After Years of Angst, Canada’s Oil Pipeline Problem May Be Over

Kevin Orland and Robert Tuttle Bloomberg June 23, 2020



(Bloomberg) -- The shortage of pipeline space that has hamstrung Canada’s oil producers for years may finally be over -- just not in the way they had hoped.

The pandemic-induced oil crash prompted Canadian companies to cut about 1 million barrels of daily crude output, freeing up space on the country’s previously congested pipelines. With that production likely slow to return and as many as three new conduits slated to be built in the next three years, the industry may have years of cheap, plentiful shipping capacity ahead.

That’s a significant turnabout for a country where, until Covid-19 hit, the lack of pipelines out of Western Canada was a central political and economic issue, often pitting the oil-rich province of Alberta against the government of Prime Minister Justin Trudeau.

But the pipeline relief came only because oil producers had to adapt to a dramatic drop in demand and low prices that are causing mounting financial losses. Some had spent heavily to ramp up their ability to ship crude by rail and now find themselves stuck with idled tanker cars and loading terminals.

The industry “achieved the dream of going long pipeline in Western Canada but for all the wrong reasons,” said Kevin Birn, IHS Markit’s director of North American crude oil markets.

Enbridge Inc., which typically has to ration space on its Mainline pipeline system, had spare capacity in recent months, a rare occurrence. Shipments of crude by train, the main alternative to pipelines, have plunged as well. April crude-by-rail exports fell 55% to about 156,000 barrels a day, according to the Canada Energy Regulator. That trend appears to have continued into May, with about 49,000 barrels a day moving by rail, according to Genscape.

Until recently, the problem had been just the opposite. The lack of enough shipping capacity forced producers to sell their crude at wide discounts to benchmark U.S. prices, hurting Alberta’s economy. The industry accounts for about a 10th of Canada’s gross domestic product and a fifth of its exports.

Trudeau’s approach to the issue has varied. On one hand, he shelled out C$4.5 billion ($3.3 billion) to buy the Trans Mountain pipeline and save a key expansion from being scrapped. On the other, he rejected Enbridge’s proposed Northern Gateway project 

THIS WAS A SAFER BETTER ECOLOGICAL ROUTE THAN KITIMAT, THOUGH IT TOO IS OPPOSED BY FIRST NATIONS, ENVIRONMENTALISTS, IT FITS WITHIN THE PLANS FOR A DEEP WATER PORT OFF PRINCE RUPERT THE PIPELINE WOULD BE BUILT ALONG THE EXISTING YELLOWHEAD HWY https://plawiuk.blogspot.com/search?q=NORTHERN+GATEWAY

implemented regulations that industry groups have said will make it impossible to build new pipelines. Those moves contributed to Trudeau’s Liberal party losing all of its parliament seats from Alberta and Saskatchewan in an election last year.

But through all the turmoil, and many delays, three major pipeline projects are expected to enter service by the end of 2023: TC Energy Corp.’s Keystone XL, Enbridge’s expansion of its Line 3, and the Canadian government’s expansion of the Trans Mountain line. The projects would add a combined 1.79 million barrels of daily shipping capacity out of Alberta, an almost 50% increase.

For now, with producers reducing output because of the pandemic, the current pipeline system should be able to handle flows, Birn said. Oil-sands companies will be slower to bring production back online until they have more certainty that a recovery is underway, bridging the gap until the new lines are running, he said.

The need for the pipelines in the immediate term has been deferred or delayed because of the dramatic reduction in demand,” he said. “Covid-19 may have bought the industry some time.”

To be sure, those start dates are by no means certain. Line 3 already was stalled by a year because of permitting delays, and the project continues to face opposition in Minnesota. Keystone XL, after more than a decade since it was first proposed, is still facing legal challenges in Montana, and Trans Mountain also continues to face resistance from some indigenous communities in British Columbia.

In the meantime, some companies are stuck with investments in rail that they won’t need.

Cenovus Energy Inc., which suspended crude-by-rail shipments in March, had signed three-year deals in 2018 to transport 100,000 barrels of oil a day, and it also owns the Bruderheim rail-loading facility near Edmonton. Executives said on their first-quarter conference call that the idled crude-by-rail program costs them about C$18 million a year, including the expense of storing unused rail cars.


Rail continues to be a part of the company’s “portfolio approach” to transporting its crude over the long-term, said Sonja Franklin, a Cenovus spokeswoman. The majority of the costs associated with the rail program are variable, she said.

