news cast? The only one I have seen in recent years was about the Dow surpassing the all-time high of 2007. Why is all the news so grim?  It reminds me of Chicken Little from the children’s folk tale running in circles screaming, “The sky is falling! The sky is falling!”  I wonder if it’s my generation of baby boomers who probably expected too much from retirement that are responsible for this cynical attitude as their negativity is encouraged by the negative TV networks. Baby boomers have actually had it pretty good up until 2008. The economy was strong and new technology entertained us throughout our lives. Yet it is exactly that technology that I believe has made us so cynical.

Since before we were born, technology has been interfering with our security. I remember the corporate line charts in the seventies with many levels of management in the company. They were slowly going away over the first eleven years of my business career. We had regional offices throughout the country and rooms of clerks processing orders by hand. They were slowly replaced over the decades by computers. There has been a peering down of opportunity at large companies throughout the world. CEO’s and Presidents took credit for it and touted their skills, while the truth is, they just didn’t need the help thanks to technology. Management was ruthless and focused to peer down and fill personal pockets. Expansion into new markets was never considered. They just wanted to maximize their company’s value and use the proceeds for personal gains. This practice was taught at business schools, and there is no doubt that this so-called business technique is the best way to make a company look successful.

This is a fact of life with technology: we don’t need the average high school graduate as an employee today. To be employed, a person must be college educated and smart enough to oversee complex computers and machinery. We say college graduates are under-employed today. The fact is, we have eliminated tedious jobs by incorporating them into a new, highly productive manufacturing world. Unfortunately, such increased automated production levels cause even more jobs to be lost.

Give a smart kid the right opportunity and American productivity will increase. It can happen anywhere, even in a small restaurant. Look very closely at how productive all those employees in the food service industry have become; not just at McDonalds, but hiring people to do the work of machines has revitalized the corner deli, coffee shop and family restaurant.

So it’s time to be less cynical and start seeing the revitalization of the American economy. Yes we have a lot of debt, and my guess is that inflation will be the result of putting people to work to grow the economy. Yet with new technology developing gas and oil reserves all over the country, low interests rates and a productive young generation coming into control, I believe we have some good direction, and we must support it with a positive attitude.

The only change I would like to see is legislation that will allow companies to receive special tax incentives that expand and grow through the development of manufacturing new products and creating new markets. Let’s discourage the old attitude of buying for expansion by rewarding those who actually do expand. I see no reason for a company to pay any income tax if it has achieved specific predefined goals that clearly demonstrate its ability to help the economy grow. If the company is stagnant, then sure, let it hoard its cash, buy its competition, and pay income tax.

Reward aggressive management for the benefits they bring to America by expanding and growing the job market. Give them tax breaks that may even include tax incentives on bonuses they receive for a good job. It’s time to reward the people who have foresight, and help make the American economy develop and grow.

The right way would be to initiate programs that give national recognition to companies that stimulate growth by giving them US manufacturing awards. Let’s give some free national recognition to companies that are expanding their footprint while developing opportunities for our citizens. Let’s identify the good, ethical operations and reward them with the recognition they deserve. And let’s start with an occasional positive headline once in a while and a few positive news casts.

 

Contact:
The Chemical Company
P.O. Box 436
19 Narragansett Ave.
Jamestown, RI 02835
Phone: (401) 423-3100
Website: www.thechemco.com
Email: Info@thechemco.com

 

Quote of the Month:

“Leadership is the art of accomplishing more than the science of management says is possible.”

–Colin Powell, quoted in the Nashville Tennessean

In 2013 The Chemical Company is celebrating our 25^th year in business and looking forward to 25 more!

 

 

Upcoming Events

 

Adhesive and Sealant Spring Convention and Expo.

April 21-23, 2013 Atlanta, Georgia

www.ascouncil.org/events

 

APIC Asia Petrochemicals Industry Conference

May 9-10, 2013 Taipei, Taiwan

http://www.apic2013.tw/

 

Connect with TheChemCo!

Downloadable Brochures:

The Chemical Company Brochure
TCC Plasticizers and Plastics Additives
Iron Oxides
Composites
Flame Retardants

 

 

Product News

Adipic Acid:                   25 Kg., 500 Kg. and 1,000 Kg. Bags (In Stock and Available Now!)

NatureFlexx 509:             Phthalate Free General Purpose Plasticizer.  Available in Totes (2200 lbs.) and Drums.  (In stock and immediately avail.)

Malic Acid:                    25 Kg. Bags (In Stock and Available Now!)

Vestinol 9 DINP:            TCC offers bulk trucks and split loads (w/ eso or dop) of DINP to North America.

Zinc Borate:                    TCC now offers Zinc Borate in 25 Kg. Bags in Stock and Immediately Avail.

 

 

Products In Transit/ Available Soon

Bio- Succinic Acid:          2000 lb. supersacks and 25 Kg. Bags (Available Q2 2013)

Dicyclopentadiene:           Isocontainers

 

New/ Updated Technical Information:

Ammonium Carbonate

Castor Oils

ChemFlexx TOTM

Fish Oils

Melamine

Succinic Acid

Urea

Please contact Robb Roach at robb@thechemco.com

or Tel: (401) 423- 3100 for more information.

We appreciate your taking the time to review this newsletter. We welcome your comments as well as contributions regarding our readers’ company/industry activities. Please send them to Robb Roach at Robb@thechemco.com

 

 

Critical Raw Materials Markets

Benzene: U.S. benzene contracts for April settled down $.33/ gallon to US$4.36/ gallon from US$4.69/ gallon in March.  Spot prices this month have strengthened and are in the $4.40- $4.50/ gallon range.

N Butane:  Normal Butane prices are trading in the mid to high US$1.20’s per gallon. Pricing has trended lower since the beginning of March continuing the downward trend in April. 

Ethylene:   U.S. Contract Price for March settled even at US$.48/ lb. Current spot is in the high $.50’s cpp with offers as high as $.62 cpp.

Natural Gas: Natural Gas pricing has increased steadily  since February.  Pricing eclipsed the $4.00/ mmbtu price point in Mid- March and continues to climb.  Current pricing is $4.35- $4.40/ mmbtu. 

Oil: Current WTI Crude price is at $88+/- per barrel range.  Prices have been trending steadily lower since Mid- February when pricing was in the $97 per barrel range.   

Orthoxylene: April contracts settled down $.07/ lb. to $.625/ lb. 

Propylene: Contract pricing for April settled at $.63/ lb. for Polymer Grade and $.615/ lb. for Chemical Grade. Down US $.10/ lb. from March.

 

Chemical Industry News

The American Chemistry Council (ACC) US Chemical Production Index declined by 0.1% in March 2013 following a revised 0.4 % increase in February. Compared to March 2012, chemical production rose in all regions by 0.9% following February’s 0.8% year to year increase. Comparing the first three months of 2013 to those of 2012, total chemical production rose 0.8% nationally.

The ACC’s Chemical Activity Barometer (CAB) slipped by 0.1% in March, following a revised 0.4% gain in February. The year over year monthly moving average showed an increase of 0.9% compared with March 2012.

The recent explosion of a fertilizer plant in Texas has caused legislators to focus on the Department of Homeland Security’s Chemical Facility Anti-Terrorism Standards program (CFATS) and its implementation. Senator Frank Lautenberg, D-NJ has called for new legislation on chemical plant safety as a result of this incident.

The Environmental Protection Agency (EPA) chemicals office will use the risk assessments it is developing for an initial group of fourteen chemicals to evaluate, reduce, and manage risks in these and similar compounds that may already be in commerce, an EPA senior chemicals officer said on April 18.

The EPA has significantly reduced its estimate of the amount of methane emissions generated by hydraulic fracturing (fracking) operations. The agency now says that the tighter pollution controls put in place by the oil/gas industry resulted in an annual decrease of 41.6 million MT of methane emissions from1990 through 2010, or more than 850 million MT in total. During the same period production grew by close to 40%.

According to a recent EPA analysis, emissions of greenhouse gases (GHG) decreased slightly in 2011, dropping 1.6% year to year. Since 2005, levels have gone down nearly 7%. The agency cited improvements in automobile fuel efficiency, reduction of coal consumption and a relatively mild winter for this decline.

The EPA’s Office of Chemical Safety and Pollution Prevention would get $686.2 million in fiscal 2014 under the White House budget proposal.

The ACC has expressed concern about how budget cuts could affect the EPA’s permitting activities for industrial facilities, with possible delays in capital projects as a result.

In the most recent activity around BPA, on April 19 a judge in California ordered on April 19 that the chemical be removed from the state’s list of reproductive toxicants.

Methanex plans to move a second plant from Chile to Geismar, Louisiana. The two facilities will hire a total of 165 employees. Kinder Morgan Energy Partners will invest $58 million to expand its methanol storage capacity in Geismar, LA near the Methanex site.

Cytec has completed the sale of its coating resins business to Advent International, a private equity company. The price was reported as $1.13 billion.

DuPont reported that profit more than doubled in the first quarter from the year-ago period as the company shifts its focus from paint pigments to agriculture.

BASF leads other European industrial companies in US investment, driven largely by favorable natural gas prices. Since 2009, BASF has invested more than $5.7 billion in US facilities.

LyondellBasell Industries could add a polyethylene (PE) line with approximately one billion pounds annual capacity, and a PE debottlenecking project in North America. These projects are in addition to other ethylene capacity expansions in Texas and are based on abundant supply of natural gas and natural gas liquids.

US chlor-alkali operating rate for February 2013 was reported at 82% of capacity, compared with 85% a year earlier. January operating rate was 78% according to the Chlorine Institute.

Chinese first quarter GDP figures showed an increase of 7.7% year to year. This was lower than the target of 8%.

Unemployment across the seventeen European Union countries that use the euro hit a new record high of 12.0% for the first two months of 2013.

According to figures published on April 25, the number of unemployed workers in Spain and France has reached all-time highs. Spain’s unemployment rate was 27.16%. In France’s unemployment rate stands at 10.6%, with youth unemployment hitting 25%. German Finance Minister Schaeuble said he will discuss a “bilateral investment program” with his Spanish counterpart, which is hoped that will become a model for the rest of Europe. Germany’s unemployment rate was 6.9% in March.

EU exports of chemical products increased by 8% year-on-year in 2012 according to the EU statistics body Eurostat.

Russian statistics agency Rosstat said that Russia’s overall production of chemical and petrochemical products was up year on year in January and February. Plastics and synthetic rubber outputs were up significantly.

Russia’s SIBUR polypropylene plant is due to come on stream in the near future, which could double the company’s basic polymers capacity.

Saudi Acrylic Polymers Co. (SAPCO) is on schedule for a September start-up of its 80,000 MT/year superabsorbent polymers plant in Al-Jubail, Saudi Arabia. This will be the first SAP plant in the Middle East.

Trinidad and Tobago and a group led by Mitsubishi Gas Chemical signed an agreement to build a methanol to petrochemical project in a new industrial area in the country. The cost is estimated at $850 million.

Carload rail volume was down 2% annually as of the week ending April 20 on major US railroads. Intermodal volume was up 0.6% compared with the same week last year. Petroleum products shipments were up 40%.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 0.9% in March after decreasing an adjusted 0.7% in February. Tonnage has increased in four of the past five months.

In a deal expected to end long delay for fliers caused by sequestration, Congress speedily approved a bill to revoke the furlough of air traffic controllers.

Shale oil and Gas-related

 

Pennsylvania State University is creating the Institute for Natural Gas Research in order to study natural gas developments in the Marcellus Shale. The project involves more than seventy faculty members.

Phillips 66 finalized agreements with energy logistics companies to increase supplies of lower cost US and Canadian crude oil, including Bakken shale product, to its US refineries.

The US east coast has seen a rejuvenation of refinery activities due to shale-based crude oil. Oil companies have begun to bring domestic shale east by rail then ship it down the coast. The Carlyle Group is building a high-speed rail facility as well.

