TheChek News Flow

Oversupply of the power-plant fuel persists despite some of the hottest weather on record

A glut of natural gas is depressing prices and prompting fresh cutbacks in America’s drilling fields, despite one of the hottest summers on record.

Big producers such as EQT and Coterra Energy are choking back output, waiting to connect new wells to pipelines and delaying drilling projects. They aim to buoy prices that have rarely been lower during the heat of the summer, when air conditioning creates a lot of power demand.

Benchmark natural-gas futures ended Monday at $2.235 per million British thermal units, down 15% from a year ago and 29% less than the recent peak in mid-June.

Futures were even lower at the beginning of this month, trading below $2, before producers began disclosing plans to dial down output. Aside from the crash during 2020’s Covid-19 lockdown, summer natural-gas prices hadn’t been so low since the 1990s.

“Simply put, gas markets are oversupplied,” Coterra Chief Executive Thomas Jorden told investors this month, when the Houston company mapped out plans to reduce production in its Appalachian gas fields.

U.S. gas output hit a daily record of 105 billion cubic feet in December, according to S&P Global Commodity Insights. An unusually warm winter left a lot of gas unburned during heating season. By spring, the market was swamped and prices tumbled. A round of production curtailments lifted prices but they were driven back down by resurgent output.

Meanwhile, storms have hit demand hard. Hurricane Beryl knocked out power for millions of Texans and big gas consumers on the Gulf Coast, including a terminal that exports liquefied natural gas, or LNG. This month tornadoes blacked out hundreds of thousands of homes and businesses around Cleveland.

The volume of natural gas in domestic storage facilities is 13% higher than the five-year average for this time of year despite record demand this summer from utilities, according to the Energy Information Administration.

That is down from a 40% surplus in March, when gas prices hit inflation-adjusted record lows. But there is still enough gas stockpiled to warm the U.S. through even an unusually cold winter and leave a comfortable cushion for spring, said Joe DeLaura, global energy strategist at Rabobank, which recently trimmed its winter price forecasts.

There are more than two months to go before furnaces are fired up and gas demand exceeds daily production. Until then, production in excess of demand is injected into underground storage caverns by traders eyeing higher winter prices. The more gas that winds up in storage ahead of winter, the lower the prices consumers are likely to pay when it comes time to heat their homes.

“Everything from today until the end of October is like extra padding,” DeLaura said. “It’s pretty hard to make a bullish case.”

Producers lately have been acting more like traders than in past years, when they drilled to boost production, often without regard to profitability. For the second time this year producers including EQT, APA and Chesapeake Energy are holding back gas from the market while prices are low.

So far this month analysts say production has declined by more than two billion cubic feet a day, which is about equal to the daily consumption of a small city or the largest LNG-export terminals.

That is partly due to the curtailments, which quickly remove supply from the market, as well as the delayed effect of less drilling since spring. There were 98 rigs drilling in the U.S. specifically for natural gas last week, down from more than 120 in February, according to oil-field services firm Baker Hughes.

Gas executives and analysts say it takes six to nine months for reduced drilling to show up in production data.

“We’re seeing markets function efficiently and producers responding the way you would expect them to respond,” said Eric McGuire, director of natural gas and LNG analytics at energy research firm Wood Mackenzie. “The thing that is shocking is that they haven’t really done this before; it’s a new producer paradigm.”

The great nightly Waymo honk-a-thon — in which the company’s robotaxis erupted into a chorus of honking at night’s end in a San Francisco parking lot— was resolved, then not. Now it is again.

The backstory: Software engineer Sophia Tung set up a livestream of the parking lot that captured the robotaxis streaming in to park — and honk — for up to an hour around 4 a.m.

Waymo last week issued a software patch to ensure the robotaxis — often in close quarters — would not honk at each other. But at 4 a.m. Saturday morning, the livestream captured, yes, more honking.

Now, another patch has been issued, per an interview Monday between Tung and Waymo Director of Product and Operations Vishay Nihalani on her livestream. Nihalani explained that while it makes a lot of sense for Waymos to honk on public roads, the group honking was an unintended consequence.

Nearly a decade after K-beauty’s initial global emergence, new indies are seeing a fast and furious rise in the U.S. — and this time, they’re leaving no beauty category unturned.

“Did you wear sunscreen today?” reads a smattering of blue bubble letters across the front window of Korean beauty store Senti Senti’s new location in Williamsburg, New York’s OG hipster neighborhood.

The shop — founded in Chinatown in 2009 under the previous name OO35mm by Chinese American sisters Winnie and Sandy Zhong — has long been a go-to spot for local K-beauty aficionados. More recently, though, TikTok-influenced consumers have been making their way to the store in droves.