Exxon Mobil Corp.’s Canadian unit, Imperial Oil Ltd., is in a joint venture on a rail terminal next to its Strathcona refinery in Edmonton. The roughly C$170 million facility can load trains with 100 to 120 cars, for about 210,000 barrels of daily shipping capacity. Imperial executives said on the company’s first-quarter earnings call in May that rail volumes for April had plummeted to 10,000 barrels a day, less than 5% of the facility’s capacity.

Imperial declined to comment.

With crude demand and oil-sands production likely to remain reduced until new pipelines come online, those rail facilities could stay underused for some time, barring a major technological advancement that makes oil-sands crude cheaper to produce, said Fernando Valle, an analyst at Bloomberg Intelligence.

“We could be pretty much set for most of this decade unless there’s a breakthrough,” Valle said.

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©2020 Bloomberg L.P.

CANADA PRIDE PIN

CANADA HAS ISSUED AN OFFICIAL PRIDE MONTH PIN PICTURED HERE 

NEW RULE 

WE NO LONGER CALL 

THE ORIGIN OF A PANDEMIC 

TYPHOID MARY 

CHANGE IT TO

 CORONAVIRUS TRUMP

German region in new lockdown after slaughterhouse outbreak

CLOSE ALL GLOBAL MEATPACKING PLANTS FOR SIX WEEKS! ALL MEATPACKERS RELY ON MIGRANT LABOUR
PAY ALL THE WORKERS 

Frank Jordans And Geir Moulson The Canadian Press June 23, 2020

BERLIN — German authorities slapped new lockdown measures Tuesday on a western region that has seen hundreds of coronavirus infections linked to a slaughterhouse, trying to make sure the cluster doesn't race into the wider community.

Authorities initially said more than 1,550 people had tested positive for coronavirus at the Toennies slaughterhouse in Rheda-Wiedenbrueck, but by Tuesday afternoon they said the exact number was still being verified.

Thousands of workers, many of them migrants from Eastern Europe, and family members have been put under a quarantine to try to halt the outbreak.The governor of North Rhine-Westphalia state, Armin Laschet, said people in Guetersloh county for the next week will face some of the same restrictions that existed across Germany during the early stages of the pandemic in March.

These include limiting the number of people who can meet in public to those from a single household or two people from separate households, Laschet said.

“We will order a lockdown for the whole of Guetersloh county," he told reporters Tuesday. “The purpose is to calm the situation, to expand testing to establish whether or not the virus has spread beyond the employees of Toennies.”

"We will get a better picture of the situation through intensive testing, and can then see more clearly within seven days what the situation is,” Laschet said.

Cinemas, fitness studios and bars will be closed, but stores will remain open and restaurants can still serve customers from the same household. Previously, the western county had only closed schools and daycare centres, sparking anger from parents who said their children were being punished for failings at the slaughterhouse.

Similar restrictions are being imposed in neighbouring Warendorf county, where many Toennies workers also live, the state government said later Tuesday. Guetersloh county has about 360,000 inhabitants and Warendorf has some 277,000.Prior to the Toennies outbreak, Germany had been widely praised for its handling of the pandemic. Intensive testing, tracing and hospital preparation measures kept Germany’s death toll five times smaller than Britain’s. Germany has seen over 8,900 confirmed virus deaths and about 192,000 cases.

Toennies Group, a family-owned company, has been criticized for using subcontractors for parts of its operation. The practice, which is common in the German meat industry and which the government now wants to ban, often involves migrant workers living in cramped communal housing and being transported to slaughterhouses in minibuses, heightening the risk of infection.

A video circulating on social media also showed workers at the plant seated close together during break times, although the company has disputed how recent the video is.

Laschet expressed his frustration Tuesday at the company's handling of the outbreak, saying authorities had to order Toennies — Germany's biggest meat processing company — to release the names of its employees.

“The readiness to co-operate could have been greater,” he said.

Laschet said the measures will be lifted June 30 if the situation has improved, but declined to provide specific parameters for success. He also urged other regions in Germany not to discriminate against people from Guetersloh.

The German news agency dpa reported that 14 people on vacation, some of them from Guetersloh, were told Monday to leave the northeastern island of Usedom, a popular Baltic Sea resort. And Bavaria issued a ban on hotels renting rooms to people from Guetersloh or other counties with more than 50 new cases per 100,000 inhabitants. Exceptions will be made for people who can present a negative coronavirus test.

Separately, virus cases also were reported Tuesday at another slaughterhouse in Wildeshausen, in northwestern Germany. Twenty-three workers at the PHW Group site tested positive, and more than 1,100 people working there were to be tested, officials said.