The House Science, Space and Technology Committee was to have held a hearing on April 25 on the federal government’s studies of fracking. Officials from all concerned agencies were expected to testify.

Interior Secretary Sally Jewell was recently quoted saying that based on her experience fracking is a safe drilling procedure.

News that the UK government is to promote shale gas exploration is expected to be greeted positively by the European chemical industry, which is struggling with a non-competitive feedstock market.

Royal Dutch Shell and Williams Partners are forming a joint venture to supply natural gas and liquids to petrochemical facilities in northwest Pennsylvania, including a possible ethane cracker. The company will be called Three Rivers Midstream and will be operated by Williams, with Shell having the right to increase its investment.

David Spence of the University of Texas recently wrote that state-based regulation of fracking is more effective than federal oversight. He stated that the benefits and costs of fracking fall mostly on local and state communities.

China reportedly has about twice the amount of shale gas reserves as does the US and Chinese firms are eager to learn shale technology. Analysts expect a Chinese shale gas boom possibly as soon as three years from now.

The Economy

The Congressional Budget Office reported that the federal government incurred a budget deficit of $601 billion for the first half of fiscal year 2013 (that is, October 2012 through March 2013), $178 billion less than the shortfall recorded for the same period last year. The deficit in March 2013 amounted to $107 billion. The US Treasury Department reported that on April 27, 2013 the federal debt was $16.77 trillion. The national debt has increased an average of $3.81 billion per day since September 2007.

March personal income increased by $30.9 billion, or 0.2% compared to February. Consumer spending rose 0.2% in March. In February personal income increased $151.2 billion or 1.1% and spending increased $81.6 billion, or 0.7%.

It’s been reported in The Wall Street Journal that Congressional leaders were in confidential talks to exempt themselves and their staffs from Obamacare.

The US government debt held by foreign entities is in excess of $5.5 trillion, with China holding $1.23 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 estimate of the first quarter 2013 Gross Domestic Product showed an increase of 2.5%, that is from the fourth quarter of 2012 to the first quarter of 2013. 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 rate of 3.7% or $146.1 billion in the first quarter of 2013 to a level of $16,010 billion. In the fourth quarter current dollar GDP increased 1.3% or $53.1 billion.

The Conference Board’s Leading Economic Index declined 0.1% in March to 94.7 (2002=100) following a 0.5% increase in February and an increase of 0.5% in January.

The Conference Board Consumer Confidence Index which had improved in February, declined in March. It stands at 59.7 (1985=100) down from an adjusted 68.0 in February.

The Institute for Supply Management’s Manufacturing Index decreased 2.9% to 51.3% in March, showing expansion for the fourth consecutive month but at a slower rate. A reading above 50% indicates that the manufacturing economy is generally expanding. The Non-Manufacturing Report for March was 54.4%, or 1.6% lower than the 56% reported for February, but reflecting growth for 44 consecutive months.

In March, retail and food services sales adjusted for seasonal variations were $418.3 billion, a decrease of 0.4% from February and 2.8% above March 2012. January through March 2013 sales were up 3.7% from the same period a year ago.

Privately owned housing starts in March of 1,036,000 were 7.0% above the revised February estimate of 968,000 and were 46.7% above the March 2012 rate of 706,000. Single family housing starts in March were at a rate of 619,000 or 4.8% below the revised February figure of 650,000. New single home sales were at a seasonally adjusted annual rate of 417,000. This was 1.5% above the revised February rate of 411,000 and 18.5% above the March 2012 estimate of 352,000.

The National Association of Realtors reported that sales of existing homes edged down 0.6% in March to a seasonally adjusted annual rate of 4.92 million units. Sales of existing homes in March were 10.3% higher than the same period a year earlier.

New orders for manufactured durable goods in March decreased $13.1 billion or 5.7% to $216.3 billion. This decrease, down two out of the last three months, followed a 4.3% increase in February.

March unfilled orders for manufactured durable goods decreased $6.4 billion or 0.6% to $991.2 billion. This followed an increase of 0.7% in February.

Consumer Price Index for all urban consumers decreased 0.2 % in March 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 was unchanged in March, and the gasoline index decreased 4.4% in March.

The Producer Price Index for finished goods decreased 0.6 % in March, seasonally adjusted, following increases of 0.7% in February and 0.2% in February. Unadjusted basis prices for finished goods increased 1.1 % for the twelve months ended in March 2013, the smallest twelve month increase since a 0.5% rise in July 2012.

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

Inflation: Inflation rate in March reported at 1.5%. The February rate was 2.0%, January rate was 1.6%, and the December rate was 1.7%. The average rate of 2.1% was reported for 2012. It is expected to rise slightly in 2013 to approximately 2.3%.

Industrial production 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%m the largest gain since the first quarter of 2012. At 99.5% of its 2007 average, total industrial production in March was 3.5% above its year-earlier level. Capacity utilization rate for total industry increased to 78.5%, a rate 1.2% above the level of a year earlier, but 1.7% below its 1972 – 2012 average.

Unemployment: The March 2013 rate was little changed at 7.6%, and has shown little movement since September 2012. The number of unemployed persons was reported at 11.7 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 4.6 million in March. Those individuals accounted for 39.6% of the unemployed. North Dakota continued to lead the nation with the lowest state unemployment rate in March of 3.3%; Nevada was reported highest at 9.7%, Illinois, Mississippi, and California close behind.

The goods and services deficit decreased to $43.0 billion in February, from $44.5 billion in January as exports increased more than imports. President Obama recently told his advisory council on exports that the US is on target toward his goal of doubling US exports before 2015. He said that the best way to increase exports is to move ahead with free trade agreements in Asia and Europe.

Crude Oil: Present WTI spot price ~$93/bbl, compared to ~$100+/bbl a year earlier. OPEC outlook continues to show a slight reduction in demand in 2013.

Natural Gas: Henry Hub spot price closed on April 23 at $4.25/MMBTU. May 2013 contract reported at $4.40/MMBTU. Working natural gas in storage is lower than last year and the five year average.

The US dollar trading at 98.0 Japanese yen; $1.30 = euro. The British pound sterling = $1.54. The Canadian dollar trading at US$1.01.

Current US gold price quoted at $1463.60/ounce, down from $1597.00/ounce approximately one month earlier. The record price of $1920/ounce was recorded in September, 2011.

CHEMICAL INDUSTRY NEWS

The American Chemistry Council (ACC) US Chemical Production Index rose by 0.6% in February 2013 following a revised 0.8 % increase in January. Compared to February 2012, chemical production rose in all regions by 1.2% following January’s 1.4% year to year increase. Comparing the first two months of 2013 to those of 2012 total chemical production rose 1.3% nationally.

The ACC’s Chemical Activity Barometer (CAB) for March 2013 showed slow expansion, with a 0.4% gain over February. The year over year monthly moving average showed an increase of 2.9% compared with March 2012.

The EPA is ready to begin evaluation of 23 common chemicals for health and environmental risks. This action will primarily involve flame retardants.

Chemical industry officials are proposing revision of the Toxic Substances Control Act (TSCA) that would strengthen the EPA’s authority to limit exposure to harmful substances rather than completely barring their use. The ACC supports a safety standard that “ensures the safety of a chemical for its intended use.”

Methanex is said to be still evaluating relocation of a second Cabo Negro, Chile methanol plant to Geismar, LA. The estimated capital investment of $500 million would create 35 new jobs.

PolyOne reached a $250 million cash deal for the sale of its base resins business to Mexichem. Spartech stockholders approved its acquisition by PolyOne; the Spartech name will no longer be used.

BASF has established an advanced materials R&D initiative with Harvard, MIT, and the University of Massachusetts, Amherst. The program will establish about twenty postdoctoral positions. The cost to BASF was not disclosed.

Dow Chemical projected petrochemical investment for the Gulf Coast involves recommissioning and improving existing ethane operations focused on performance plastics.

LyondellBasell Industries will upgrade its Houston refinery in order to handle an increased amount of oil from Canadian tar sands and to lower its reliance on feedstock from Venezuela. The company is relocating its R&D center from Newtown Square, Pennsylvania to Channelview, Texas.

Rigid plastics recycling in the US and Canada, excluding plastic bottles, exceeded 934 million pounds in 2011 according to a report issued by Moore Recycling Associates for the ACC.

US chlor-alkali operating rate for January 2013 was reported at 80% of capacity, essentially the same as December’s 81%.

Norwegian oil group Statoil announced a large natural gas find off Tanzania’s coast. This is the third major discovery in a year for the Statoil-ExxonMobil partnership.

Unemployment across the seventeen European Union countries that use the euro hit a new record high of 11.9 % in January.

A developing German political party led by economists, jurists, and Christian Democrats was established in March. It calls for the break-up of monetary union before it can do any more damage. They propose German withdrawal from the euro and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns and similar nations. The French are not among them.

Germany’s top industry trade group, BDI, welcomed plans by the federal government to prepare rules for fracking. German energy policies, particularly the country’s exit from nuclear power by 2022, made it necessary to investigate new domestic sources.

An apartment building under construction in Hamburg, Germany will be clad on its two south-facing sides with a transparent shell housing millions of microalgae. The building has been designed to harness heat generated by the microscopic plants and use it to heat its 15 apartments.

Russia’s Gazprom, the largest extractor of natural gas in the world and the largest Russian company, offered to bail out Cyprus in exchange for gas exploration rights. It was reported that Gazprom would undertake the restructuring of the country’s banks in return for the exploration rights.

Cyberattacks traced to Chinese hackers prying into US company secrets have made more firms rethink plans to locate in China.

Royal Dutch Shell will explore for and produce shale natural gas in China with China National Petroleum Corp. No details were available.

Mixed carload traffic on major US railroads for the week ending 3/23/13 increased 0.2% year over year. Intermodal volume was up 1.4% compared with the same week last year. Petroleum products shipments were up 57%.

Burlington Northern Santa Fe Railroad has begun to experiment with locomotives that run on liquefied natural gas as replacement for the costlier diesel fuel now in use.

The ACC filed comments with the Surface Transportation Board urging the agency to take action on reforms that would increase access to competitive freight service for domestic producers.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 0.6% in February after increasing an adjusted 1.0% in January. Year to date, the tonnage index is up 4.4% for the same period.

SHALE OIL AND GAS-RELATED

The House Energy and Power subcommittee said that its primary goals for this session of Congress are getting the government out of the way of energy production, generation, and export. Examples such as easing export regulations, approving the Keystone XL pipeline, opening federal lands for drilling and applying a lighter touch on rules for greenhouse gas emissions and hydraulic fracturing (fracking) topped the agenda.

A Congressional Research Service report said that thanks to the innovation of fracking and horizontal drilling on private and state lands, the US in fisc

al 2012 produced 6.2 million barrels of oil daily, up from 5.1 barrels as recently as fiscal year 2007. Technological advances enabled private industry to increase production last year at the fastest rate in the history of the domestic industry. However, the same study found that federal oil production fell more than 23% from fiscal 2010 to fiscal 2012 and today is below 2007 levels. It was also reported that natural gas production on non-federal lands grew 40% since 2007 while production on federal lands dropped by 33%.

ExxonMobil Corp. is expanding its Baytown, Texas refinery capacity for turning natural gas into chemical building blocks. Permit applications are pending. It’s expected that this multibillion dollar project will create 10,000 jobs during its construction.

In early March the New York State Assembly approved a two year moratorium on fracking to last until May 15, 2015. The bill calls for the State University of New York to conduct an independent, comprehensive health review; fracking would be further delayed if the study were delayed.

Some of the country’s largest energy companies and environmental groups have agreed on a voluntary set of standards for gas and oil fracking in the Northeast that appears to go beyond existing state and federal regulations.

California governor Jerry Brown, a noted environmentalist, said on March 13 that the state should consider the use of fracking so it could develop its massive shale oil reserves and reduce dependence on imported oil. Some groups in California have opposed the use of fracking, but Brown has said that decisions would be based on science and common sense.