“We always knew we wanted a second location, but the pandemic changed everything in enabling us to make that decision,” said Winnie.

“In bringing self-care to the forefront of the internet, [the pandemic] also helped people find hobbies — and skin care was definitely one of them,” continued Winnie, who leads a 25-member team at Senti Senti’s 2,000-square-foot Williamsburg store.

Among the roughly 165 brands lining the retailer’s shelves are K-beauty OGs such as Klairs and Amorepacific-owned Laneige, Innisfree and Aesutra — which have become all but synonymous with K-beauty’s initial, 2010s-era Stateside emergence — as well as a more nascent crop of burgeoning K-beauty indies, including Beauty of Joseon, Mixsoon, Anua, Round Lab, I’m From, Tocobo and more.

The likes of Beauty of Joseon and Round Lab have skyrocketed thanks to their hero SPFs, which cost less than $20 and feature heavier-duty UV filters than those that are FDA-approved in the U.S.

The TikTok Factor

It helps, too, that “a lot of Asian beauty brands excel at creating sensorial textures, which translate well across a screen; snail mucin is a great example of this, where it almost has the appeal of ASMR, but in terms of texture,” said Spate cofounder Yarden Horwitz.

According to Spate, Amorepacific-owned CosRx, best known for its Advanced Snail 96 Mucin Power Essence — receives 15.1 million average weekly views on TikTok, a 245.6 percent increase versus last year.

In terms of K-beauty views, the brand is second only to Anua, a more recent player that rakes in 17.1 million average weekly views — up 578.3 percent versus last year — mainly driven by its Heartleaf Pore Control Cleansing Oil. Retailing for $17, the offering was the top-selling cleansing oil during July’s Amazon Prime Day event, per Market Defense, and in the last month has sold more than 100,000 units on the platform.

“All indications are that consumer awareness is coming from TikTok,” said Vanessa Kuykendall, chief engagement officer at Market Defense, adding that Amazon searches for “K-beauty” are up 54 percent year-over-year, reaching 112,000 monthly searches.

“K-beauty is being reimagined through the lens of TikTok — it’s a new generation who are digesting the trends, the products, the ingredients and interpreting them in their own unique way,” said Charlotte Cho, who founded K-beauty e-tailer Soko Glam in 2012, as well as her own Korean-inspired skin care brand, Then I Met You, in 2018. “I think at the crux of it is that Korean beauty trends and rituals are not based on gimmicks — they work, and that’s why K-beauty has this second life, will have a third life, and has made such an impact on the industry.”

Cho should know. Soko Glam, which is now 12 years old and ships to 53 countries, has seen a 69 percent increase in site traffic versus January 2024 alone. Among its bestsellers are I’m From’s $40 Mugwort Essence; Iope’s $50 Caffeine Shot Serum and Then I Met You’s The Giving Essence, which costs $50 and taps a 78 percent blend of naturally fermented ingredients.

Because of its quickly expanding global purview, the e-tailer is projected by industry sources to double its sales by this time next year. Meanwhile, Then I Met You is slated to enter Sephora U.S. online and in 250 doors this October, making it the first new K-beauty brand to shake up the retailer’s assortment in some time, joining the ranks of Glow Recipe, Dr.Jart+ and Amorepacific’s portfolio of brands.

It’s the kind of expansion K-beauty is poised to see much more of in the near future.

A Shifting Retail Landscape

“U.S. retailers — until about four years ago — quite frankly were not interested in K-beauty whatsoever,” said Landing International chief executive officer Sarah Chung Park, who spearheaded CosRx’s entry to Ulta Beauty in 2017 and has since partnered with several other Korean brands — most of whom don’t have U.S. teams — looking to enter the market. “Now, we’re talking to almost every retailer about what they’re going to do about K-beauty, because you almost have to have a point of view at this point.”

Chung Park is bringing Mixsoon, which, like CosRx is TikTok-loved and operates a sizable Amazon business, to Costco — a common avenue for brands entering the U.S. market from Korea, where membership wholesale retailers are extremely popular.

The brand’s hero $26 bean essence has sold more than 20,000 units on Amazon during the last month, and though Chung Park did not comment on sales expectations for its 200-door Costco foray, industry sources think Mixsoon could do $5 million in sales during its first year at the retailer.

“During its first wave, K-beauty didn’t have a direct channel to the consumer; Amazon wasn’t what it is today, TikTok didn’t exist — there was Instagram, but it really wasn’t the same,” said Chung Park. “On top of that, not a lot of people knew about Korea. It wasn’t considered cool, and there was a lot of apprehension about K-beauty products — they were still considered this novelty item.”