The head of Germany's disease control centre said Tuesday the exact reasons why slaughterhouses in Germany, the United States and elsewhere have become coronavirus infection hubs are still being investigated.

“It's certainly the case that if you live in cramped conditions and small rooms then that's a situation where the virus can spread more easily,” said Lothar Wieler, chief of the Robert Koch Institute.


But he added that low temperatures in parts of the plant, intended to keep the meat cool, could also play a role.

“Another factor, which we don't think is small, is the development of aerosols,” said Wieler, referring to tiny droplets that can linger in the air and potentially contain viruses.

Wieler said the outbreak at the slaughterhouse and others linked to religious gatherings could certainly spread to other people in Germany.

“That's why it's so important that we remain careful,” he said. “The virus is still in the country and if we give it the chance to spread, then it will take that chance."

But he expressed hope that Germany could avoid a second wave of the pandemic if people followed government advice on social distancing and hygiene.

Dr. Ute Rexroth, a senior Robert Koch Institute official involved in Germany's pandemic response, noted that poverty seems to play a significant role in who gets infected, calling it “the root of the problem.”

___

Follow AP pandemic coverage at http://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak

Frank Jordans And Geir Moulson, The Associated Press

U.S. Set to Announce Aluminum Tariffs on Canada by End of Week

TRUMP AMERICA HAS NO ALLIES

Joe Deaux and Jenny Leonard Bloomberg June 22, 2020


(Bloomberg) -- The Trump administration is considering re-imposing tariffs on aluminum imports from Canada and an announcement could come by the end of the week, according to people familiar with the matter.

If Canada refuses to impose export restrictions on aluminum, the U.S. will announce Friday the re-imposition of 10% tariffs on aluminum from the country and implement the tariffs by July 1, according to the people, who asked not to be identified because the information isn’t public.

That would be just days before the new U.S.-Mexico-Canada trade deal enters into force on July 1. U.S. Trade Representative Robert Lighthizer has expressed concern about recent struggles by American aluminum producers, which have seen sales drop and all-in prices sink as demand evaporated amid the global pandemic.

Lighthizer told the Senate Finance Committee in a hearing last week that recent surges in metal imports from North American neighbors are “of genuine concern to us now,” and that his office was looking at the issue.“I would say there have been surges on steel and aluminum, substantially from Canada, some from Mexico, and it is something that we’re looking at and talking to both Mexico and Canada about,” he told the panel’s top Republican, Senator Chuck Grassley from Iowa.

A spokesman for the USTR didn’t immediately respond to an emailed request for comment outside office hours.

Under the May 2019 agreement, which resulted in initial tariffs being lifted, Canada has to limit its retaliation to the U.S. metals sector and cannot hit American agriculture, Lighthizer told Grassley.

Ironically, the only three U.S. aluminum producers -- Alcoa Corp., Century Aluminum Co. and Magnitude 7 Metals LLC -- disagree whether tariffs should be reimposed.
The American Primary Aluminum Association, which represents Century Aluminum Co. and Magnitude 7 Metals LLC., has asked Lighthizer to reimpose a 10% tariff on imports of Canadian aluminum, saying a rise in metal coming from the country has caused the price to collapse.

The Aluminum Association of the U.S., which represents Alcoa Corp., Rio Tinto Group and dozens of other aluminum parts makers, argues that imports are virtually unchanged since 2017.

Alcoa CFO William Oplinger said at a virtual bank conference in June that China’s overcapacity subsidized by the government is the real problem, and that he supports free trade with “those who trade freely, especially the Canadians.”

©2020 Bloomberg L.P.

COVID-19 to leave some lasting economic damage, Bank of Canada chief saysThe Canadian Press June 22, 2020


NEW GOVENOR OF THE BANK OF CANADA WEARING 

A CANADIAN FLAG PRIDE PIN

OTTAWA — The COVID-19 pandemic will leave some long-term economic damage that will only become clearer as the country moves further along a "prolonged and bumpy" course to recovery, Canada's top central banker says.

In his first speech as governor, Tiff Macklem said the central bank expects to see growth in the third quarter of this year as people are called back to work and households resume some of their normal activities as restrictions ease.

But he quickly warned Canadians not to expect the short and sharp economic bounce-back expected over the coming months to last.

The combination of uneven reopenings across provinces and industries, the unknown course of consumer confidence, and unemployment rates will "likely inflict some lasting damage to demand and supply," Macklem said in a speech Monday.