THE ECONOMY

The Congressional Budget Office reported that the federal government incurred a budget deficit of $495 billion for the first five months of the fiscal year 2013 (that is, October 2012 through February 2013), $86 billion less than the shortfall recorded for the same period last year. CBO estimates are that if lawmakers enacted no further legislation affecting spending or revenues, the federal government would end fiscal 2013 with a deficit of $845 billion. The US Treasury Department reported that on March 29, 2013 the federal debt was $16.77 trillion. Since President Obama took office in January 2009, more than $6 trillion has been added to the national debt. It was $5.7 trillion in 2001.

January marked the sharpest one month decline in personal income in 20 years. Personal income decreased by $505 billion in January, or 3.6% compared to December. However, February showed an increase of 1.1% and was encouraging to economists. Consumer spending rose in January even as incomes dropped, and increased once again in February.

According to the Department of Agriculture, the number of Americans on food stamps saw an all-time high in 2012. An average of 46.6 million people received the benefits each month last year. In 2007, 26 million people received food stamps.

It’s been reported that health insurance companies are warning brokers that premiums for many individuals and small businesses could see a sharp increase in 2014 due to the health-care overhaul legislation. The projections appear to disagree with Department of Health and Human Services forecasts.

Banks wrote off $3 billion of student loan debt in the first two months of 2013, up in excess of 36% from the same period a year earlier. The cost of earning a four year undergraduate degree has increased 5.2% per year in the last decade according to the Consumer Financial Protection Bureau.

White House aides refused on March 27 to specify the date President Obama will release his proposed federal budget. Federal law requires that the White House submit a budget on the first Monday of February.

As of March 1, sequestration is in place. Sequester focuses on the portion of the budget that funds operating accounts for federal agencies and departments, including the Department of Defense.

The US government debt held by foreign entities is a record $5.56 trillion, with China holding $1.26 trillion of it, or approximately 21.% 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 $1.12 billion.

The Bureau of Economic Analysis third estimate of the fourth quarter 2012 Gross Domestic Product showed a revised annual increase of 0.4% that is from the third quarter to the fourth quarter. The earlier second estimate showed an increase of 0.1%. 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 rate of .05% or $18 billion in the fourth quarter of 2012 to a level of $15,829 .0 billion. In the third quarter current dollar GDP increased 5.9% or $225.4 billion.

The Conference Board’s Leading Economic Index rose 0.5% in February to 94.8 (2004=100) following a 0.5% increase in January and a 0.4% increase in December.

The Conference Board Consumer Confidence Index which had improved in February, declined in March. It stands at 59.7 (1985=100) down from an adjusted 68.0 in February.

The Institute for Supply Management’s Manufacturing Index increased 1.1% to 54.2% in February, showing expansion for the third consecutive month. A reading above 50% indicates that the manufacturing economy is generally expanding. The Non-Manufacturing Report for January was 56.0%, 0.8% higher than the 55.2% registered in January, still indicating continued growth.

In February, retail and food services sales adjusted for seasonal variations were $421.4 billion, an increase of 1.1% from January and 4.6% above February 2012. December 2012 through February 2013 sales were up 4.5% from the same period a year ago.

Privately owned housing starts in February of 917,000 were 0.8% above the revised January estimate of 910,000 and were 27.7% above the February 2012 rate of 718,000. Single family housing starts in February were at a rate of 618,000 or 0.5% above the revised January figure of 615,000. New home sales increased 4.6% in February to a seasonally adjusted annual rate of 411,000. This was 4.6% below the revised January rate of 431,000 but 12.3% above the February 2012 estimate of 366,000.

The National Association of Realtors reported that sales of existing homes reached a three-year high in February and their prices rose, adding to signs of acceleration in the housing recovery. Sales of existing homes rose 0.8% in February to a seasonally adjusted annual rate of 4,980,000 units.

New orders for manufactured durable goods in February increased $12.4 billion or 5.7% to $232.1 billion. This followed five consecutive monthly increases.

February unfilled orders for manufactured durable goods increased $9.4 billion or 0.9% to $999.8 billion. This followed a decrease of 0.1% in January after four consecutive monthly increases.

Consumer Price Index for all urban consumers increased 0.7% in February on a seasonally adjusted basis. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 2.0 % before seasonal adjustments. Food increased slightly at 0.1% in February, and the gasoline index rose 9.1% in February.

The Producer Price Index for finished goods increased 0.7 % in February, seasonally adjusted, following an increase of 0.2% in January and a decline of 0.3% in December. On an unadjusted basis, prices for finished goods increased 1.7 % for the twelve months ended in February 2013, the largest twelve month increase since a 2.3% rise in October of last year.

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

Inflation: Inflation rate in February reported at 2.0%. The January rate was 1.6%, December rate was 1.7%. The average rate of 2.1% was reported for 2012. It is expected to rise slightly in 2013 to approximately 2.3%.

Industrial production increased 0.7% in February, having been unchanged in January. At 99.5% of its 2007 average, total industrial production in February was 2.5% above its year-earlier level. Capacity utilization rate for total industry increased to 79.6%, a rate 0.6% below its 1972 – 2012 average.

Unemployment: The February 2013 rate edged down to 7.7%, but has shown little movement since September 2012. The number of unemployed persons decreased 236,000 to12.0 million. The Bureau of Labor Statistics stated that the long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.8 million in February. Those individuals accounted for 40.2% of the unemployed. North Dakota continued to lead the nation with the lowest state unemployment rate in February of 3.3%; Nevada, Mississippi, and California were all reported highest at 9.6%.

In a recent Federal Reserve report on economic conditions across the country, the cost of Obamacare was cited as one reason the unemployment rate has remained high.

The goods and services deficit increased to $44.4 billion in January, from $38.1 billion in December 2012 as imports increased and exports decreased. As a percentage of US gross domestic product, the goods and services deficit was 3.4% in 2012, down from 3.7% in 2011. Both imports and exports increased during the year. President Obama recently told his advisory council on exports that the US is on target toward his goal of doubling US exports before 2015. He said that the best way to increase exports is to move ahead with free trade agreements in Asia and Europe.

Crude Oil: Present WTI spot price ~$97/bbl, compared to ~$100+/bbl a year earlier. OPEC outlook shows a reduction in demand.

Natural Gas: Both spot and futures prices reached 18 month record highs during the week ending March 27. Henry Hub spot price closed on March 26 at $4.08/MMBTU. April 2013 contract reported at $3.97/MMBTU. Working natural gas in storage is lower than last year but is 3.5% above the five year average

The US dollar trading at 94.2 Japanese yen; $1.28 = euro. The British pound sterling = $1.52. The Canadian dollar trading at US$1.02.

Current US gold price quoted at $1597.00/ounce compared to the record price of $1920/ounce in September, 2011.

CHEMICAL INDUSTRY NEWS

The View from Jamestown – February 2013

The American Chemistry Council (ACC) US Chemical Production Index rose by 0.7% in January 2013 following a revised 0.9% increase in December 2012. Chemical production rose in all regions for the second consecutive month. Compared to January 2012 total chemical production in all regions was up 0.9%. The outlook for 2013 is sluggish, with increase of approximately 2% foreseen.

The ACC’s Chemical Activity Barometer(CAB) for February 2013 showed slow expansion, with a 0.6% gain over January. The year over year monthly moving average showed an increase of 2.9% compared with January 2012.

Senator Lisa Murkowski (R, AK) introduced an energy policy plan that includes drilling in ANWAR and opening the coasts of the Carolinas, Georgia, and Virginia to leasing.

The Carlyle Group completed its acquisition of DuPont Performance Coatings for $4.9 billion. The new organization will be known as Axalta Coating Systems.

The BPA issue surfaced again recently with a toxicology analysis of 150 studies by the Department of Energy that found that the amount of bisphenol A used in plastic bottles and food containers is too little to account for negative effects on humans.

Air Products and Chemicals installed a $400 million demonstration-scale carbon capture system that can reduce carbon dioxide emissions at Valero’s Port Arthur, Texas refinery by approximately one million tons per year.

Senate Environmental and Public Works Committee Chair Barbara Boxer (D, CA) and Sen. Bernie Sanders (I, VT) have proposed a bill that would tax carbon dioxide emissions of major industrial facilities, including natural gas processing plants. Their plan would charge a $20 tax for every ton of CO2 emitted beyond a set limit.

Plastic film recycling increased 4% in 2011 reaching 1 billion pounds annually for the first time. The category includes plastic bags, product wraps, and commercial shrink film. It was reported that recycling of plastic film has increased 55% since 2005.

A federal judge ordered that the Department of Health and Human Services meet with the ACC on February 27 regarding whether or not the department and its agencies have fulfilled ACC’s Freedom of Information Act request regarding a study on formaldehyde.

US chlor-alkali operating rate for January 2013 was reported at 80% of capacity, essentially the same as December’s 81%. In January, the UN Environmental Program’s Mercury Convention passed a set of legally binding measures accepted by more than 140 countries. It was agreed that there will be a mandatory deadline for phasing out mercury cells in chlor-alkali production by 2025. The EU deadline is 2020.

The federal government is implementing procedures to stop China, Russia, India, and other nations from stealing trade secrets worth billions of dollars from US businesses. Thefts of information from DuPont and Dow Chemical were cited as examples.

Officials from the US and the European Union stated on February 13 that they were moving ahead on major issues to resolve a US-Europe trade agreement. Such an agreement would lower/reduce import duties as well as reach agreement on regulations governing many industries including chemicals and drugs. The UN is moving towards this with its Globally Harmonized System of Classification and Labelling. Finalization is possible before the end of 2014. The ACC has strongly endorsed the initiative.

The European Commission has said that REACH chemical legislation has affected the prices of some chemicals in Europe. It was reported that the cost of complying with this legislation has discouraged some companies from competing.

Great Britain’s pound sterling has fallen 4% against the dollar and 8% against the euro since October 1, 2012 in spite of the government’s success in reducing expenditures. From 2009 to 2012 UK government expenditures rose a total of 1.6% compared to the US rate of 7.9%. The country’s credit rating was recently downgraded by Moody’s from Aaa, the highest possible, to Aa1.

Unemployment in the eurozone was reported at 11.7 % in December.

The German economy registered a contraction of 0.6% in the fourth quarter and grew by 0.7% for all of 2012, compared with a positive 3% in 2011. Economists are confident that the German economy will start expanding again in the first quarter.

In France, the economy shrank by 0.3% in the fourth quarter, which was weaker than expected. France’s economic growth for 2012 was zero.

Russia has become the world’s largest gold buyer, with its central bank having acquired 570 metric tons in the past decade. The Russian cache of 958 tons is the world’s eighth largest; the US is first with approximately 8,000 tons.

China surpassed the US last year in order to become the world’s largest trading nation as measured by the sum of imports and exports. US exports and imports of goods totaled $3.82 trillion in 2012; China’s government reported trade in goods of $3.87 trillion. China’s export growth in January rose 25% from a year earlier.

Since 2008, China’s total public and private debt has grown to more than 200% of GDP, yet the consensus shows little risk to continued economic growth.

The recent announcement of the merger of American Airlines and US Airways will be the world’s largest air carrier, keeping the American Airlines name. It will be run by US Airways CEO Doug Parker. When the merger is completed, American, United, Delta, and Southwest will control about 75% of US airline traffic.

One of the worst droughts in decades along the Mississippi River caused mounting concern in the new year among shippers and navigation experts who were faced with the threat of a halt or reduced barge traffic on the river. If river traffic were shut down, industry experts said that 8,000 jobs could be affected, cost $54 million in wages, and halt the movement of 7.2 million tons of commodities with a value of $2.8 billion.

The Association of American Railroads announced that US Class I railroads originated a record 233,811 carloads of crude oil in 2012, up 256% from the 65,751 carloads in 2011. Mixed carload traffic on major US railroads for the week ending 2/16/13 declined 1.2% year over year. Intermodal volume was up 13.6% compared with the same week last year.

