|0.2 to 104.5 points||0.6%||33,419 railcars|
|Small Business Optimism (Feb)||Producer Prices (Feb)||Chemical Railcar Loadings (Jan)|
Running tab of macro indicators: 15 out of 20
Small business optimism, as measured by the latest NFIB survey, moved up 0.2 points to 104.5, a reading among the top 10% in the 46-year history of the survey. Those expecting better business conditions increased, and job creation and openings improved as well. Real sales expectations declined along with capital expenditure and inventory plans. That said, the survey was conducted prior to the recent escalation of the coronavirus outbreak and the Federal Reserve rate cut.
Consumer prices rose 0.1% in February, the same gain as in January. Higher prices for shelter, food, apparel, personal care, used vehicles, education and health care drove the increase, more than offsetting weaker energy, airline fare and recreation prices. Core consumer prices (excluding food and energy) rose 0.2% and were up 2.4% Y/Y. Overall prices were up 2.3% Y/Y. Producer prices plunged 0.6% in February, the largest drop in five years. Lower gasoline prices was the largest contributing factor behind the decline but prices for vegetables, diesel and jet fuel, meat, and light-duty trucks also fell. Producer prices less food and energy (a core measure) fell 0.1% in February. As a result, headline prices slowed to a 1.3% Y/Y gain while core prices cooled to 1.4% Y/Y, the second slowest pace since 2016. Import prices fell 0.5% in February after rising 0.1% in January. Lower prices for imported fuels, offset higher prices for industrial supplies and materials; food, feeds and beverages; and capital goods. Import prices were off 1.2% Y/Y. The disinflationary impact from COVID-19 and the tanking of oil prices is exerting downward pressure on prices and these will likely intensify.
Consumer credit rose 0.3% (or $12.0 billion) to $4.21 trillion at the end of January. This was below expectations. Non-revolving credit (student loans, car loans, etc.) posed a solid gain but non-revolving credit (e.g., credit cards) eased after a gain in December. Consumer credit was up 4.4%, roughly in-line with consumer spending but above gains in personal incomes.
The oil and gas rig count rose by one to 789 rigs. Crude oil inventories rose for the seventh consecutive week. Given mild weather across much of the nation, working gas in storage was drawn down by 48 BCF, about half the typical draw for this week. At 2,043 BCF, total working gas is within the five-year historical range. This week was one of the most volatile in history. With the collapse of the potential OPEC+ production cut agreement last Friday, oil prices collapsed over the weekend and this week. The breakdown of Russia’s partnership with OPEC and what appears to be the threat of ramping up of production by both Russia and Saudi Arabia suggests rising supply at a time when demand is falling.
For the business of chemistry, the indicators bring to mind a yellow banner for basic and specialty chemicals
According to data released by the Association of American Railroads, chemical railcar loadings, the best ‘real time’ indicator of chemical industry activity, fell by 502 to 33,419 railcars during the week ending 7 March (week 10). Loadings were up 6.6% Y/Y, up 2.9% YTD/YTD and have been on the rise for 6 of the last 13 weeks. The 13-week moving average, which is used to smooth out irregularities, was up 1.2% compared to last year.
Chemical producer prices fell 0.2% in February and follows a 0.4% decline in January, leaving prices off 3.2% Y/Y. Weakness was in inorganic chemicals, bulk petrochemicals and organics, and plastic resins while prices for synthetic rubber, manufactured fibers, other specialties and agricultural chemicals all fell. Feedstock prices fell 11.6% in February and were off 42.0% Y/Y.
Chemical import prices rose 0.2% in February and follows a 0.7% decline in January. Prices for imported inorganic chemicals, organic chemicals, and some miscellaneous chemicals rose. Export prices fell 0.2% and follows a 0.1% gain in January. Import prices were off 4.2% Y/Y and export prices were off 3.3% Y/Y.
U.S. chemicals trade expanded in January reflecting a 9.3% rise in imports. Chemicals exports declined 0.3% in January (compared to December). Increased exports of specialty chemicals, petrochemicals and derivatives, other industrial chemicals were offset by declines in agricultural chemicals, consumer products and inorganics. Imports rose in all major chemicals sectors with the exception of consumer products. The chemicals trade surplus in January declined $731 million to $2.5 billion.
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14 April 2020
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10th ICIS World Surfactants Conference
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The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy we keep a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:
Green – 13 or more positives
Yellow – between 8 and 12 positives
Red – 7 or fewer positives
For the chemical industry there are fewer indicators available. As a result we rely upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.