The exact extent of the damage in terms of the number of lost jobs and business closings won't become clear until the country is further along the reopening phase.

And even when things start looking up, he said there is the potential for setbacks from new outbreaks.

"As we get through that reopening phase, though, we do think that the pace of the recovery will slow and that will reflect the reality that not everybody's job is coming back," Macklem said at a midday press conference.

"Some companies aren't going to make it to the other side of this. New companies will form, existing companies will seize new opportunities, but that takes some time and that's going to be a slower, bumpier process that is going to require ongoing support."

The central bank's support against the economic shock caused by the pandemic has been a drop to its policy interest rate to 0.25 per cent, which Macklem says is as low as it will go.

The Bank of Canada has also launched a purchasing program of bonds and government debt to help markets function and make borrowing cheaper for households and businesses. Such purchases, known as quantitative easing, also send a signal that the bank's key rate "is likely to remain low for a long period," he said in his speech.

The bank has a number of other tools it can use to deliver some monetary stimulus beyond the interest rate, Macklem said, including scaling its purchasing programs or providing more direct forward guidance on activities as other central banks have done.

"Going forward, the types of measures we take will depend on the circumstances. Different measures have different effectiveness in different circumstances. And they will be guided by the achievement of our inflation target," he told reporters.

"We'll be flexible, we'll be resolute, we're going to be innovative and we're going to be determined."

For the Bank of Canada, the impact of structurally low interest rates and the scale of the shock are having what Macklem said is "a profound impact" on the inflation-rate target.

The central bank targets an annual inflation rate of two per cent as measured by Statistics Canada's consumer price index.

The basket of goods used to form the index has been shaken by a shift in consumer spending habits during the pandemic. People are spending less on gasoline, which usually receives a heavier weight in calculating inflation, as its price has plunged and the frequency of car travel has dropped. Spending is also down on travel, while grocery spending is up.

Last week, Statistics Canada reported the annual pace of inflation was -0.4 per cent in May, marking the second consecutive month for negative annual inflation after a reading of -0.2 per cent in April.

In his speech, Macklem said the bank expects supply to be restored faster than demand, which could put downward pressure on inflation. BMO's Benjamin Reitzes wrote in a note that Macklem's message suggests bank policy remaining easy for some time.

Next month, the Bank of Canada will provide "a central planning scenario" for the economy and inflation to help guide bank policy, as well as related risks — such as local, but not national, lockdowns.

"The central scenario would embody the reality that there probably will be some more local flair-ups," Macklem said.

"Hopefully, with each flair-up we get better at targeting it, isolating it, and closing it down faster than the one before."

This report by The Canadian Press was first published June 22, 2020.

Jordan Press, The Canadian Press

Macklem Sees Long Road Ahead for Canada’s Economic Recovery

Shelly Hagan Bloomberg June 22, 2020



(Bloomberg) -- Canada’s economy will take a long time to fully recover from the Covid-19 lockdowns, requiring the central bank to continue purchases of government bonds to keep interest rates at historical lows indefinitely, according to Tiff Macklem.

In his first public speech as governor, Macklem said Canada’s economy should resume growth in the third quarter as containment measures are lifted. He cautioned, however, that any recovery will be “prolonged and bumpy” and the central bank will be “laser-focused” on supporting the rebound with stimulus.

“It will be a very long period before we start discussions about removing stimulus,” Macklem said in response to questions after his speech, which he gave via video-conference to Canadian Clubs and Cercles canadiens. “It’s not a discussion we’re engaged in right now.”

The economy will get an immediate boost as containment measures are lifted, people are called back to work, and households resume some of their normal activities,” Macklem said. “But it will be important not to assume that these growth rates will continue beyond the reopening phase.”

The Bank of Canada, under Macklem’s predecessor Stephen Poloz, took unprecedented actions to make sure businesses, institutions and consumers had access to credit. The bank cut interest rates by 175 basis points to 0.25% and launched a series of programs to inject hundreds of billions of cash into the economy. That includes its first ever large scale asset purchase program to buy government debt -- known as quantitative easing.

The central bank will continue to buy government bonds until a rebound is “well underway,” Macklem said, adding that policy makers are worried that demand will be slow in recovering, which could put downward pressure on inflation without the stimulus.

Long and Gradual

Macklem’s comments echo those of Deputy Governor Lawrence Schembri, who said last week the second phase of the recovery will be long and gradual because of the lingering uncertainty around the virus. The bank sees the economy rebounding quickly during the first phase after governments allow normal activities to resume. But after that, the growth trajectory may be uneven and slow, since not all industries will be able to operate until a vaccine is created.