The American Trucking Association reported that seasonally adjusted for-hire truck tonnage increased 2.9% January after increasing an adjusted 2.4% in December.

SHALE OIL & GAS-RELATED

Company representatives stated that BASF and Lanxess are reviewing building petrochemical facilities in the US in order to take advantage of cheap natural gas.

New York Governor Cuomo missed another deadline for completing a report on the environmental impact of hydraulic fracturing (fracking.) Some observers say that nothing will happen until 2014.

Occidental Petroleum Corp. (Oxy) has applied to build an ethylene plant in Ingleside, Texas, the latest company to consider new capacity in the region as generous gas supplies cut costs for chemical producers. Construction is expected to start in December 2014 with production beginning in early 2017.

The Institute for Energy Research has said that potential revenues from giving oil and natural gas drillers more access to public lands are much greater than the Congressional Budget Office’s estimates. According to the IER, the nation’s gross domestic product would increase by $127 billion annually for the next seven years through expanded development.

Shell Chemicals is still considering moving ahead with construction of a petrochemical plant in Pennsylvania.

Researchers at MIT have developed a process of treating water byproducts from the oil and natural gas industry through humidification dehumidification.

 

THE ECONOMY

The Congressional Budget Office reported that the federal government incurred a budget deficit of $295 billion for the first four months of the fiscal year 2013 (that is, October 2012 through January 2013), $54 billion less than the shortfall recorded in the first quarter of last fiscal year. The US Treasury Department reported that on February 25, 2013 the federal debt was $16.62 trillion. It was $5.7 trillion in 2001.

The White House missed the legal deadline of February 4 for sending a fiscal 2014 budget to Congress. A budget official said that submission will happen in mid-March. The Senate last passed a budget resolution in 2009.

As of February 27, there was a continuing impasse between the Congress and the White House regarding automatic budget cuts (sequestration) scheduled to be implemented on March first. Sequester focuses on the portion of the budget that funds operating accounts for federal agencies and departments, including the Department of Defense.

The US government debt held by foreign entities is a record $5.55 trillion, with China holding $1.20 trillion of it, or approximately 21.6% 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 $1.12 billion.

The Bureau of Economic Analysis advance estimate of the fourth quarter 2012 Gross Domestic Product showed a decrease of 0.1% at an annual rate that is from the third quarter to the fourth quarter. 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 rate of .05% or $18 billion in the fourth quarter to a level of $15,829 .0 billion. In the third quarter current dollar GDP increased 5.9% or $225.4 billion.

The Conference Board’s Leading Economic Index rose 0.2% in January to 94.1 (2004=100) following a 0.5% increase in December and no change in November.

The Conference Board Consumer Confidence Index which had declined in November and December fell again in January. It stands at 56.8 (1985=100) down from an adjusted 66.7 in December.

The Institute for Supply Management’s Manufacturing Index increased 2.9% to 53.1% in January, showing expansion for the second consecutive month. A reading above 50% indicates that the manufacturing economy is generally expanding. The Non-Manufacturing Report for January was 55.2%, 0.5% lower than the 55.7% registered in December but still indicating continued growth.

In January, retail and food services sales adjusted for seasonal variations were $416.6 billion, an increase of 0.1% from December 2012 and 4.4% above January 2012. November 2012 through January 2013 sales were up 4.5% from the same period a year ago.

Privately owned housing starts in January of 890,000 were 8.5% below the revised December estimate of 973,000 and were 23.6% above the January 2012 rate of 720,000. Single family housing starts in January were at a rate of 613,000 or 0.8% above the revised December figure of 608,000. New home sales increased 15.6% in January to a seasonally adjusted annual rate of 437,000. This was 28.9% above the January 2012 estimate of 339,000.

The National Association of Realtors reported that sales of existing homes rose in January and left the supply of homes at its lowest level in 13 years. This was taken as a sign that steam is gathering in the US housing market. Sales of existing homes rose 0.4% in January to a seasonally adjusted annual rate of 4,920,000 units. The national median existing home prices rose in January, up 12.3% from a year earlier.

New orders for manufactured durable goods in January decreased $11.8 billion or 5.2% to $217 billion. This followed four consecutive monthly increases.

January unfilled orders for manufactured durable goods decreased $2.1 billion or 0.2% to $989.2 billion. This followed four consecutive monthly increases.

Consumer Price Index for all urban consumers was unchanged 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. The energy index fell 1.7% in January, but other indices such as food and shelter increased, resulting in the all items index being unchanged. However, the gasoline index was on its way up in February.

The Producer Price Index for finished goods increased 0.2% in January, seasonally adjusted, following a decrease of 0.3% in December and 0.4% in November. On an unadjusted basis, prices for finished goods increased 1.4 % for the twelve months ended in January 2013.

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

Inflation: Inflation rate in January reported at 1.6%. The December rate was 1.7%, November rate was 1.8%. The October rate was 2.2%, September rate was 2.0% and the August rate was 1.7%. The average rate was 2.1% was reported for 2012. It is expected to rise slightly in 2013 to approximately 2.3%.

Industrial production decreased 0.1% in January, after having risen 0.4% in December. At 98.6% of its 2007 average, total industrial production in January was 2.1% above its year-earlier level. Capacity utilization rate for total industry decreased to 79.1%, a rate1.1% below its 1972 – 2012 average.

Unemployment: The January 2013 rate was essentially unchanged at 7.9% as reported by the Bureau of Labor Statistics. The number of unemployed persons increased 157,000 to12.3 million. The BLS stated that the long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.7 million. Those individuals accounted for 38.1% of the unemployed. North Dakota continued to lead the nation with the lowest state unemployment rate in December of 3.2%; Nevada and Rhode Island were both reported highest at 10.8%. The Federal Reserve announced on December 20 that it would hold interest rates near zero until it hit the target of 6.5% unemployment.

The goods and services deficit was $540.4 billion in 2012, down from $559.9 billion in 2011. As a percentage of US gross domestic product, the goods and services deficit was 3.4% in 2012, down from 3.7% in 2011. Both imports and exports increased during the year.

Crude Oil: Present WTI spot price ~$93 – 96/bbl, compared to ~$100+/bbl a year earlier.  OPEC has reduced production and that isn’t likely to change short term. OPEC outlook shows a reduction in demand.

Natural Gas:  Henry Hub spot price closed on February 22 at $3.34/MMBTU.  February 2013 contract reported at $3.28/MMBTU. Working natural gas in storage is lower than last year and remains above the five year average

The US dollar trading at 92.5 Japanese yen; $1.31 = euro. The British pound sterling = $1.52. Canadian dollar trading at US$1.03.

Current US gold price quoted at $1595.00/ounce compared to the record price of $1920/ounce in September, 2011.

Employment Optimism and

the New Era of Social Media

By: Nick Roach CEO, The Chemical Company

The Dow’s all time high was on October 9th of 2007. That day the stock market index closed at 14,164. What happened shortly after is not something we would like to relive. Yet it is fantastic that we have slowly climbed back and are now close to the pre- recession levels. With this recovery stock investment has grown, our 401K accounts look better, home sales are improving and it gives hope for an eventual recovery. There are indicators that 2013 could possibly be the year that we break the 14,164 barrier and surpass our all-time high. We hope this is true because it would be a huge psychological boost for all American’s.

In addition to an improving economy many of us “older folks” have continued our employment out of fear. If there is recovery we may take the bold step into retirement. This will open up advancement within companies and opportunity for replacement workers. Companies are looking for chemical engineers, chemists, sales staff, and other educated individuals. It is our belief that these educated individuals should be capable of finding jobs and will have choices.

But…. Something that isn’t discussed is the change brought on by the extensive record keeping thanks to computers and the internet. Your past life is recorded on the internet in many ways and if you have a criminal record of any kind it will be discovered by your potential employer. There is Facebook, Twitter, Instagram, Google+, Etc. where for some individuals every living breath is recorded by choice. Personnel departments are using social media when investigating any potential employee and unfortunately some individuals have developed a record on line that makes them unemployable. If you are looking for a job, remember that your online post of one tasteless picture or one misjudged statement can make you unemployable.

The Chemical Company
P.O. Box 436
19
Narragansett Avenue
Jamestown, Rhode Island 02835
Phone: 1(401) 423-3100
www.thechemco.com
info@thechemco.com

 

Quote of the Month:

“You never fail until you stop trying.”

– Albert Einstein, quoted in The Cincinnati Enquirer

In 2013 The Chemical Company is celebrating our 25^th year in business and looking forward to 25 more!

 

 

Upcoming Events

Come see us at Booth #2400!

 

2013 AFPM International Petrochemical Conference March 24-26 Grand Hyatt San Antonio, TX

 

Connect with TheChemCo!

The Chemical Company Downloadable Brochures:

The Chemical Company Brochure
TCC Plasticizers and Plastics Additives
Iron Oxides
Composites
Flame Retardants

 

Product News

Adipic Acid: 25 Kg., 500 Kg. and 1,000 Kg. Bags (In Stock and Available Now!)

NatureFlexx 509: Phthalate Free General Purpose Plasticizer. Available in Totes (2200 lbs.) and Drums. (In stock and immediately avail.)

Malic Acid: 25 Kg. Bags (In Stock and Available Now!)

Vestinol 9 DINP: TCC offers bulk trucks and split loads (w/ eso or dop) of DINP to North America.

Zinc Borate: TCC now offers Zinc Borate in 25 Kg. Bags in stock and immediately available.

 

 

Products In Transit/ Available Soon

Bio- Succinic Acid: 2000 lb. supersacks and 25 Kg. Bags (Available Q1 2013)

Dicyclopentadiene: Isocontainers

 

New/ Updated Technical Information:

Ammonium Carbonate

Castor Oils

ChemFlexx TOTM

Fish Oils

Melamine

Succinic Acid

Urea

 

Please contact Robb Roach at robb@thechemco.com or call (401) 423- 3100 for more information.

We appreciate your taking the time to review this newsletter. We welcome your comments as well as contributions regarding our readers’ company/industry activities. Please send them to Robb Roach at Robb@thechemco.com

*Please note that all products are now in alphabetical order and many products are linked to their own information page.

CRITICAL RAW MATERIALS MARKETS

 Check the real-time commodities tracker at www.thechemco.com for up to the minute info.

Benzene: U.S. benzene contracts for February settled down $.36/ gallon to US$4.80/ gallon from US$5.16/ gallon in January. Spot prices are in the $4.70- $4.80/ gallon range.

N Butane: Normal Butane prices are trading in the low US$1.60’s per gallon compared to the $1.70’s per gallon in January.

Ethylene: U.S. Contract Price for January settled higher by $.035/ lb. to $.48/ lb. Current spot is in the low to mid $.60’s due to strong demand. We expect a significant increase for February. Inventories expected to bottom in April. Pricing will remain firm until then.

Natural Gas: Natural Gas pricing has been moving lower since late November and continues to do so. Pricing eclipsed the $4.00/ mmbtu price point in Mid- November before it’s steady migration lower over the last 3 months. Current pricing is in the $3.20’s/ mmbtu.

Oil: Current WTI Crude price is at US$97+/- per barrel range. ICE Brent is in the US$116- $118 +/- per barrel range. Prices have been trending higher since mid- December 2012.

Orthoxylene: January contracts settled up $.06/ lb. to $.715/ lb. February announcements are for a $.02/ lb. increase but has not yet settled. Consumers are looking for a rollover in light of lower mixed xylene prices.

Propylene: Contract pricing for January settled up a dramatic $.15/ lb. to $.73/ lb. for Polymer Grade and $.715/ lb. for Chemical Grade. February will increase $.06/ lb. to $.79/ lb. for Polymer Grade and $.775/ lb. for Chemical Grade.

