News Briefs

Image courtesy of F.Muhammad - Pixabay

×

U.S. new auto dealers see weakest first quarter volume in decade

U.S. January-March 2022 light vehicle sales in terms of volume are forecast to decrease over 16% on-year to the lowest level in ten years as a result of ongoing supply chain issues limiting production without relief in the near term, Cox Automotive projected in early April.

The annual new-vehicle sales pace in March may finish near 13.1 million, down from 14.1 million units in February and from 17.6 million in March 2021, according to Cox.

“Auto sales will basically be stuck at the current level until more supply arrives,” said Charlie Chesbrough, a senior economist at Cox.

Cox also lowered its full-year 2022 forecast to 15.3 million from an initial 16 million projection.

Cox experts also said car prices have increased while at the same time consumers have lost purchasing power.

“Average hourly earnings growth remains above 5%, but real wage growth is negative, with inflation outpacing wage growth,” said Jonathan Smoke, chief economist at Cox.

In other trends, higher gasoline prices in March led to “a spike in shopping for electric vehicles,” said Rebecca Rydzewski, a research manager at Cox.

“Shopping for EVs rose 69% as gas prices peaked in March; shopping for hybrids increased by 32%,” Rydzewski said.

“Shoppers even showed more interest in small, more-efficient cars in Q1. Our team is forecasting growth in electrified vehicles in the year ahead, and we certainly saw that in Q1,” she added. 

“It’s going to take time for dealers to build back inventories, even as microchip availability improves. My forecast: The year ahead will continue to be a seller’s market,” said Brian Finkelmeyer, senior director of Cox new-vehicle sales strategies.

Vehicle manufacturing drives demand for multiple downstream petrochemical products including dozens of petrochemicals like polypropylene, polyurethanes, synthetic rubber and PVC.

U.S. jet fuel production recovers in April but still lags pre-pandemic

There were about 1.6 million barrels per day of jet fuel produced in the first week of April in the U.S., according to weekly U.S. refiner and blender net production of kerosene-type jet fuel data published in April by the U.S. Energy Information Administration.

This compared with 1,190,000 barrels per day a year earlier and with 715,000 barrels per day in April 2020.

U.S. airlines saw in April 2020 the most restrictive period of the lockdowns for pandemic prevention. Travel restrictions severely cut down travel, particularly international, sending jet fuel demand to very low levels.

While the April 2022 production data has shown recovery, it still trails behind the 1,714,000 barrels per day in the second week of April 2019.

Air travel has increased its pace of recovery to pre-pandemic levels since late February as passengers return to airports, a top executive of a leading airline said in April.

“The uptick just started about six to eight weeks ago, in late February and March,” said Glen Hauenstein, president of Delta Air Lines, speaking in mid-May during the company´s first quarter earnings discussion. The pick-up came after Omicron-related concerns diminished.

Delta anticipates a stronger recovery. It hired over 10,000 people and took over services previously assigned to third-party companies that had been outsourced as it makes efforts to prepare for a stronger recovery.

Atlanta-based Delta Air Lines has about 16% of the U.S. air passenger travel market.

U.S. rail deliveries of vehicles, autoparts, chemicals see increase

North American weekly data for rail traffic as of mid-April showed an increase of 1,185 carloads of chemicals to 35,152 carloads compared with the same week a year earlier while motor vehicle and parts carloads rose 1,320 to a total of 13,352 carloads.

U.S. railroads reported for the first 14 weeks of 2022 a total of 3.2 million carloads, up 2.5% from last year, and 3.6 million intermodal units, down 6.6% from last year, the U.S. Association of American Railroads reported on April 13.

Carloads move mostly chemicals, hydrocarbons and agriculture commodities. Intermodal unit traffic is more related to international trade of finished goods.

Canadian railroads reported 1.9 million carloads, containers and trailers, an 8.8% on-year decline.  Mexican railroads reported a 2.2% on-year increase to 512,546 carloads and intermodal containers and trailers.

Canada´s 2022 Federal Budget seen attracting investment

The Chemistry Industry Association of Canada (CIAC) said on April 8 that the Canadian 2022 Federal Budget released on April 7 will attract investment into the circular plastics economy and also support innovation. 

The Carbon Capture Utilization and Storage (CCU) Investment Tax Credit has a minimum 37.5% inclusion rate for transport infrastructure, a 50% inclusion rate on CCUS equipment, and a 60% for direct air capture, the CIAC said. 

The 2022 budget also proposed up to $1 billion over six years to innovation and science, it said. Funding into supply chains increased by C$450 million while an existing innovation program will see a C$750 million re-capitalization, it added.

The association has also seen opportunities for CCU investment in the country´s emissions plans announced earlier this year.

(C$1 = $ 0.79)

Reuters Events Downstream