“The expected long road back indicates that the Bank will need to provide more stimulus, likely in the form of a more aggressive quantitative easing program,” Royce Mendes, an economist at CIBC World Markets, said in a report to investors.

The Bank of Canada has bought almost C$400 billion ($296 billion) in assets since the crisis began to inject liquidity into financial markets. Macklem highlighted on Monday how the purpose of that cash injection has been changing, with the focus now on keeping interest rates low rather than ensuring markets are functioning properly. That’s meant more of the liquidity is targeted at buying up government debt, rather than short-term money market instruments held by banks.

Macklem reiterated the bank will continue to purchase at least C$5 billion of Canadian government bonds a week to help lower long-term borrowing costs for households and businesses and signal that rates will remain low for a long period.

The bank continues to express concern around the potential for lower inflation. Although businesses are reopening, millions of Canadians remain out of work and spending has dropped. The bank expects supply to be restored faster than demand, which could put downward pressure on prices.

“Our main concern is to avoid a persistent drop in inflation by helping Canadians get back to work,” Macklem said.

Macklem isn’t a fan of negative rates. The governor made sure to highlight in his speech that low rates could lead to distortions in the behavior or financial institutions, while reiterating policy makers will using asset purchases until a recovery is underway. He didn’t specify when he expects that will happen.

Next month, the bank will deliver its July Monetary Policy Report which will contain a central planning scenario for output and inflation. Still, the bank says the pandemic has created a ‘fog of uncertainty’ which has made it difficult to give a clear outlook.

“The course of the coronavirus is the biggest source of uncertainty,” Macklem said. “Beyond that, we don’t know how global trade and supply chains will evolve, or what will happen with domestic supply and demand,” or even how spending habits will change or confidence rebounds.

Yet, the economy is showing signs of stabilization and as the data comes in, the bank feels more comfortable in its ability to answer some of those questions.

(Updates with Macklem’s comments throughout.)

©2020 Bloomberg L.P.

Beijing’s Latest Virus Outbreak Disrupts Tyson Foods and PepsiCo

DID TRUMP SEND CORONAVIRUS TAINTED CHICKENS TO CHINA
WHILE SENDING CHLORINATED CHICKENS TO THE UK

Marion Dakers and Michael Hirtzer Bloomberg June 22, 2020

Beijing’s Latest Virus Outbreak Disrupts Tyson Foods and PepsiCo

(Bloomberg) --

China suspended poultry imports from a Tyson Foods Inc. plant where hundreds of employees tested positive for Covid-19, stoking concerns over the broader implications for U.S. and global meat exports.

All products from the plant in Springdale, Arkansas, where Tyson is based, that are about to arrive in China or have arrived at the country’s ports will be seized by customs. The suspension announced Sunday is an about face from just a few days ago, when Chinese officials said food was unlikely to be responsible for a fresh virus outbreak in Beijing.

The move is a potential new threat to meat plants across the world that have seen slaughter disruptions because of the virus. In the U.S., hundreds of workers have become ill, and dozens have died. There’s also been a recent uptick in infections at facilities in Brazil and Germany.

“There are worries in China over serious coronavirus outbreaks in the U.S.,” said Lin Guofa, a senior analyst at Bric Agriculture Group, a Beijing-based consulting firm. The public is worried about imported frozen products as almost all cases in Beijing have been connected to a meat and frozen fish wholesale market, he said.

A new outbreak in China had been blamed on imported salmon after the head of a food market where clusters were detected said the virus had been traced to a chopping board used by a fish seller. Fears over whether food can transmit viruses had led salmon to be boycotted in the Asian country.

Trade Disruption

If China continues to suspend shipments based on coronavirus cases reported at processing plants, it could also threaten to undermine promised agricultural purchases as part of the Washington-Beijing trade deal.

Tyson said in a statement Sunday it was looking into the report and cited that the World Health Organization and the Centers for Disease Control and Prevention say there’s no evidence that virus transmission is associated with food. The company late Friday said 13% of its workers tested positive for the virus at plants in northwest Arkansas.

Tyson’s shares fell as much as 3.5% Monday morning in New York. Lean hog futures in Chicago slumped as much as 3.9%, with the most-active August contract hitting a record low.

China had backed off from its previous stance linking food to virus cases. A customs official at a briefing on Friday said the country was taking the advice of international organizations that there’s a low risk of imported food transmitting the virus, and no food restrictions would be imposed.