 

CHEMICALS MARKETS

Adipic Acid

Adipic Acid pricing has increased on higher Benzene pricing with good demand. Also, it is reported that a U.S. producer has had manufacturing issues and this has put some pressure on domestic supply. TCC has Adipic Acid in stock and immediately available in 1,000 Kg. Sacks, 500 Kg. Sacks and 25 Kg. bags.

For more information please contact Robb Roach at robb@thechemco.com

 

Ammonia

January pricing in Tampa decreased US$12/met. ton from December($685/ ton C&F) to US $673/ met. ton C&F. February saw a further decrease of US$18/ met. ton to the current $655/ met. ton. NOLA is currently at $640/ ton fob down from $685/ ton.

For more information please contact Robb Roach at robb@thechemco.com

 

Ammonium Nitrate

Ammonium Nitrate pricing will increase $25/ ton. In Feb. Seasonal demand is picking up and ammonia prices have been inflated.

For more information please contact AJ Petrarca aj@thechemco.com

 

Antimony Trioxide

Demand for antimony trioxide remains weak and good availability from South America and China are keeping prices flat. Current offers are in the upper $4.00/ lb. range for full truckloads. Buyers continue to keep inventories to a minimum and use alternate chemistries where possible.

For more information please contact AJ Petrarca aj@thechemco.com

 

Dicyandiamide

Prices are stable. We are keeping a close eye on energy demand and pricing for Q1 2013. Prices are expected to climb as energy demand picks up after the Lunar New Year. The Chemical Company has both bulk bags and sacks in stock and immediately available.

For more information please contact AJ Petrarca aj@thechemco.com.

 

Epoxidized Soybean Oil

Soybean prices have been steady, check www.thechemco.com for real time soybean pricing on our commodities ticker. Epoxidized Soybean Oil Supply is healthy keeping prices stable.

For more information please contact Robb Roach at robb@thechemco.com

 

Fumaric Acid

Fumaric Acid Pricing has stabilized and availability on both domestic and imported material is good.

For more information please contact AJ Petrarca aj@thechemco.com.

 

Glycol (Mono, Di and Tri):

Ethylene: U.S. Contract Price for January increased by by $.035 /lb. to $.48/ lb. Spot has shot up to $.67/ lb.

MEG: U.S. producers have announced a 3-4 cts/ lb. increase for February. Spot prices are in the low- $.50’s fob Gulf. Availability is good but producers have entered the spot market. Turnarounds have begun and are expected to continue into summer. Ethylene pricing and turnarounds will likely push spot prices higher and crimp availability.

DEG: U.S. producers have announced increases ranging from 2-5 cts./ lb. for February. Spot prices are in the mid $.50’s per lb. fob Gulf with good availability. We expect higher prices in the coming months due to ethylene pricing and turnarounds.

TEG: U.S. producers announced no price change for February on low demand and increased pressure from imports. Spot pricing is lower and in the $1.00/ lb. range to meet the import offers.

For more information please contact Robb Roach at robb@thechemco.com

 

Isophthalic Acid

PIA pricing has been level for January and February of 2013. Demand is good and supply healthy. Underlying raw material pricing will likely pressure prices in the coming months.

For more information please contact Robb Roach at robb@thechemco.com

 

Maleic Anhydride

Producers have announced no price change for February due to good availability and lower butane pricing. Molten supply is balanced to long in North America. Briquette pricing on the other hand has moved up with limited supply and higher prices from Asia.

For more information please contact AJ Petrarca aj@thechemco.com.

 

Melamine

Melamine supply has tightened considerably but could be improving. Price increases of $.05- $.08/ lb. were announce for Q1 2013. Supply and Demand is the most recent driver of pricing.

For more information please contact Javier Fernandez Javier@thechemco.com

 

Malic Acid

Malic Acid Pricing has stabilized and availability on both domestic and imported material is good. TCC has Malic Acid in stock and available.

For more information please contact AJ Petrarca aj@thechemco.com

 

Methanol

The Methanex Non-Discounted Reference Price for February will remain unchanged at US$1.45/ gallon (Southern rolled over at $1.46/ gallon). Spot pricing is currently approx. US$1.27- $1.29/ gal. and trending up.

For more information please contact Robb Roach at robb@thechemco.com

Notes:

European Methanol prices pushing higher.

Gas Curtailment issues in Trinidad have improved.

Chinese Lunar New Year holiday is in full swing causing the typical two week lull in methanol trade. Prices have moved lower widening the gap between Asian methanol prices and those in Europe and the America’s.

 

Nitric Acid

Nitric Acid pricing is stable and availability is good.

For more information please contact Robb Roach at robb@thechemco.com

 

Phenolic Resins

Phenol pricing has shifted moderately lower on decreasing benzene values and less demand. Formaldehyde prices are stable.

For more information please contact John Santini at john@thechemco.com

 

Phthalic Anhydride

Phthalic Anhydride pricing increased by $.06/ lb. in February in line with the January orthoxylene price increase. Orthoxylene will roll over or increase slightly for February. Imports are available with some savings, pricing for imported PA can be a bargain when OX prices move up.

For more Information please contact Javier Fernandez at javier@thechemco.com

 

Plasticizers and Plasticizer Alcohols:

Plasticizer demand world-wide has dramatically improved with additional and continuing pricing pressure by the underlying aromatics costs. Two new increases were nominated by majors for January 15^th and February 1^st. Now a new increase has been announced for March 1, 2013. Ethylene and propylene pricing continue to move up pressuring PZ prices.

Plasticizer alcohol pricing had been stable with lack luster demand and healthy supply. Now, underlying raw material costs are pressuring price and demand has increased in Asia and worldwide. Prices have begun to increase and some linear alcohols are on sales control. There has been large capacity expansions completed in Asia and staggering growth slated for the future.

For more information please contact Forest Goodman at forest@thechemco.com

 

TCC Plasticizers available:

Note: Some plasticizers have limited availability. Please contact TCC for further details.

Non (ortho)- Phthalate:

ChemFlexx Dibenzoate Esters

ChemFlexx DiOctyl Succinate (DOSX)

“ChemFlexx NP 500” Non- Phthalate Replacement for General Purpose Plasticizers

“ChemFlexx NP 600” Non- Phthalate Replacement for DIDP

“NatureFlexx 509” Phthalate Free General Purpose (ATBC)

Epoxidized Soybean Oil

ChemFlexx TOTM (TriOctyl Trimellitate)

ChemFlexx DOA (DiOctyl Adipate)

ChemFlexx 8 10 Trimellitate

ChemFlexx DOTP (DiOctyl Terephthalate)

Oxsoft 3G8 (Triethylenglycol-di-(2-ethylhexanoate))

Oxsoft DUO 1

Oxsoft DUO 2

 

Phthalate:

Vestinol 9 DiIsononyl Phthalate (DINP)

“ChemFlexx 206” Functional Linear Phthalate Replacement

“ChemFlexx 208” Low Temp Functional Linear Phthalate Replacement

ChemFlexx DOP (DiOctyl Phthalate)

ChemFlexx DUP (DiUndecyl Phthalate)

DMP (DiMethyl Phthalate)

Brominated DOP

ChemFlexx 9 11 Phthalate

ChemFlexx L9 Phthalate

 

Styrene monomer

Styrene pricing decreased slightly for February in line with lower benzene values (down $.36/ gallon). NA demand remains slow. We expect styrene prices to remain stable to slightly down in March.

For more information please contact Robb Roach at robb@thechemco.com

 

Urea

Current granular barge pricing is US$425 – $429/ ton and firm. Prills are also $415- $420/ ton fob Gulf. The firming of pricing is associated with a seasonal uptick in demand as well as higher international pricing. Increased pricing should continue into March and beyond.

For more information please contact Robb Roach at robb@thechemco.com

Notes:

Most fertilizer combinations are produced now well ahead of the Spring demand season.

96 Million acres of Corn expected for 2013.

 

Zinc Borate

Pricing has been steady. Product is in stock and immediately available.

For more information please contact Robb Roach at robb@thechemco.com

For more information on these or any of the products and services provided by TCC please contact Robb Roach directly at Robb@thechemco.com or go to our web site at www.thechemco.com

A Gallup Poll conducted on January 7 – 10, just after Washington narrowly avoided the fiscal cliff knocked unemployment off the top of Gallup’s “most important problem” list for the first time since 2009. Federal budget deficit and government dysfunction took over the top spots.

The Congressional Budget Office reported that the federal government incurred a budget deficit of $293 billion for the first three months of the fiscal year 2013 (that is, October through December 2012), $29 billion less than the shortfall recorded in the first quarter of last fiscal year. The US Treasury Department reported that on January 27, 2013 the federal debt was $16.44 trillion. It was $5.7 trillion in 2001.

The White House has informed House Budget Committee Chairman Paul Ryan that it will miss the legal deadline of February 4 for sending a budget to Congress. The Senate last passed a budget resolution in 2009.

The $787 billion economic stimulus legislation mandated quarterly status reports. Fourteen should have been released by now; eight have been issued, the last one covering the period ending in June 2011. The last report stated that for every $317,000 spent, one job was created or saved.

The US government debt held by foreign entities is a record $5.5 trillion, with China holding $1.17 trillion of it, or slightly more than 21% 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, although Chinese holdings are down 6.7% year over year. Japan is a close second, holding $1.13 billion.

The Bureau of Economic Analysis advance estimate of the fourth quarter 2012 Gross Domestic Product showed a decrease of 0.1% at an annual rate that is from the third quarter to the fourth quarter. 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 rate of .05% or $18 billion in the fourth quarter to a level of $15,829 .0 billion. In the third quarter current dollar GDP increased 5.9% or $225.4 billion.

The Conference Board’s Leading Economic Index rose 0.5% in December to 93.9 (2004=100) following no change in November and a 0.3% increase in October.

The Conference Board Consumer Confidence Index which had decreased slightly in November, contrary to earlier estimates of improvement, posted another decrease in December. It stands at 65.1 (1985=100) down from an adjusted 71.5 in November.

The Institute for Supply Management’s Manufacturing Index increased 1.2% to 50.7% in December after contracting in November following two months of modest growth. A reading above 50% indicates that the manufacturing economy is generally expanding. The Non-Manufacturing Report for December was 56.1%, 1.45% higher than the 54.7% registered in November and still indicating continued growth.

In December, retail and food services sales adjusted for seasonal variations were $415.7 billion, an increase of 0.5% from November and 4.7% above November 2011. Total sales for the twelve months of 2012 were up 5.2% from 2011. October through December 2012 sales were up 4.2% from the same period a year ago.
The 2012 US holiday season may have been the worst for retailers since 2008, with sales growth far below expectations. One bright spot was online sales, which continue to grow rapidly.

Privately owned housing starts in December of 954,000 were 12.1% above the revised November estimate of 851,000 and were 36.9% above the December 2011 rate of 697,000. Single family housing starts in December were at a rate of 616,000 or 8.1% above the revised November figure of 570,000. New home sales declined 7.3% in December, to a seasonally adjusted annual rate of 369,000, while November’s sales pace was revised to 398,000. This was 8.8% above the December 2011 estimate of 339,000.

The National Association of Realtors reported that sales of existing homes in 2012 rose to the highest level in five years as prices also gained. Sales of existing homes declined 1% in December to a seasonally adjusted annual rate of 4.94 million but were up 9.2% from 2011. The national median existing home prices rose in December, up 11.5% from a year earlier. The average rate for a thirty year fixed mortgage fell to 3.38% in the week ending January 17. The association has reported that non-American buyers accounted for $82 billion in home sales last year. More than $7 billion of that is by the Chinese, who are the second largest foreign home buyers after Canadians. The Chinese purchase high-end multimillion dollar homes and pay cash.
New orders for manufactured durable goods in December, up seven of the last eight months, increased $10.0 billion or 4.6% to $230.7 billion. This followed a 0.7% November increase.

December unfilled orders for manufactured durable goods, up six of the last seven months, increased $8.2 billion or 0.8% to $992.0 billion. This followed a slight November increase.

