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The industrial commodities rebound is starting to lose its luster. Metals prices in China are in steep decline, the WSJ's Yifan Xie and David Hodari report, amid growing worries that demand for commodities like steel and iron in the world's No. 2 economy is weakening. The softer metals demand is being felt around the world, as waning exports from key producing countries start to eat into earnings at big bulk shipping companies. A big concern is that expected demand for infrastructure and construction projects in China -- long a pillar of global commodities prices -- may not materialize as the government tries to rein back debt created by the big projects. Prices for foundation commodities including iron ore and steel rebar have been falling from four-year highs in March. The Baltic Dry Index, which measures prices for shipping bulk commodities, has tumbled more than 22% since the start of April, and traders say demand could weaken even more if China's economy slows further.
One segment of the retail market is building a strong rebound amid disarray in most of the consumer-sales trade. Home-improvement companies are on a roll, the WSJ's Ryan Dezember and Corrie Driebusch report, with companies from big-box retailers Lowe's Co and Home Depot Inc. to paint maker Sherwin-Williams Co. drawing more traffic in the aisles and interest from investors. Behind the rally: booming construction as the housing market recovery advances and rising home prices that are convincing homeowners to spruce up properties. Home-improvement retailers have proved resilient to the migration to online shopping that is crashing many brick-and-mortar retailers. Home Depot has been opening new stores, and Floor & Decor Holdings Inc. plans to add to its 72 locations at a clip of about 20% a year. The growth is starting to show up in freight movements, with rail shipments of lumber and wood products turning around after starting the year in decline.
Four suppliers turn out to carry more weight than just one. One of the largest grocery cooperatives in the U.S. is seeking bankruptcy protection after four suppliers banded together to demand the operation pay its bills. The WSJ's Lillian Rizzo and Stephanie Gleason report Joliet, Ill.-based Central Grocers Inc., which serves several independent chains and runs three regional chains of its own, is trying to sell its better-performing stores. The bankruptcy filing follows a rare move by big suppliers to work together over a common, troubled customer. Food giants Coca-Cola Co., General Mills Inc., Post Consumer Brands and Mars Financial Services this week filed an involuntary chapter 7 petition against Central Grocers claiming the cooperative of grocery wholesalers owes them $1.8 million. The coop is already winding down some operations while it seeks to sell, and it's liquidating inventory at its Joliet distribution center.
ECONOMY & TRADE
The direction of U.S. trade this year isn't following the script. U.S. exports and imports both grew sharply in the first quarter, the WSJ's Josh Mitchell reports, quelling fears that anti-globalization waves would quickly tamp down the movement of goods. The new figures suggest underlying health in the global economy and in the economic forces driving the flow of goods. The U.S. trade deficit with Mexico jumped to its highest level since November 2007, for instance, as the falling value of the peso helped push Mexican goods exports to the U.S. to an all-time high of $28.1 billion. Many manufacturers and transportation companies are still investing in Mexico even as the Trump administration talks about renegotiating the North American Free Trade Agreement and reinvigorating U.S. factories. That could end up hurting Mexican exports. But in the near term, the peso's drop has made it cheaper for American firms to buy Mexican goods in dollars.
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IN OTHER NEWS
Crude oil prices dipped to a five-month low following a modest dip in U.S. inventories and an increase in gasoline supplies. (WSJ)
Ford Motor Co. will temporarily lay off 130 workers at an Ohio factory to trim supply of medium-duty work trucks hit by softening demand. (WSJ)
U.S. labor costs rose at a 3% annual rate in the first quarter. (WSJ)
The number of U.S. workers claiming unemployment benefits for longer than a week reached the lowest level in 17 years. (WSJ)
U.S. service-sector activity accelerated sharply in April. (WSJ)
Canada's exports jumped 3.8% in March. (WSJ)
Apple Inc. supplier Imagination Technologies Group PLC intends to sell a large part of its business amid a patent fight with Apple. (WSJ)
Siemens AG's second-quarter profit margins improved in part because of gains at its unit providing factory automation equipment and software. (WSJ)
Cargo revenue at Air France-KLM SA fell 4.7% in the first quarter as the airline cut its freighter capacity by 14.8% from a year ago. (WSJ)
Japanese shipbuilders including Mitsubishi Heavy Industries will jointly develop self-navigation systems and other technology to better compete with Asian rivals. (Nikkei Asian Review)
Iran is in talks with Britain's export credit agency to help finance aircraft sales to state airline IranAir. (Reuters)
Apple will create $1 billion fund to invest in advanced manufacturing in the U.S. (New York Times)
Auto parts supplier Bosch Ltd. sold its subsidiary making starter motors and generators to a Chinese buyer. (Agence France-Presse)
Sealed Air Corp. and United Parcel Service Inc. will jointly research more efficient packaging for e-commerce shipments. (Business Journals)
Roadrunner Transportation Services Inc. restructured its leadership as the trucker copes with accounting issues and a falling stock price. (Milwaukee Journal-Sentinel)
Unionized workers at two DHL Supply Chain warehouses in South Yorkshire, U.K., are threatening rolling strikes over plans to consolidate the sites. (Post & Parcel)
Global airfreight demand rose 14% in March, the fastest pace since October 2010. (DC Velocity)
Atlas Air Worldwide Holdings Inc. expects improved earnings later this year after reporting a small first-quarter loss. (The Loadstar)
Forwarder CEVA Holdings LLC fell to a $57 million loss in the first quarter despite a 1.9% gain in gross revenue. (American Shipper)
Auto-parts retailer AutoZone Inc. is building a 440,000-square-foot distribution center in Ocala, Fla., next to a FedEx Ground facility. (Business Journals)
Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.
Write to Paul Page at email@example.com
(END) Dow Jones Newswires
May 05, 2017 06:43 ET (10:43 GMT)