Canadian Economic News, May 2024 Edition

Resources

• Calgary-based Trans Mountain Corporation announced that May 1st signified the commercial commencement date for the Expanded System and that tankers would be able to receive oil from Line 2 by mid-May.
• Calgary-based Imperial Oil Ltd. announced that its Grand Rapids oil sands project had started production at Cold Lake using lower emission technology. Imperial said production will continue to ramp up over the next few months to achieve full rates of 15,000 gross barrels per day later this year.
• Calgary-based AltaGas Ltd. and Royal Vopak of the Netherlands announced a positive final decision on the Ridley Island Export Facility, a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with rail, logistics, and marine infrastructure on Ridley Island, British Columbia. The companies said the projected gross Joint Venture capital cost of the project is $1.35 billion, excluding governmental incentives and support, and is expected to come online near 2026 year-end.
• Calgary-based Canadian Utilities Limited announced a new $2 billion energy infrastructure project, called the Yellowhead Mainline project, which will consist of building approximately 200 kilometres of high-pressure natural gas pipeline and related control and compression facilities that will run from Peers, Alberta, to the northeast Edmonton area. The company said construction is expected to commence in 2026, subject to regulatory and company approvals, and is planned to be on-stream in the fourth quarter of 2027.
• Vancouver-based Canfor Corporation announced the permanent closure of its Polar sawmill in Bear Lake, British Columbia and the suspension of its planned reinvestment in Houston, British Columbia. Canfor said this follows the announcement by its subsidiary company, Canfor Pulp, that one line of production will be indefinitely curtailed at the Northwood Pulp Mill.

Manufacturing

• Winnipeg-based NFI Group Inc. (NFI) announced that NFI subsidiary New Flyer of America Inc. (New Flyer) had been awarded a contract from the New Jersey Transit Corporation for the purchase of up to 1,300 Xcelsior® 40-foot clean-diesel transit buses. NFI said New Flyer had received an initial firm order for 175 buses with the option to purchase up to 1,125 additional 40-foot buses.
• Unifor announced on May 5th that 461 workers at the Toronto Nestle plant had decided to strike. Unifor said the plant produces Kit Kat, Aero, and Coffee Crisp chocolate bars, as well as Smarties. On May 29th, Unifor announced that workers had ratified a new three-year contract.
• Japan-based Asahi Kasei announced it will construct its previously announced integrated lithium-ion battery (LIB) separator plant in Port Colborne, Ontario. Asahi had announced an initial investment of approximately $1.56 billion and said the start of commercial production is currently slated for 2027. The Governments of Canada and Ontario said the project is expected to benefit from federal support through tax credit while Ontario expects to support the project with both direct and indirect incentives.

Other news

• The Government of Canada announced it was launching the first phase of a national pharmacare plan, including making contraception medications and devices free and making diabetes medications, like insulin, free.
• On May 24th, the Government of the Northwest Territories released Budget 2024-25, which included a fiscal strategy to restore fiscal sustainability by increasing operating surpluses, reducing short-term debt, realigning health spending to make the programs more sustainable, allocating funding to priorities, and increasing fiscal capacity to ensure the Greater Northwest Territories (GNWT) can respond to future fiscal shocks. The Government forecasts a $294 million operating surplus for 2024-2025 and a contraction in real GDP of 1.1% in 2024.
• Quebec's minimum wage increased from $15.25 to $15.75 per hour on May 1st.
• Minnesota-based ALLETE, Inc., which includes utilities and renewable energy companies, and a partnership led by Canada Pension Plan Investment Board of Toronto and Global Infrastructure Partners of New York announced they had entered into a definitive agreement under which the partnership will acquire ALLETE for USD $6.2 billion including the assumption of debt. ALLETE said the transaction is expected to close in mid-2025, subject to the approval of ALLETE's shareholders, the receipt of regulatory approvals, and other customary closing conditions.

United States and other international news

• United States President Joseph R Biden, Jr. announced an increase in tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products.
• The U.S. Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate at 5.25% to 5.50%. The last change in the target range was a 25 basis points increase in July 2023. The Committee also said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities and that, beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Monetary Policy and Financial Stability Committee of Norway's Norges Bank left the policy rate unchanged at 4.5%. The last change in the policy rate was a 25 basis points increase in December 2023.
• The Bank of England's Monetary Policy Committee (MPC) voted to maintain the Bank Rate at 5.25%. The last change in the Bank Rate was a 25 basis points increase in August 2023.
• The Reserve Bank of Australia (RBA) left the cash rate target unchanged at 4.35%. The last change in the cash rate target was a 25 basis points increase in November 2023.
• The Executive Board of Sweden's Riksbank lowered the repo rate by 25 basis points to 3.75%. The last change in the repo rate was a 25 basis points increase in September 2023.
• The Reserve Bank of New Zealand (RBNZ) left the Official Cash Rate (OCR), its main policy rate, unchanged at 5.50%. The last change in the OCR was a 25 basis points increase in May 2023.
• Florida-based Red Lobster Management LLC, owner and operator of the Red Lobster® restaurant chain, announced that the Company had voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the United States. The Company said it intends to use the proceedings to drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern. The company also said Red Lobster's restaurants will remain open and operating as usual during the Chapter 11 process.
• Texas-based ConocoPhillips and Marathon Oil Corporation announced they had entered into a definitive agreement pursuant to which ConocoPhillips will acquire Marathon Oil in an all-stock transaction with an enterprise value of USD $22.5 billion. The companies said the transaction is expected to close in the fourth quarter of 2024, subject to the approval of Marathon Oil stockholders, regulatory clearance, and other customary closing conditions.

Financial market news

• West Texas Intermediate crude oil closed at USD $76.99 per barrel on May 31st, down from a closing value of USD $81.93 at the end of April. Western Canadian Select crude oil traded in the USD $63 to $67 per barrel range throughout May. The Canadian dollar closed at 73.33 cents U.S. on May 31st, up from 72.75 cents U.S. at the end of April. The S&P/TSX composite index closed at 22,269.12 on May 31st, up from 21,714.54 at the end of April.