Ulbrich Economic Update - Number 17 (October 2021)

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October 2021 Economic Update Executive Summary

USA economy impact covid

The Americas

U.S. BUSINESS ACTIVITY EXPANDED AT ITS SLOWEST PACE IN A YEAR IN SEPTEMBER amid relentless supply constraints and peaking demand. Consumer confidence fell to a seven-month low last month as the rise in COVID cases deepened concerns about the economy's near-term prospects. American consumer spending rebounded in August, boosted by increases for food and household supplies, offsetting a drop in auto outlays. Factory activity gained strength in September, but manufactures had longer delays getting raw materials and paid higher prices. Durable goods orders increased 1.8% in August, boosted by a 5.5% rebound in transportation equipment orders, but motor vehicles and parts orders fell 3.1%. August producer prices accelerated their upward trajectory, leading to the biggest annual gain in nearly 11 years, but there are signs that inflation could be nearing its peak. The federal budget deficit for August was 15% lower vs. a year ago; recovery-driven tax receipts grew faster than outlays for pandemic relief.


THE EURO ZONE RECORDED SHARPLY SLOWER GROWTH IN SEPTEMBER in both manufacturing and services, extending a slowdown that began in August after business activity in July hit a 21-year high. A carbon dioxide shortage in the UK that is threatening industries from steel to food and beverages is spilling over to Continental Europe. China’s manufacturing activity dipped into negative territory in September, the first time since the pandemic began. Power outages have swept across many Chinese provinces, as the government ramps up efforts to curb energy consumption and reduce carbon emissions.

Steel coils import export China

Metals & Commodities

IRON ORE PRICES EXTENDED THEIR SLUMP BELOW $100 A TON as China stepped up restrictions on steel production. Prices have collapsed about 60% since a record high in May, as Chinese demand for iron ore wanes. China is intensifying steel production curbs to meet a target for lower volumes this year, as it works toward carbon neutrality by 2060. More recently, restrictions have focused on improving air quality for the Winter Olympics next year. Aluminum prices continued to rally in September, with the spot price on the London Metal Exchange hitting $3,000 per metric ton for the first time in more than a decade on supply concern issues.

Steel Production Updates

STAINLESS DEMAND REMAINS STRONG ALTHOUGH AUTOMOTIVE AND APPLIANCES ARE IN SLOWDOWNS resulting from the microchip shortage. Supply remains tight with only three domestic mills making commodity grade flat-rolled. Nucor is looking for a location to build a $2.7 billion sheet mill with a 3 million ton annual capacity. U.S. Steel is also looking for a site to construct a mini mill for an estimated cost of $3 billion. The planned USS mini mill will combine two electric arc furnaces with steelmaking and finishing technology. Steel service center inventories recovered slightly in the 3rd Qtr but remain well below adequate historical levels.

Ford Go Electric

Automotive Industry Advancements

FORD AND GENERAL MOTORS ARE FIGHTING IT OUT TO ELECTRIFY THEIR FLEETS, especially pickups, the biggest source of profits for both companies. As part of this campaign, GM will build four battery factories by 2025 with its partner, LG Chem, a South Korean battery-maker. Ford and its South Korean battery partner, SK Innovation, announced an investment of $11 billion for three battery factories and an assembly plant for electric F-Series pickups. General Motors said the semiconductor chip shortage that has hit production at automakers worldwide was lessening, while reporting its first quarterly sales drop in a year.


A LONGER-LASTING, LIGHTER AND MORE SUSTAINABLE RIVAL TO THE LITHIUM-ION BATTERIES has been created by researchers. A glucose-based additive applied to the positive electrode stabilizes lithium-sulfur battery technology, long touted as the basis for the next generation of batteries. In less than a decade, this technology could lead to vehicles that can travel more than 500 miles without recharging. It could also enable innovation in delivery and agricultural drones where lightweight is paramount.

NASA Perseverance Mars Rover collects rock samples

Latest Aerospace Developments

HYDROGEN’S MOMENT IS FAST APPROACHING, according to Airbus’ CEO, who said Airbus is ready to start building a hydrogen-powered commercial airliner before the end of this decade. Lockheed Martin Aeronautics was awarded a $2 billion contract to provide logistics support for delivered F-35 Lightning II Joint Strike Fighter air systems. NASA's Perseverance Mars rover collected two rock samples, showing signs they were in contact with water for a long time, boosting the case for ancient life on Mars.

Medical Insights

DEVICES MADE OF BIOACTIVE GLASS AND METALS THAT DISSOLVE at the end of their operational lifespan could replace other types of implants and eliminate the need for invasive removal once they have served their purpose. America’s COVID testing infrastructure is bracing for a surge in demand as most large U.S. companies mandate their workers get vaccinated or be screened weekly. Medical device makers seek priority amid the chip shortage by highlighting their life-saving products to secure supply.

offshore floating wind turbine farm

Energy Sector News

GAZPROM HAS LIMITED NATURAL GAS SALES IN THE EUROPEAN SPOT MARKET, fueling a surge in prices that is threatening industries across the Continent. Royal Dutch Shell and Scottish Power submitted proposals to UK authorities to build the first large-scale set of floating wind farms in the world off Scotland’s coast. Siemens Gamesa has developed the first offshore wind turbine blades that can be fully recycled, potentially saving hundreds of thousands from landfill and resolving an issue highlighted by critics.

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