But the move to block the Tyson shipments runs counter to that, and reverts the country back to increasing its scrutiny over imported food. Meanwhile, a German abattoir last week voluntarily halted pork exports to China after workers were found to be infected.

China’s customs department said over the weekend that one poultry company in Britain reported Covid-19 cases. While the U.K. isn’t allowed to export poultry to the Asian nation, its authorities have agreed to take measures to prevent the virus from contaminating pork and beef exports to China, and will inform the Asian nation whenever exporters have any outbreaks.

Testing Imports

China’s customs authorities had started testing all shipments of imported meat for the virus, while officials in some major cities were also checking the products at domestic markets. In a statement last week, China Customs said all 32,174 samples of imported seafood, meat, vegetables, fruit and other related products had tested negative.

The country’s scrutiny may end up having a big impact on global food shipments. Its surging imports of meat had helped to buoy U.S. and Brazilian producers of poultry, pork and beef, both before the nation’s virus outbreak in January and as global trade has staged a nascent recovery in recent weeks with the country exiting lockdowns.

Through April, U.S. exports of poultry meat and products, excluding eggs, to China were valued at $152 million, up from only about $7 million in the comparable period in 2019, U.S. Department of Agriculture data showed.

Still, China’s market is facing a chicken surplus from its own production and stagnating demand, Bric Agriculture’s Lin said. China also imports most of its poultry from Brazil, while the U.S. makes up just a small percentage of imports, therefore the halt will have little impact on the domestic market, he said.

On Sunday, PepsiCo China said it shut a food plant in the Chinese capital after a case of the virus was confirmed earlier in the week. The company conducted tests on all employees at the plant and quarantined 480 workers, even though they all tested negative, one of its officials, Fan Zhimin, said at a local government briefing. PepsiCo China later said in a WeChat post that none of its beverage plants in the country have reported any cases of the virus.

(©2020 Bloomberg L.P.

ThyssenKrupp Elevator $3.4 Billion Debt Sale Starts for BuyoutTatiana Darie and Ruth McGavin Bloomberg June 22, 2020


(Bloomberg) -- A group of six banks have launched the first part of the highly-anticipated jumbo debt sale backing the acquisition of ThyssenKrupp AG’s elevator unit, Europe’s largest leveraged buyout in a decade.

The private equity firms that agreed to buy the division are seeking loans worth 3.05 billion euros ($3.4 billion) denominated in euros and U.S. dollars to part-finance the 17.2 billion euro buyout.

Lead underwriters for the transaction are Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., Royal Bank of Canada, and UBS Group AG. The issue comes after bankers pre-marketed the deal to a group of investors in the past few days to gauge interest.

Bankers are taking advantage of a swift rebound in debt markets to shift the debt that’s been weighing on their balance sheets since the first quarter. High-yield bonds and leveraged loans on both sides of the Atlantic have erased most of their losses since March and the markets have seen a flurry of offerings in recent weeks.

The new loan helps fund the acquisition of ThyssenKrupp’s elevator unit by Advent International Corp. and Cinven Ltd., together with RAG-Stiftung. The purchase is due to close by the end of July.

The debt package also includes senior secured bonds in dollars and euros, plus the equivalent of 1.7 billion euros in unsecured notes of which about 625 million euros has already been placed, Bloomberg has previously reported.

On its latest earnings call, ThyssenKrupp didn’t offer too many details about the elevator business, besides noting that the division saw a small annual net sales decline in the three months to end-March, attributed to the coronavirus impact in China.

In the loan market, the unit’s credit ratings will be watched closely by a large group of buyers, known as collateralized loan obligations. CLOs have been plagued by downgrades and may seek to add the business to their portfolios, depending on its rating.

A lender call on the offering is scheduled for Tuesday. Investors have until July 1 to commit to the deal.

Spam Sales Are Booming With Consumers Seeking Out ComfortKen Parks, Jackie Davalos, Greg Ritchie and Heesu Lee Bloomberg June 22, 2020

(Bloomberg) -- Canned meat is having a moment.

Demand is booming across the globe. In the U.S., sales surged more than 70% in the 15 weeks ended June 13. In the U.K., consumption of canned corned beef has taken off. Even in South Korea, where Spam is an old favorite, sales are expanding at the fastest pace in years.

At first, people were loading up on pantry staples with a long shelf life during lockdown conditions. Then, shortages of some fresh meat supplies, especially in the U.S., also helped to drive sales. Now, the economic downturn is underpinning demand.