Enter “Hallyu”

Within a mere matter of years, though, Korea’s influence over culture and trends in the U.S. has become near-ubiquitous.

K-pop stars belonging to chart-topping ensembles like BTS, Enhypen and BlackPink are being tapped in rapid-fire succession as ambassadors for luxury brands including Gucci, Louis Vuitton and Dior, while interest in Korean cuisine, too, has soared, fueled by myriad buzzy restaurant openings across cities like New York and Los Angeles as well as an online popularization of Korean recipes and snacks. (For instance, Korea’s Buldak — or “fire chicken” — instant noodles, which first went mainstream years ago due to a viral spicy noodles challenge, now operate a six-figure TikTok Shop business — a status not many foods can claim.)

It only makes sense that the beauty crest of Hallyu, meaning “Korean wave,” is now firmly taking root.

“This is the Korean moment,” said John Demsey, formerly executive group president of the Estée Lauder Cos. and current senior adviser to South Korean retail giant, Shinsegae. “Korean beauty is not a regional product play — this is a global offer, and if Korean companies haven’t previously been fully organized to deeply penetrate a market like the U.S. — the work is now being done to get there.”

Just look at the trajectory of Beauty of Joseon. The brand, which offers skin care products ranging in price from $17 for each of its Glow, Calming and Revive serums to $48 for its Dynasty Cream, saw a uniquely organic rise on TikTok beginning in 2022, when creators like Dieux cofounder and aesthetician Charlotte Palermino began singing the praises of Korean sunscreens.

“The reason I got so into Beauty of Joseon was because I saw they were posting two tests for their sunscreens — their PA results and SPF results, both in Korea and Spain,” said Palermino, who is credited by many for educating on and influencing a preference toward Korean sunscreens for their increasingly advanced chemical UV filters. (The U.S. has not approved a new UV filter for sunscreen use since 1999, and while efforts to streamline FDA approval of more up-to-date filters has seen much start- and stop- since, little progress has been made).

“There’s a reason why Americans, who are obsessed with two-day shipping, will wait weeks and spend money on import fees for these [international] SPFs,” said Palermino. “Sure, we have perfectly passable sunscreens here in the U.S., but because Americans don’t wear that much sunscreen, and especially because of the sun habits of Americans — it’s critical we have better ones.”

Beauty of Joseon’s three SPF50+, PA++++ products — which tap supplementary ingredients like rice, mugwort and ginseng and come in lotion, stick and spray formats — comprise nearly 40 percent of the brand’s total sales, which in 2023 topped $100 million. For context, in 2020 — its debut year — the brand did $31 million.

In 2024, the brand, now in talks with CVS Pharmacy and Target to bring over-the-counter iterations of its sunscreens to mass U.S. retail by 2025, projects it will exceed $200 million.

“Virality had a huge impact on our business; we had never been focused on our TikTok channel before that, and we never spent money on collaborations on TikTok until last year,” said Sumin Lee, Beauty of Joseon’s brand director, adding that the brand is only now shifting gears into marketing mode in a bid to further capitalize off the momentum.

“The U.S. is our biggest market and our most important market — we want to be in it as deeply as its local brands are,” said Lee, adding that Europe and Malaysia are the brand’s second and third-largest markets, respectively.

Fellow TikTok darling TirTir, primarily known for its makeup — particularly its Mask Fit Red Cushion Foundation that sells for $25 and is the single most-purchased foundation on Amazon, per Market Defense — is also betting big on the U.S.

Standing for “trust in radiance,” TirTir launched in 2018 and entered Japan, now its biggest market, in 2019. This time last year, the brand offered its hero foundation in just three shades, catering specifically toward fair-skinned consumers in its then-key markets of Korea and Japan.

When TirTir seeded the range to U.S. influencers this spring and quickly faced fallout for not catering toward diverse skin types, it mobilized to expand the range to 30 shades in less than three months, reseeding it to the same influencers again.

“Let’s talk about redemption,” said influencer Golloria George (@golloria) in a TikTok video upon receiving the expanded range. George — who was among those vocalizing disappointment in the brand’s initial shade range, and was also at the forefront of Youthforia’s recent shade diversity reckoning — then signed on as an ambassador for TirTir.

“When we launched [in the U.S.] we weren’t sure if our formulation would be suitable for the U.S. market or not; we wanted to listen to the influencers’ feedback, and that’s why we decided to expand our range,” said Lyla Kim, global business manager at TirTir, adding that this month, the brand added an additional 10 shades, bringing its total to 40.

While the brand is upping investment in influencer marketing, “more than 50 percent of social media content featuring TirTir is completely organic,” said Rahee Lim, global business director. The brand, which is in the midst of finalizing a TikTok Shop storefront — sure to catalyze sales even further — is also planning its first U.S. pop-up in New York this October.