Consumer Price Index for all urban consumers was unchanged 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 1.7 % before seasonal adjustments. The gasoline index fell 2.3% in December, but other indices such as food and shelter increased, resulting in the all items index being unchanged.

The Producer Price Index for finished goods declined 0.2% in December, seasonally adjusted, following a decrease of 0.8% in November and 0.2% in October. On an unadjusted basis, prices for finished goods increased 1.3 % in 2012, compared with a 4.7% increase in 2011.

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

Inflation: Inflation rate in December reported at 1.7%. The November rate was 1.8%. The October rate was 2.2%, September rate was 2.0% and the August rate was 1.7%. Average rate of 2.0% is projected for 2012. It is expected to rise slightly in 2013 to approximately 2.3%.

Industrial production increased 0.3% in December, after having risen 1.0% in November, declined 0.7% in October, increased 0.2% in September, and fallen 1.4% in August. The gain in November is estimated by the Federal Reserve to have largely resulted as recovery from Hurricane Sandy. At 98.1% of its 2007 average, total industrial production in December was 2.2% above its year-earlier level. Capacity utilization for total industry increased 0.1% to 78.8%, a rate1.8% below its 1972 – 2011 average.

Unemployment: The December 2012 rate edged back up to 7.7% as reported by the Bureau of Labor Statistics. This has basically been the same level since September. The number of unemployed persons changed little at 12.2 million. The BLS stated that the long-term unemployed, i.e., jobless for 27 weeks and over was essentially unchanged at 4.8 million. Those individuals accounted for 39.1% of the unemployed. North Dakota continued to lead the nation with the lowest state unemployment rate in December of 3.2%; Nevada and Rhode Island were both reported highest at 10.8%. The Federal Reserve announced on December 20 that it would hold interest rates near zero until it hit the target of 6.5% unemployment. As of January 17, The President’s Council on Jobs and Competitiveness had not held a meeting for a year.

The decline in union membership continued in 2012. The BLS reported that the total number of union members fell by 400,000 to 14.3 million, although the nation’s overall employment rose by 2.4 million. The percentage of workers in unions fell to 11.3%, down from 11.8% in 2011.

Trade Deficit: For November 2012 the goods and services deficit increased to $48.7 billion from the October figure of $42.1 billion as imports increased more than exports.

Crude Oil: Present WTI spot price ~$95/bbl and holding, compared to ~$90+/bbl a year earlier. OPEC has reported that world oil demand is expected to decline in 2013 and has reduced production.

Natural Gas: Henry Hub spot price closed on January 22 at $3.53/MMBTU. February 2013 contract reported at $3.55/MMBTU. Working natural gas in storage is greater than last year and remains above the five year average

The US dollar trading at 91.0 Japanese yen; $1.35 = euro. The British pound sterling = $1.58. Canadian dollar trading at US$1.006

Current US gold price quoted at $1657.00/ounce compared to the record price of $1920/ounce in September, 2011.

The American Chemistry Council (ACC) US Chemical Production Index rose by 0.3% in December following a revised 0.1% increase in November. Chemical production rose in all regions for the first time since February 2012. Comparing the entire year 2012 to 2011, chemical production was up 0.2% nationally. Year to year comparisons remained ahead in the Gulf Coast and Ohio Valley regions, strengthened by shale gas advantage. The outlook for 2013 is sluggish, with increase of 1.9%

The ACC’s Chemical Activity Barometer (CAB), for January showed sustained growth, with a 0.4% gain over December 2012. The year over year monthly moving average showed an increase of 2.8% gain compared with January 2012. The chemicals industry generated about $760 billion last year. The ACC reported that 96% of manufactured goods are touched by products of chemistry.

Germany’s Evonik announced on January 11 that it will be expanding output of C-4 based products, including butadiene, methyl tertiary butyl ether, and 1-butene at its plants in Belgium and Germany. The increased capacity is expected to come on stream in 2015. Evonik signed a letter of intent with PETRONAS (Malaysia) in order to cooperate in the production of hydrogen peroxide, C-4 monomer and OXO products. Also included is an isononyl alcohol (INA) plant with a projected volume of 220KT/year expected on line in 2016.

According to a poll conducted by the British manufacturers’ association EEF, many European manufacturers are still unclear of how the Registration, Evaluation, and Restriction of Chemical Substances (REACH) program affects their operations.

Following with Georgia Gulf Corporation’s pending merger with PPG, the company will be known as Axiall Corporation. The merger between Georgia Gulf and PPG’s commodity chemicals business was announced in July. The value of the transaction is estimated by the parties at $2.1 billion.

PPG has acquired the assets of Spraylat Corp., a manufacturer of industrial powder and liquid coatings based in Pelham, NY. The price was not disclosed.

Clariant agreed to sell their textile chemicals, paper specialties, and emulsions businesses to SK Capital Partners for 502 million Swiss francs ($550 million). The deal is expected to be completed by late June.

The ACC is challenging a New York University School of Medicine study that links bisphenol A (BPA) exposure to increased risk of heart and kidney disease. The ACC statement cited that regulators in Japan, Europe, and the US have repeatedly supported the continued safe use of BPA.

 
 
Ford Motor Co. has expanded its car parts recycling program, and has found ways to reuse approximately 62,000 bumpers and 26,000 headlights in the past two years. Headlights normally include a number of polycarbonates and other plastics.

In a Chemical Watch survey, nearly 60% of companies expect increased regulatory compliance activities as tighter rules demand increasing attention to chemical management. Not only TSCA, but also Europe’s REACH program must be considered.

On January 4, the EPA released drafts of the first five of 83 chemical risk assessments it is planning to conduct in order to determine whether it should regulate the substances under TSCA. The EPA has updated regulations for industrial boilers that are aimed at reducing emissions of acid gases, mercury, and fine particulates. The agency estimated that the ruling will cost US manufacturers, chemical facilities, and oil refineries between $1.3 and $1.5 billion each year. The new standards will not take effect until 2016.

The ACC and other groups are working with Sen. David Vitter, R-LA, on possible legislation to reform TSCA. Sen. Vitter is the lead Republican on the Environment and Public Works committee.
US chlor-alkali operating rate for December was reported at 81% of capacity, up 4% from November.
The fourth quarter GDP in Great Britain shrank 0.3% and was seen as leading to a triple-dip recession.

The International Monetary Fund (IMF) Managing Director, Christine Lagarde, was recently quoted as saying that nations need to press forward with fiscal and reform promises, especially in Europe and the US.

Unemployment in the eurozone rose to a new record high of 11.8% in November, up from 10.4% a year earlier. Spain was reported at 27%, the highest rate in the EU. Retail sales rose just 0.1% in November, and were 2.6% lower than November 2011.

The German economy registered a contraction in the fourth quarter of 2012. It expanded 0.7% for the year, but gross domestic product was estimated to have dropped by 0.5% in the fourth quarter. Investment in machinery and equipment was down 4.4% in 2012, while construction investment was down 1.1%.
China’s export growth in December moved upward sharply to a seven month high after seven straight months of slowdown.

Chinese manufacturing unexpectedly expanded at its fastest pace in 19 months in December, creating optimism that recovery of the Chinese economy is gaining.

The Association of American Railroads announced that mixed carload traffic on major US railroads for the week ending 1/19/13 5 declined 3.5% year over year. Intermodal volume was up 13.5% compared with the same week last year.

The ACC along with other shipper groups, recently urged the Surface Transportation Board to adopt policies that promote an economically strong freight rail system by encouraging competition.

 
The American Trucking Association reported that for-hire truck tonnage increased 2.8% in December, and 3.9% in November. For all of 2012, tonnage was up 2.3%.

Shale oil and gas-related:

Private landowners are receiving billions of dollars in royalties each year from the boom in natural gas drilling. In Pennsylvania, royalty payments could exceed $1.2 billion for 2012, according to an Associated Press analysis. The National Association of Royalty Owners estimates that natural gas royalties totaled $21 billion in 2010, the last year for which it has full analysis.

Petrochemical industry representatives met in Pittsburgh early in January to discuss how their industry can capitalize on natural gas and improved manufacturing options. Pittsburgh-based Bayer MaterialScience is examining methane use for producing chemical building blocks. Other participants included Shell Chemical, which is considering constructing an ethane cracker in the commonwealth, and ExxonMobil Chemical.
The complete development of the Marcellus and Utica shale formations could add more than $10 trillion in new economic activity according to a report from Kroll Bond Rating Agency.

 

THE CHEMICAL COMPANY

“The View from Jamestown”
Product News, December 2012

A Special Message

 On a beautiful New England Winter morning in mid December 2012 evil was in Newtown, CT. There were gentle, happy, harmless children and smart, brave and kind adults sacrificed. They were violently thrust into the hands of God. Our thoughts and prayers have been with those sacrificed and their friends and families.

As we enjoy the Christmas Holiday and the New Year we have all been shocked by these tragic deaths. This event has been thought provoking on many, many levels. Such tragic events usually bring a swift political reaction. We can only hope that any new legislation is well thought out, addresses the issues of mental health and guns, and is not just reactive. We need to protect children and the innocent. This is an obligation not an option. Yet we need to do it through debate and insight, we can’t get this wrong.

The Chemical Company has been proactive about the needs of children for decades. TCC supports each and every employee to sponsor a child at an orphanage in El Salvador. Our support helps them to enjoy the basics of food and clothing that unfortunately we in our lives take for granted. We are able to communicate with the children and see the progress that our money provides. We don’t care about the politics of the country because our money goes to the children and ignoring the problem and letting children suffer just isn’t fair. We love helping these children.

So in memory of all these lovely children and dedicated teachers who died a miserable death, let’s move forward from this tragedy. Let’s start to address all the issues relating to children as loving and caring adults. Let’s try our hardest to protect all children. If the government can’t do it, lets try personally. If we all react and do something positive for children because of the thoughts brought on by this tragedy, this loss may have at least one positive result.

Contact:
The Chemical Company
P.O. Box 436
19 Narragansett Ave.
Jamestown, RI 02835
Phone: (401) 423-3100
Website: www.thechemco.com
Email: Info@thechemco.com

Chemical Industry News – December 2012

“The View from Jamestown”
A MARKET UPDATE

From the Wall Street Journal:

A new round of negotiations has been scheduled in the dispute between shipping companies and dock workers at ports along the East Coast.

Federal mediators announced the new talks on Thursday. They are scheduled for the week of Sept. 17.The longshoremen’s contract expires at the end of September, and some retailers have already begun re-routing ships in anticipation of a possible strike.

Key issues in the labor dispute include overtime rules and royalty payments to longshoremen based on container weight.The U.S. Maritime Alliance, which represents shippers, says union members are taking advantage of loose overtime rules and driving up shipping costs. The longshoremen’s union says a small minority are being singled out to unfairly characterize the whole membership.

 

Chemical Industry News

The American Chemistry Council (ACC) US Chemical Production Index rose by 0.2% in October following an upwardly revised 0.3% increase in September. Chemical production rose in all regions except the Mid-Atlantic, Northeast, and West Coast, which declined. Compared to October 2011, total production in all regions was down by 0.2%, following a 0.2% decline in September. Comparing revised figures for the first nine months of 2012 with the same period a year ago, chemical production was up 0.1% nationally with only the Ohio Valley region ahead on a year-to-date basis.

The ACC’s Chemical Activity Barometer (CAB,) for December showed no change over the last month. This followed four consecutive monthly increases in the CAB. The chemicals industry generated about $760 billion last year. The ACC reported that 96% of manufactured goods are touched by chemistry.

The ACC will issue updated Responsible Care product and safety codes next year. Sven Ryall, chair of the Responsible Care board committee stated that they were moving forward rather than waiting for government action.

The president of the European Chemistry Council recently stated that Europe’s Registration, Evaluation, and Restriction of Chemical Substances (REACH) program threatens competitiveness by diverting resources from innovative research.

