+ Industrial Production grew .4% in November, the 7th monthly gain in a row. Total capacity utilization in the USA was 73.3%.
+ Housing Starts in the US rose by 1.2% on a monthly basis in November following October’s increase of 6.3%. Building Permits increased by 6.2% after declining by 0.1% in October.
+ The Fed kept interest rates the same at zero to .25% in order to help keep the cost of money down as the COVID and related shut downs continue to throttle economic growth. Nevertheless, the economy does continue to grow, slowly. Federal Reserve officials said they expected growth of roughly 4.2% next year, better than previously forecast. They forecast a fall in the unemployment rate from 6.7% to 5%.
+ Business inventories grew .7% in October, but sales increased as well, keeping the inventory to sales ratio at 1.31 to 1. A year ago it was 1.4 to 1.
+ From Air Canada to China’s CDB Aviation, airlines and leasing firms are rushing to permanently convert older passenger jets into freighters, betting on a boom in e-commerce as the value of used planes tumbles amid the pandemic. That has created a huge opportunity for passenger-to-freighter (P2F) conversion companies, including Singapore Technologies (ST) Engineering Ltd, Israel Aerospace Industries (IAI) and U.S.-based Aeronautical Engineers Inc. Aviation analytics firm Cirium expects the number of P2F conversions globally will rise by 36% to 90 planes in 2021, and to 109 planes in 2022. Air Canada is looking to convert several of its Boeing 767s, Russia’s S7 Group is acquiring its first 737-800 converted freighters from lessor GECAS, and lessor CDB Aviation has ordered two Airbus SE A330 conversions from ST Engineering’s EFW joint venture with Airbus. Permanent conversions are a financial bet that air freight demand, which was weak before COVID-19, will remain strong for years to come as shoppers turn to e-commerce. The airline industry estimates it will take until 2024 for passenger traffic to recover to 2019 levels.
– #1 heavy melt scrap is at $303 per tons and #1 busheling scrap is $380 per ton.
– Raw steel production in the United States totaled 1,567,000 net tons for the week, down by 0.8% from 1,579,000 tons the previous week, with mills operating at an average capacity utilization rate of 70.9%.
– Iron ore FOB Chinese ports is up to $152 per dry metric ton.
– Here is a 6 month graph showing zinc increases. It is looking like zinc is going to hit $1.30 per pound soon.
+ Steel slab export prices from Brazil showed a steep increase in the week ended Friday December 11, with sellers achieving higher deals because of the positive trend in flat steel markets. Export prices fob main port Brazil reached $650-670 per tonne, up by $60-70 per tonne from a week earlier.
– A surge in demand in China, risks a shortage of iron ore that’s pushed prices past $150 a ton and crowned it this year’s best-performing major commodity. Futures in Singapore have surged about 70% this year, hitting their highest since trading started in 2013, as China’s stimulus-led rebound fuels steel output and consumption. The rally received an added boost from Vale SA’s cut to annual production guidance, while the first quarter is likely to bring elevated risks of weather disruptions for southern hemisphere producers. Goldman Sachs said this week it expects a “substantial” deficit next year, with resilient demand and restrained supply set to sustain bullish price momentum. Morgan Stanley forecasts a particularly tight first half of 2021, which will support prices above $100 a ton. “The bull market for iron ore is set to extend into 2021,” Goldman said in its Dec. 8 report. “We now expect another substantial deficit next year, supported by a combination of only gradually decelerating China steel demand growth, sharply re-accelerating Western steel demand growth and tepid supply growth.”
– Mercedes Benz said last Thursday that it would wind down car production in Brazil, shutting down its factory dedicated to producing luxury vehicles in the city of Iraccemapolis, costing some 370 jobs. The company said in a statement that the pandemic had caused a drop in demand for luxury vehicles that made it unsustainable to keep the factory open.
– In a newly-released survey of 14 countries by Ford Motor Company, 69% of respondents feel overwhelmed by the changes taking place, while 53% find adapting to the changes harder than most thought. Surprisingly, younger respondents are feeling it more acutely, with 63% of Gen Zers saying that adapting has been harder than anticipated. Only 42% of Boomers said they feel the same. Overall, less than half of all respondents, 47%, have found adapting to life with COVID-19 “easier than I imagined,” or so says a new report released today by Ford. The study focused on how consumers are adapting to life during the pandemic and the coping mechanisms they’re using to endure it. One in four adult vehicle owners escape to their car, truck or van to relax, with one in five saying they use their vehicle for privacy. And 17% say they use it as an office. When they’re not using their automobile as another room in their home, they’re using it to escape. This helps explain the stronger than expected rebound in car sales in recent months after a deep drop-off during the spring.
– A shortage of chips used in auto manufacturing could disrupt automotive production in China well into next year, industry officials said Friday, with chip companies saying they are raising prices and expanding their production in response. Automobiles have become increasingly dependent on chips – many of them made in Europe – for everything from computer management of engines for better fuel economy to driver-assistance features such as emergency braking. Automotive production slowed in early 2020 because of hard lockdowns caused by the COVID-19 pandemic but has come roaring back, especially in China, as consumers look to travel in private vehicles rather than take public transport. German auto suppliers Continental, Bosch and Volkswagen, the world’s largest carmaker, warned about the shortage of semiconductor components. Dutch automotive chip supplier NXP Semiconductors has told customers that it must raise prices on all products because it is facing a “significant increase” in materials costs and a “severe shortage” of chips, a letter to customers seen by Reuters showed. Germany-based auto supplier Bosch said it too was seeing supply chain bottlenecks for certain components.