“We’ve done many pop-ups in Japan, but we have a desire to impact beauty trends in the U.S., as well,” said Lim. “Americans tend to wear their skin bare or do a full face of makeup, but in Korea, our makeup style sits in the middle — it’s very natural, and very glowy.”

A Peak Yet to Come

Data indicates it isn’t far-fetched that a brand like TirTir could indeed wield influence over not just product trends, but also makeup look trends in the U.S.

“The Korean skin care movement is the most significant of the K-beauty verticals, but Korean makeup is gaining traction — we’re seeing new trends like ‘idol makeup’ emerge, where people are giving the signature K-pop idol look its own makeup terminology,” said Horwitz, also pointing to the rise of Chinese-inspired “Douyin makeup” over the last two years, which features “strategic highlight, blush in the right places, lip stain and lashes.”

On TikTok, “Korean makeup” receives 14.8 million average weekly views, up 622.9 percent versus last year. And while facial skin care and makeup are the two main categories feeling the influence of K-beauty, the rise of brands like Gentle Monster’s fragrance arm Tamburins — which is widely talked about in the U.S. despite not even being available for sale in the region yet — and Helen Shin’s resurfacing and firming Korean body care brand, Lilis, signify the potential of a category that, to many of those driving it, transcends its own label.

“We don’t even necessarily lead with saying that we’re a Korean beauty brand or a Korean skin care brand, because you know what — what does that actually mean? It’s like saying you’re an American beauty brand — there are so many types of American beauty brands that it doesn’t mean much,” said Alicia Yoon, who brought the still-trending term “glass skin” to the masses when she launched Peach & Lily Skincare and its masstige counterpart, Peach Slices, in 2018.

The brands, both sold at Ulta Beauty while Peach Slices also sells at Walmart and CVS Pharmacy, hit $100 million in combined net sales last fall.

“K-beauty is not a fad — it’s a restructuring of the entire industry. The connectivity between the U.S. and Korea; there isn’t another market where you have that kind of crossover in terms of consumer,” said Demsey. Indeed, data from Global Market Insights valued the K-beauty market at $9.5 billion in 2022, projected to grow at a compound annual growth rate of 5.7 percent between 2023 and 2032 driven by Korea’s “growing cultural influence.”

“The consumer for K-beauty is not Asian,” said Chung Park. “It’s a younger generation, it’s a diverse consumer; K-beauty is for everyone.”

What is good for Walmart is often bad for rivals

Walmart is often seen as a bellwether for the US retail sector and consumer behaviours. Little wonder: the company, which generated $648bn in revenue last year, is the country’s biggest bricks-and-mortar retailer by sales.

Walmart’s strong second-quarter results and bumped-up full-year guidance last week suggest good times ahead for the company. But it is not necessarily the best proxy for the wider retail sector. What is good for Walmart is often bad for rivals. Investors who bid up shares of other retailers such as Target, Macy’s and Gap on the back of Walmart’s earnings may be setting themselves up for disappointment as more retailers prepare to report their results.

Walmart’s size and business mix make it unique among US retailers. For starters, it has a massive US grocery business, which generated 60 per cent of the revenue at Walmart US last year. Being a purveyor of cheap groceries has proved to be a sweet spot in the current climate.

While the rate of inflation in the US has eased, day-to-day life in America continues to be much more expensive than pre-pandemic. Food prices, for example, went up 25 per cent between 2019 and 2023, according to government data. They rose faster than housing, medical care, and all other major categories apart from transportation during this period.

This means even as American households are cutting back on everything from Big Macs and caramel frappuccinos to trips to Disneyland, bargain hunters are still packing the aisles of Walmart. More middle- and higher-income shoppers are doing their grocery runs there. At the same time, lower-income consumers are snapping up more of the company’s private-label food offerings.

Like-for-like sales at Walmart US climbed 4.2 per cent year on year during the second quarter. At Home Depot, the only other major US retailer to report results so far, they fell 3.6 per cent. The DIY retailer expects the metric to fall between 3 and 4 per cent for the year. Walmart raised its forecasts for full-year sales and adjusted operating income.

Selling groceries is a low-margin business. Walmart is able to keep prices low on food because of all the other side businesses it runs. Third-party online marketplace, digital advertising and Amazon Prime-like membership schemes — all these are fast growing and more profitable. Few other bricks-and-mortar retailers can claim to be able to do the same.

Walmart’s share price performance reflects this. The stock is up nearly 40 per cent so far this year and hit a new record high on Monday. At 29 times forward earnings, Walmart is also trading at a hefty premium to the broader retail sector. Do not expect the gap to close soon.