DuPont has begun to focus more on its food and agriculture products, while reducing emphasis on its paint business. More than a third of the company’s profit last year came from paint ingredient titanium dioxide (TiO2), and demand can be volatile. DuPont has invested heavily in the seed business, encountering stiff competition from Monsanto.

Mexichem will no longer pursue a proposed joint venture with Petroleos Mexicanos (Pemex) that would have expanded capacity at a Pemex vinyl chloride monomer plant.

PPG Industries expects to finalize early in 2013 the merger of its spun-off chemicals business with Georgia Gulf. Georgia Gulf CEO Paul Carrico credited low cost natural gas with giving Gulf Coast choro-vinyls a strong market position.

Starting in 2013, bio-based fuel will help power three Dow Automotive Systems plants in Midland, MI. This is expected to reduce CO2 emissions by as much as 8,000 MT/year.

Louisiana is granting Sasol more than $135 million in incentives to build an ethane cracker in the state. It was reported that the package included tax incentives, property funding, and worker training. The project is expected to generate 1250 permanent jobs.

The long-expected EPA standards for soot emissions were released on December 14. They tighten limits on soot pollution from sources as varied as power plants, diesel engines, and burning wood. The new standards limit annual average soot emissions by the end of the decade. Individual states will be responsible for deciding how to cut emissions of the fine particulates.

The Occupational Safety and Health Administration (OSHA) will use sets of 15 questions in process safety assessments for chemical facilities. The questions will vary and will not be available to the public.

A federal appeals court on December 20 rejected an industry-backed request that it reconsider its decision to uphold Obama administration greenhouse gas regulations.

Sabic will open four technology centers in 2013, one each in India and China and two in Saudi Arabia.

US chlor-alkali operating rate for November was reported at 83% of capacity, up 3% from October.

On December 14 President Obama signed into law a bill to remove Cold War era restrictions on trade with Russia and to establish permanent normal trade relations with Moscow. The action became necessary after Russia joined the World Trade Organization.

In a move towards “insourcing,” a number of companies are moving the manufacture of many products back to the US. GE, Whirlpool and Otis have moved offshore manufacturing back to this country. Even Wham-O is bringing Frisbee making from China to California.

The third quarter GDP growth in Great Britain was recently revised to 0.9% from a previous estimate of 1.0%

Unemployment in the eurozone rose to a new record high of 11.7% in October, up from 10.4% a year earlier. Spain was reported at 26.2%. The lowest unemployment rates were recorded in Austria (4.3%), Luxembourg (5.2%), Germany and the Netherlands (5.4%).

China has announced the completion of the world’s longest high-speed rail line, a stretch of 2,298 kilometers (1,428 miles.) The new line will help China to reach its goal of having 18,000 kilometers of high speed railway by 2015.

China’s export growth in November slowed to a much lower than expected 2.9%, to $179.38 from $177.5 billion. A record monthly level of $186.4 billion was reported in September.

Chinese manufacturing accelerated in November as a non-official index jumped to a 13 month high, indicating that the Chinese economy gained momentum.

A Chinese group, International Lease Finance Corp, purchased 80.1% of American International Group Inc. (AIG)’s plane leasing operation for $4.23 billion. This is the nation’s largest acquisition of a US company.

The Association of American Railroads announced that mixed carload traffic on major US railroads for the week ending 12/15 declined 3.8% year over year. Intermodal volume was up 8% compared with the same week last year.

The American Trucking Association reported that tonnage increased 3.7% in November, after falling 3.7% in October. Year-to-date, tonnage was up 2.8% compared with the same period last year.

Environment, Health, Safety and Sustainability

Shale Oil and Gas-related:

Dow Chemical Co. applied for a federal permit to build the company’s biggest ethylene plant, driven by low cost natural gas. The proposed cracker, to be built in Freeport, TX would have annual capacity of 1.5 million tons/year. Construction is estimated to begin in January 2014 at a total cost of $1.7 billion, with start-up in 2017.

New York Governor Andrew Cuomo’s administration will delay a decision on whether to overturn a four year ban on hydraulic fracturing (fracking.) The Department of Environmental Conservation (DEC) filed a notice for a 90 day extension.

The first barrel of ethane from the Bakken field will go to Nova Chemicals’ Joffre, Alberta facility to be converted to polyurethane next year.

There are huge shale deposits outside North America that global energy companies want to tap. However, developers are running into obstacles as they try to reproduce the US experience. Among the reasons for the slow pace are government ownership of mineral rights, lack of infrastructure, and environmental concerns.

The Economy:

      According to an article in The Washington Post, if President Obama and the Congress fail to reach a deal to avoid hundreds of billions of dollars of tax hikes and federal spending cuts,(the “fiscal cliff”) many Americans will see less money in their paychecks in the first week of the New Year.

      The Congressional Budget Office reported that the federal government incurred a budget deficit of $292 billion for the first two months of the fiscal year 2013, $57 billion more than the number recorded in October and November of last year. The US Treasury Department reported that on December 24, the federal debt was $16.35 trillion. It was $5.7 trillion in 2001.

The US government debt held by foreign entities is a record $5.4 trillion, with China holding $1.15 trillion of it, or slightly more than 21% 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, although Chinese holdings are down 9% year over year. Japan is a close second.

The Bureau of Economic Analysis reported the advance estimate of third quarter 2012 Gross Domestic Product growth at a revised annual growth rate of 3.1%, that is, from the second quarter to the third quarter. 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 rate of 5.9% or $225.4 billion in the third quarter to a level of $15,811.0 billion. In the second quarter current dollar GNP increased 2.8% or $107.3 billion.

The Conference Board’s Leading Economic Index declined 0.2% in November to 95.8 (2004=100) following a 0.3% increase in October and a 0.4% increase in September.

The Conference Board Consumer Confidence Index which had increased in October, improved again in November. It stands at 73.7 (1985=100) up from an adjusted 73.1 in October.

The Institute for Supply Management’s Manufacturing Index contracted in November following two months of modest growth. The index for November registered 49.5%, a decrease of 2.2% from October’s reading of 51.7%, indicating contraction in manufacturing for the fourth time in the last six months. A reading below 50% indicates that the manufacturing economy is generally retracting. The Non-Manufacturing Report for November was 54.7%, 0.5% higher than the 54.2% registered in October and still indicating continued growth.

In November, retail and food services sales adjusted for seasonal variations were $412.4 billion, an increase of 0.3% from October and 3.7% above November 2011. Total sales for the September through November 2012 period were up 4.3% from the same period a year ago.

“US holiday retail sales this year were the weakest since 2008. This year’s shopping season was disrupted by bad weather and consumers’ rising uncertainty about the economy.”

According to the trade group International Council of Shopping Centers, retail sales for the fiscal month of December will accelerate to 4.0 to 4.5%, keeping the holiday (November-December) forecast of 3% on track.

Privately owned housing starts in November of 861,000 were 3.0% below          the revised October estimate of 888,000 and were 21.6% above the November 2011 rate of 708,000. Single family housing starts in November were at a rate of 565,000 or 4.1% below the revised October figure of 589,000. New home sales fell 0.3% in October, to a seasonally adjusted annual rate of 368,000, while September’s sales pace was revised from 389,000 to 369,000. This was 17.2% above the October 2011 estimate of 314,000.

The National Association of Realtors reported that sales of existing homes increased 5.9% in November to a seasonally adjusted annual rate of 5.04 million from October’s adjusted level of 4.76 million, and are14.5% higher than the 4.4 million rate of November 2011. The national median existing home prices rose in November, up 10.1% from a year earlier. The association has reported that non-American buyers accounted for $82 billion in home sales last year. More than $7 billion of that is by the Chinese, who are the second largest foreign home buyers after Canadians. The Chinese purchase high-end multimillion dollar homes and pay cash.

New orders for manufactured durable goods in November, up six of the last seven months, increased $1.6 billion or 0.7% to $220.9 billion. This followed a 1.1% October increase.

November unfilled orders for manufactured durable goods, up for five of the last six months, increased $1.1 billion or 0.1% to $984.4 billion. This followed a 0.3% October increase.

Consumer Price Index for all urban consumers declined 0.3% in November on a seasonally adjusted basis, following an increase of 0.1% in October and a 0.6% increase in September. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 1.8 % before seasonal adjustments. The gasoline index fell 7.4% in November, which more than offset increases in other areas.

The Producer Price Index for finished goods declined 0.8% in November, seasonally adjusted, following a decrease of 0.2% in October, and an increase of 1.1% in September. On an unadjusted basis, prices for finished goods increased 1.5 % for the twelve months ended November 2012, the smallest advance since a 0.5% increase for the twelve month period ended July 2012.

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

Inflation: Inflation rate in November reported at 1.8%. The October rate was 2.2%, September rate was 2.0% and the August rate was 1.7%. Average rate of 2.0% is projected for 2012.

Industrial production increased 1.1% in November, after having declined 0.7% in October, increased 0.2% in September, and fallen 1.4% in August. The gain in November is estimated by the Federal Reserve to have largely resulted as recovery from Hurricane Sandy. The largest estimated storm-related effects included reductions in the output of utilities, chemicals, and food. At 96.6% of its 2007 average, total industrial production in October was 1.7% above its year-earlier level. Capacity utilization for total industry increased 0.7% to 78.4%, a rate1.9% below its 1972 – 2011 average.

Unemployment: The November 2012 rate edged down to 7.7% as reported by the Bureau of Labor Statistics. The number of unemployed persons changed little at 12.0 million. The BLS stated that the long-term unemployed, i.e., jobless for 27 weeks and over was little changed at 4.8 million. Those individuals accounted for 40.1% of the unemployed. North Dakota continued to lead the nation with the lowest state unemployment rate in October of 3.1%, and Nevada was again reported the highest at 10.8%. The Federal Reserve announced on December 20 that it would hold interest rates near zero until it hit the target of 6.5% unemployment.

Trade Deficit: For October 2012 the goods and services deficit increased to $42.2 billion from September figure of $40.3 billion as exports decreased more than imports.

Crude Oil: Present WTI spot price ~$87/bbl and holding, compared to ~$90+/bbl a year earlier.  OPEC has reported that world oil demand is expected to decline in 2013.

Natural Gas:  Henry Hub spot price closed on December 19 at $3.25/MMBTU. January 2013 contract reported up at $3.82/MMBTU. Working natural gas in storage is greater than last year and remains above the five year average

The US dollar trading at 84.7 Japanese yen; $1.32 = euro. The British pound sterling = $1.61. Canadian dollar trading at US$1.008

Current US gold price quoted at $1661.00/ounce compared to the record price of $1920/ounce in September, 2011.

 

 

TCC Downloadable Brochures:

 

 

 

The Chemical Company Brochure
TCC Plasticizers and Plastics Additives
Iron Oxides
Composites
Flame Retardants

 

Contact:
The Chemical Company
P.O. Box 436
19 Narragansett Ave.
Jamestown, RI 02835
Phone: (401) 423-3100
Website: www.thechemco.com
Email: Info@thechemco.com

“The View from Jamestown”

Chemical Industry News – November 2012

CHEMICAL INDUSTRY NEWS

The American Chemistry Council (ACC) US Chemical Production Index was flat in September following no growth in August. Chemical production fell in all regions except the Gulf Coast and the Ohio Valley regions, which posted gains. Compared to September 2011, total production in all regions was down by 0.5%, a worsening year-over-year comparison. Comparing the first nine months of 2012 with the same period a year ago, chemical production was up 0.2% nationally.

The ACC’s Chemical Activity Barometer (CAB,) for November showed a drop of 0.5% over the previous month. This followed four consecutive monthly increases in the CAB. The chemicals industry generated about $760 billion last year.

Cytec Industries will sell its coating resins subsidiary to private equity firm Advent International for $1.03 billion. Advent will assume $118 million of liabilities associated with the unit, bringing the total value of the deal to $1.15 billion. It is expected to close in the first quarter of 2013.

BASF, the world’s largest chemical company, is breaking up its plastics division and splitting the operations into consumer and commodity lines in order to help market tailored products to the automotive and apparel markets.