There’s the obvious factor of income here. With millions thrown out of work in the last few months, consumers are looking for a way to cut back on grocery bills, and they’re trading in fresh meat for canned varieties. But there’s also something deeper going on -- a return to comfort food and nostalgia in troubled times.

Ray Herras, a graduate student at Columbia University, is a Filipino American. Spam gained popularity in the cuisines of Southeast Asia after occupying U.S. forces brought the canned ham with them. For Herras, Spam is a taste of childhood.

“I grew up eating Spam. It is deeply ingrained in Filipino culture, but I wasn’t really eating Spam until quarantine,” said Herras, who started adding it to his grocery purchases at least every other week. He’s not sure how much longer he’ll keep the buying up, but it’s always a staple whenever he’s “feeling homesick,” he said.

Canned meat has been available for more than 80 years. It’s sometimes frowned upon by filet-mignon loving elites, but it’s also got a cult following. Spam musubi -- think of it like a porky twist on sushi -- is a popular snack in Hawaii. In Korea, it’s eaten with kimchi and steamed rice. In the U.S., a slice of fried Spam with eggs can be a breakfast treat. And in the U.K., tinned corned beef is served up as hash with potatoes and fried onions.

But while the die-hard fans are always there, the recent boom in sales is something even the canned meat makers didn’t see coming.

“Even I thought it could be difficult to increase our sales of canned meat to more than what we expected,” said Kasper Lenbroch, chief executive officer of the unit that houses the Tulip brand at Danish Crown Group, Europe’s top meat processor. “It’s not very often when you’re in food that you can see traditional products like these grow as much as they have done right now.”

Sales of Tulip Pork Luncheon Meat, sold in 120 markets around the world, are expected to go up 25% this year, Lenbroch said. Sales are “growing all over,” including in the U.K., Germany, Greece, Japan and Singapore, among many others.

Marfrig Global Foods SA, the Brazilian beef giant, is seeing a similar jump at its Uruguay business, which supplies corned beef to the U.S. Sales of the product are expected to reach as high as 3,500 metric tons this year, said Marcelo Secco, CEO of the unit. That would be up almost double compared with 2019, when about 1,800 tons were sold, he said.

Secco points to the recent jump in U.S. meat prices as turning consumers on to canned alternatives. Some of America’s biggest livestock slaughter plants were forced to close earlier this year after coronavirus outbreaks saw thousands of workers falling ill. That caused wholesale beef prices to double in about a month. While the market has come back down, corned beef was there to help fill supply gaps -- and now that consumers have returned to the old staple, they may be more inclined to stick with it.

“There isn’t a supermarket in the U.S. that doesn’t have corned beef,” Secco said. “It’s a product that everyone knows.”

While U.S. sales of canned meat have slowed since an initial surge when lockdowns started in mid-March, they are still well above 2019 levels. In the week ended June 13, sales were up 17%, according to Nielsen data.

Hormel Food Corp.’s Spam was already seeing sales growth in the past several years, but nothing like the increase taking place now.

“The last time Spam saw a similar pattern in interest was back to when the brand started during the Great Depression. The economic situation wasn’t great -- that was carried into World War II,” said Brian Lillis, Hormel’s senior brand manager for Spam. “What we saw over the last few months is really people all over the country purchasing the product.”

Hormel shares are up about 8% this year, while the S&P 500 Index is down 4%.

Spam has a storied history in South Korea, the No. 2 consumer after the U.S. It’s a popular holiday gift sold in lavish packages, which make up about 60% of annual sales, according to CJ CheilJedang Corp., the Korean producer of the tinned ham.

When coronavirus cases started spreading in the country in February and March, consumers stayed home and cooked more -- but many people still had leftover Spam from holiday packages. It wasn’t until April that sales really started taking off.

In the two months of April and May, CJ saw Spam sales soar more than 50% from a year earlier.

“The outbreak of coronavirus has revived the domestic canned food industry, which was on the verge of entering a period of stagnation,” said Lee Seung Hoon, a spokesman at CJ. “Now we are expecting growth in the market.”

©2020 Bloomberg 

Virus is taking big toll on farm county in Washington state

The Canadian Press June 22, 2020



YAKIMA, Wash. — Fruit warehouse worker Armida Rivera says her days in Yakima County, Washington, are filled with the fear of getting the coronavirus.

Sean Gilbert worries about the threat to his family's century-old orchard business in the county.

And Washington Gov. Jay Inslee is struggling to help the county at the heart of the state's agricultural belt that he once called home.

