Ulbrich Economic Update - Number 21 (February 2022)

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February 2022 Economic Update Executive Summary

2020 - 2021 - 2022 World Economy Forecast

The Americas

THE U.S. ECONOMY NOTCHED ITS STRONGEST ANNUAL GROWTH IN NEARLY FOUR DECADES IN 2021, surging 5.7% after contracting 3.4% in 2020. The stunning reversal came as GDP increased at a 6.9% annualized rate in the fourth quarter. U.S. payrolls grew sharply by 467,000 in January and the jobless rate rose slightly to 4%, as the economy weathered the Omicron wave and staffing shortages. Manufacturing activity fell to a 14-month low in January. The ISM survey of national factory activity noted there was another tentative sign of improving supply chains, but prices at the factory gate continued to march higher. Durable goods orders fell a sharp 0.9% in December. New orders for cars and planes fell 3.9% and have declined in three of the last four months. Producer prices increased 0.2% in December, their smallest advance in 13 months. Retail sales tumbled 1.9% in December, due to early holiday shopping starting in October to avoid empty shelves. Receipts at auto dealerships slipped 0.4%. Leading economic indicators increased a strong 0.8% in December, suggesting America’s expansion would continue. The Conference Board is forecasting growth of 3.5% this year.


EUROZONE BUSINESSES REPORTED A WEAKER THAN EXPECTED START TO THE YEAR with activity growing at its slowest rate for eleven months in January despite an easing of supply bottlenecks. Manufacturers reported some reduction of the supply chain problems that have caused record order backlogs in factories, congestion at ports and shortages of materials. China’s GDP expanded by 8.1% in 2021, but the figure masks a significant loss of growth momentum and weak consumer demand due to China’s strict COVID-19 containment measures. Chinese retail sales weakened further in December, rising just 1.7% from a year earlier.

Steel Coils

Steel Industry Updates

U.S. STEEL WILL BUILD ITS NEWEST STEEL MILL IN OSCEOLA, ARKANSAS, close to the company’s existing Big River Steel mill. The new $3 billion mini mill will add two electric arc furnaces to the site. Russian steelmaker NLMK developed a new steel product with an anti-bacterial coating which can be used in medical, food preparation and other facilities that require strict cleanliness and safety. Stainless steel domestic availability remains tight but imports have increased and service centers have built inventories up 18% vs. December 2020. February surcharges increased as LME nickel gains more than offsets the drop in ferrous scrap.

Metals & Commodities

THE PRICE OF ALUMINUM ON THE LME HAS INCREASED BY 24% OVER THE PAST 6 MONTHS to more than $3,100 a metric ton, approaching a decade high. Uranium prices spiked as violent protests in Kazakhstan stoked concerns about security of supply. Oil prices hit their highest level in over 7 years in January, threatening to fuel a further rise in global inflation. Benchmark nickel futures on the LME traded below $23,000/tonne ($10.43/lb) at the end of January, not far from a decade high.


Automotive Trends

TESLA’S ANNUAL VEHICLE DELIVERIES SURGED 87% IN 2021, growing at their fastest pace in years. The company delivered more than 936,000 vehicles globally in 2021, up from nearly half a million the previous year. Novelis plans to build a $365 million automotive recycling plant in Guthrie, KY, expanding its closed-loop recycling operations. The plant will reclaim aluminum from vehicles at the end of their useful lives and aluminum scrap from auto production. Toyota lowered its planned February output by 150,000 vehicles globally (25,000 to 30,000 units in North America) due to the ongoing semiconductor shortage still plaguing the industry.

Energy Sector News

THE WORLD’S FIRST FLOATING NUCLEAR POWER PLANT IS PART OF PUTIN’S AMBITIONS for Russia’s Far East. This nuclear plant moored on the northern coast of Siberia is part of Moscow’s plan to open up a major shipping lane through the Arctic and bring natural resources within easier reach. Solar power will account for nearly half of new U.S. electric generating capacity installed in 2022, as an estimated 46.1 gigawatts of new utility-scale electric generating capacity is added to the power grid.

Biowearable Device

Medical Insights

ABBOTT UNVEILED A NEW BIOWEARABLES CATEGORY AT THE CONSUMER ELECTRONICS SHOW. Lingo encompasses future biowearable devices that are being designed to translate the body’s unique language, allowing a person to track key biomarkers in the body, such as glucose, ketones, lactate and alcohol, to better understand a person’s general health and wellness. Pfizer/BioNTech started a trial evaluating an adapted version of their COVID-19 vaccine that targets the Omicron variant.

Aerospace Developments

BOEING INCURRED $4.5 BILLION IN CHARGES ON ITS SIDELINED 787 PROGRAM, obscuring its long-awaited return to positive cash flow fueled by rebounding 737 MAX deliveries. Airbus kept its crown as the world's largest commercial airplane supplier for the third consecutive year, outstripping Boeing by delivering 611 jets in 2021. Boeing only handed over 340 jets. The Fed TC filed an antitrust lawsuit to block Lockheed’s $4.4 billion plan to acquire rocket maker Aerojet Rocketdyne.

3D Bridge in Amsterdam


BMW SHOWED OFF ITS WILD IMAGINATION at the 2022 Consumer Electronics show by unveiling a radical concept SUV called the iX Flow which can change color in the blink of an eye. The Flow is wrapped in something called E Ink—the material used in the displays of e-readers—which allows it to shift through shades of white, grey and black. The first 3-D-printed steel bridge in the world opened to the public in Amsterdam. The six-ton stainless steel bridge stands as an award-winning feat of engineering by MX3D.

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