Methanex obtained federal and state environmental permits to relocate its Chilean methanol plant to Geismar, LA and to operate it. The move was initiated in order to take advantage of low cost natural gas.

The Department of Health and Human Services has asked a federal judge to dismiss the American Chemistry Council’s lawsuit which seeks to obtain disclosure of documents that explain how HHS staff decided to list formaldehyde in its most recent report on carcinogens. The ACC claims that HHS has ignored its requests through the Freedom of Information Act.

Jubail Chemicals Storage and Services, the joint venture of SABIC and Vopak, awarded the engineering and construction contract for its Saudi Arabian chemical terminal to China National Chemical Engineering. The $400 million facility will have an initial capacity of 250,000 cubic meters when completed in 2015.

US chlor-alkali operating rate for October was reported at 80% of capacity, down 1% from September, down from the August rate of 86%.

The House of Representatives voted on November 16 to take a step toward normalizing trade relations with Russia, disposing of one of the last remains of cold war era policy. The US Senate is expected to pass the bill. A proviso is attached to the legislation that seeks to punish Russians who are involved in human rights abuses, so that the US could deny visas to Russian officials who are deemed abusers and freeze their assets. The Russian Foreign Ministry called the move “flagrantly unfriendly.”

Russian petrochemical producer Sibur and Belgium’s Solvay have agreed to form a joint venture for the production of surfactants and oilfield process chemicals in Russia. The company will be known as Ruspav and is expected to come on line in 2015.

More than a quarter of German companies have said that they would likely be cutting jobs in 2013. The Cologne Institute for Economic Research found that 30% of businesses said that their position was worse than the previous year.

German engineering giant Siemens is quitting its solar energy business in favor of wind and hydropower. Siemens will sell Solel Solar Systems, which it acquired for $418 million in 2009, and the photovoltaic business of its solar and hydro division.

Unemployment in the eurozone rose to a new high of 11.6% in the third quarter. Spain and Greece were reported at more than 25%. The lowest unemployment rates were recorded in Austria (4.4%), Luxembourg (5.2%), Germany and the Netherlands (5.4%). The UK rate was 7.9%

The EU failed to reach a seven year budget agreement at its Brussels summit in late November.

China’s exports decreased in October to $177.5 billion, from a record monthly level of $186.4 billion in September.

Chinese manufacturing accelerated in November as a non-official index jumped to a 13 month high, indicating that the Chinese economy gained momentum.

Following China Petrochemical Corp.’s (Sinopec) $1.5 billion investment in Canada’s Talisman Energy Inc. the state controlled Chinese company said it was already exploring ways to widen the partnership, emphasizing China’s eagerness to secure more energy resources. Sinopec owns 49% of UK North Sea oil and gas assets owned by Talisman.

The International Warehouse and Logistics Association has created a cross-border protocol for the warehousing of chemicals. It sets standards regarding best practices in the US and Canada.

Auto sales in China were up 6.4% in October, after a decrease of 0.3% in September and a September increase of 5.3%.

The Association of American Railroads announced that carload traffic on major US railroads for the week ending 11/17 declined 4.9% week to week, but was up 2.4% year over year.

The American Trucking Association reported that tonnage decreased 3.8% in October, after falling 0.4% in September. Year-to-date, tonnage was up 2.9% compared with the same period last year.

Shale Oil and Gas-related:

The International Energy Agency has stated that natural gas will overtake oil as the most-used fuel in the US by 2030 as supplies increase. The IEA foresees the US as an exporter starting in around 2018.

Senators Ron Wyden (D-Ore.) and Lisa Murkowski (R-AK) said that they plan to collaborate on a bill that would balance environmental protection, job generation and economic development spurred by the oil and natural gas boom.

Royal Dutch Shell anticipates spending over $20 billion on natural gas projects through 2015.

The CEO’s of Phillips 66 and Marathon Petroleum recently said that they expect President Obama’s second term to bring a wave of regulation on their industry. They cited that new and expanded federal regulations including the Renewable Fuel Standards and the Corporate Average Fuel Economy standards have cost their companies billions to date.

Former General Electric CEO Jack Welch told CNBC that the US hydrocarbons industry is poised to boom the way the internet sector did in the 1990’s, although regulations are preventing it from taking off.

Nick Vafiadis, global director of plastics for IHS Chemical recently stated that massive planned expansions for ethylene feedstock could lead to almost 15 billion pounds of lower cost polyethylene capacity in the US and Canada.

The natural gas industry has expressed frustration with New York State’s continuing review of hydraulic fracturing (fracking) with one trade group saying that its trust in state government has been exhausted. The Independent Oil and Gas Association of New York has sent a letter to Governor Andrew Cuomo urging that he have the Department of Environmental Conservation (DEC) release its long-awaited final report on large scale fracking and to move ahead with issuance of permits. The letter came in advance of a November 29 regulatory deadline, which if missed, would require the DEC to re-open its proposed regulations to public comment. The DEC report was first launched in July, 2008.

Occidental Chemical (OxyChem) has commissioned CB&I for the basic engineering design of a proposed cracker that will produce 1.2 billion lbs/year of ethylene. Feedstock will be from domestic shale gas.

THE ECONOMY

Federal Reserve Chairman Ben Bernanke said that an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth, while failure to avoid the so-called fiscal cliff would pose a “substantial threat” to the economy. Bernanke identified the threat of $607 billion in automatic tax increases and spending cuts scheduled to take place in 2013 as one of the impediments as companies hold back on hiring and investment.

      The Congressional Budget Office reported that the federal government incurred a budget deficit of $1.1 trillion for fiscal 2012, the fourth consecutive year with a deficit above $1.0 trillion. It was $207 billion less than the deficit recorded in fiscal 2011 because revenues rose by $147 billion while outlays dropped by $61 billion. The US Treasury Department reported that on November 24, the federal debt was $16.28 trillion. It was $5.7 trillion in 2001.

The US government debt held by foreign entities is a record $5.4 trillion, with China holding $1.16 trillion of it, or slightly more than 21% 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, with Japan a close second.

The Bureau of Economic Analysis reported the advance estimate of third quarter 2012 Gross Domestic Product growth at an annual growth rate of 2.0%, that is, from the second quarter to the third quarter. In the second quarter, real GDP increased 1.3%. In the fourth quarter of 2011, real GDP increased 3.0%. Current-dollar GDP, the market value of the nation’s output of goods and services, increased at a rate of 5.0% or $190.1 billion in the third quarter to a level of $15,775.7 billion. In the second quarter current dollar GNP increased 2.8%. or $107.3 billion.

The Conference Board’s Leading Economic Index increased 0.2% in October to 96.0 (2004=100) following a 0.5% increase in September and a 0.4% decrease in August.

The Conference Board Consumer Confidence Index which had increased in September, improved again in October. It stands at 72.2 (1985=100) up from an adjusted 68.4 in September.

The Institute for Supply Management’s Manufacturing Index expanded in October for the second consecutive month following three straight months of contraction. The index for October registered 51.7%, an increase of 0.2% from September’s reading of 51.5% indicating growth. A reading below 50% indicates that the manufacturing economy is generally retracting. The Non-Manufacturing Report for October was 54.2%, 0.9% lower than September’s 55.1%, but still indicating continued growth.

In October, retail and food services sales adjusted for seasonal variations were $411.6 billion, a decrease of 0.3% from September and 3.8% above October 2011. Total sales for the August through October 2012 period were up 4.7% from the same period a year ago.

According to the trade group International Council of Shopping Centers, major retailers reported robust post-Thanksgiving sales. Wal-Mart reported its best ever sales on “Black Friday.”

Privately owned housing starts in October of 894,000 were 3.6% above the revised September estimate of 863,000 and were 41.9% above the October 2011 rate of 630,000. Single family housing starts in October were at a rate of 594,000 or 0.2% below the revised September figure of 595,000. New home sales increased 5.7% in September, to a seasonally adjusted annual rate of 389,000, and were 27.1% above the September 2011 figure of 306,000. The Census Bureau adjusted estimate of new houses for sale at the end of September was 145,000, representing a supply of 4.5 months at current sales rates.

The National Association of Realtors reported that sales of existing homes increased 2.1% in October to a seasonally adjusted annual rate of 4.79 million from September’s adjusted level of 4.69 million. The national median existing home prices rose in October, up 11.1% from a year earlier.

US foreclosures and short sales accounted for 24% of October sales, unchanged from September. They were 28% in October 2011.

New orders for manufactured durable goods in September, up four of the last five months, increased $19.5 billion or 9.8% to $218.2 billion. This followed a 13.1% August decrease, which was the largest decrease since January 2009.

September unfilled orders for manufactured durable goods, up for three of the last four months, increased $1.7 billion or 0.2% to $981.0 billion. This followed a 1.7% August decrease.

Consumer Price Index for all urban consumers increased 0.1% in October on a seasonally adjusted basis, following a 0.6% increase in September. The US Bureau of Labor Statistics reported that over the last twelve months the all items index increased 2.2 % before seasonal adjustments. The shelter index rose 0.3%, its largest increase since March 2008. The energy index, which had risen sharply in August and September, declined slightly in October.

The Producer Price Index for finished goods declined 0.2% in October, seasonally adjusted, following an increase of 1.1% in September and 1.7% in August. On an unadjusted basis, prices for finished goods increased 2.3 % for the twelve months ended October 2012, the largest advance since a 2.8% increase for the twelve month period ended March 2012.

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

Inflation: Inflation rose in September by 2.2%. The September rate was 2.0% and the August rate was 1.7%. Average rate of 2.0% is projected for 2012.

Industrial production declined 0.4% in October, after having increased 0.2% in September, and fallen 1.4% in August. Hurricane Sandy, which held down production in the Northeast at the end of October, is estimated by the Federal Reserve to have reduced the rate of change in total output by nearly one percentage point. The largest estimated storm-related effects included reductions in the output of utilities, chemicals, and food. At 96.6% of its 2007 average, total industrial production in October was 1.7% above its year-earlier level. Capacity utilization for total industry decreased 0.4% to 77.8%, a rate 2.5% below its 1972 – 2011 average.

Unemployment: The October 2012 rate was virtually unchanged at 7.9% from 7.8% in September as reported by the Bureau of Labor Statistics. The number of planned layoffs by US firms increased 41% in October to the highest level in five months, although the number includes more than 10,000 jobs in US-owned auto plants in Europe. According to the BLS, Hurricane Sandy had no discernible effect on the October employment/unemployment data. The BLS stated that the long-term unemployed, i.e., jobless for 27 weeks and over was little changed at 5.0 million from the 4.8 million reported in for September. Those individuals accounted for 40.6% of the unemployed. North Dakota continued to lead the nation with the lowest state unemployment rate in October of 3.1%, and Nevada was again reported the highest at 11.5%.

Trade Deficit: For September 2012 the goods and services deficit decreased to $41.5 billion from a revised August figure of $43.8 billion as exports increased more than imports.

Crude Oil: Present WTI spot price ~$87/bbl and holding, compared to ~$90+/bbl a year earlier.  OPEC has reported that world oil demand is expected to decline in 2013. Prices have seen an increase of ~$1.00/bbl as a result of the Israeli-Palestinian conflict in Gaza.

Natural Gas:  Henry Hub spot price closed on November 20 at $3.62/MMBTU. December contract reported up at $3.76/MMBTU. Working natural gas in storage is greater than last year and remains above the five year average. Residential and commercial consumption is increasing as the temperature drops.

The US dollar trading at 82.4 Japanese yen; $1.30 = euro. The British pound sterling = $1.60. Canadian dollar trading at US$.99

Current US gold price quoted at $1729.50/ounce compared to the record price of $1920/ounce in September, 2011.

 

Contact:
The Chemical Company
P.O. Box 436
19 Narragansett Ave.
Jamestown, RI 02835
Phone: (401) 423-3100
Website: www.thechemco.com
Email: Info@thechemco.com