The coronavirus pandemic is hitting Yakima County hard, with cases surging far faster in this region about 140 miles (225 kilometres ) southeast of Seattle than the rest of the state. The virus has caused turmoil in the farm and food processing industry, where some fearful workers staged wildcat strikes recently to demand employers provide safer working conditions.

Hospitals in the county are filled to capacity and have started sending patients to neighbouring counties, officials said.

Efforts to slow the spread of COVID-19 among the county's 250,000 residents have so far failed, and Yakima County is one of only three in Washington that has remained in Phase One lockdown while most of the state is starting to reopen.

Inslee said a big reason is that many people in Yakima County are declining to wear masks.

Visits to fast-food restaurants and other essential businesses found lots of employees and customers not wearing masks. In Selah, youth league baseball games were being played with spectators — few wearing masks — in the stands.

Inslee on Saturday announced he was preparing a proclamation to require Yakima County residents to wear masks when outside their homes. Stores and other businesses will be banned from selling to customers without masks, he said.

“That essentially means: ‘’No mask, no service, and no mask, no goods,'' Inslee said.

The Washington Department of Health in mid-June ranked the industries in the state most struck by COVID-19. The agency found that manufacturing, including food processing plants, ranked second in cases, behind health care. Agriculture ranked fifth, behind retail trade and the hospitality industry.

Nationally, meat and poultry processing plants have been hard-hit by coronavirus, with at least 20 of those plants across the country shut down for a week or more.

Meanwhile, the 2.7 million farm workers employed in the U.S., often working and living in close quarters, are just heading into the busy harvest season.

As of Sunday, Yakima County had at least 6,283 cases of coronavirus, second-highest among counties in the state, and 138 deaths. King County, which includes Seattle and has nearly 10 times more people, had recorded at least 9,211 cases and 600 deaths.

Inslee noted the infection rate in Yakima County was 28 times higher than the rate in King County. He predicted it would jump dramatically this summer if people don't take steps to limit exposure.

“It is terrifying,'' Inslee said of the region, home to tens of thousands of workers on farms and in food processing plants who make up the bulk of the economy.

Just over 50% of the county's virus cases involve Hispanic residents, who make up the bulk of the agricultural workforce. In addition, 26% per cent of virus tests in the county come back positive, compared to a state average of about 6%.

Rivera, 36, works in a fruit warehouse. A native of Mexico who has lived 20 years in the United States, she was a leader of a two-week wildcat strike at the warehouse when management refused to provide workers with masks, hand sanitizer and other safety equipment.

“We were scared. '' she said, stressing that people were working shoulder-to-shoulder.

The valley's bounty of apples, cherries, pears and other crops are sorted, cleaned and packaged at the warehouse.

The workers who went on strikes at several plants mostly earn the minimum wage of $13.50 an hour. They were heartened by support from the medical community, as doctors and nurses came by to drop off masks and other supplies.

The wildcat strikes, which involved half a dozen fruit warehouses, have all been settled, but fears remain.

Rosalinda Gonzalez, 41, is a native of Mexico who has lived in the United States since 1995. Married with three children, she also went on strike for protective equipment and a safer work environment.

“We are always afraid,'' Gonzalez said, adding that many workers at her warehouse have tested positive for the virus.



Some farmers have taken extraordinary steps, some prescribed by the governor's office, to protect their work force.

Gilbert is the owner of Gilbert Orchards,where he grows 4,000 acres of apples, cherries, wine grapes and other crops in the shadow of the Cascade Range.

He provided face marks for his workforce, spending $22,000 in April to buy 16,000 masks from China. His employees practice social distancing and migrant workers are housed in dormitories that no longer include bunk beds, as required by the governor's proclamations. Vans now carry seven people at a time to distant fields instead of 15.

But that doesn't mean he will stay in business.

Costs for farmers are rising dramatically, even as the markets for produce are dropping because of trade restrictions overseas and people's inability to pay for the products in the United States because of job losses, Gilbert said.

He recently took 300 acres of apples out of production.

“At our cost structure, it didn't make sense to keep growing,'' he said.

Inslee said the county also has lots of cases in nursing homes, and a large percentage of the region's employees are rated as essential and thus continued to go to work.

“”This is the place where our food comes from,'' Inslee noted.

As a result, local politicians pushed him hard to start allowing the reopening of businesses in Yakima County.

Rivera said safeguarding health should be the most important consideration.

“It’s super necessary to protect our families.? she said.

Nicholas K. Geranios, The Associated Press