Archive for September, 2013

JOC Insights by Mario Moreno: U.S. Exports of Scrap Plastics, Paper & Metals to China

September 25, 2013

U.S. exports of scrap paper, plastics, and metals to China have increased at a remarkable pace over the last 16 years. Between 1996 and 2012, the dollar value of U.S. scrap exports to China in real terms increased at a compound annual growth rate of 24%, allowing China to take 47% of the market in 2012, up from 6% in 1996. Over that same period, U.S. scrap exports to all other markets increased by just 5% a year.

US Scrap Exports to China

Given weak global economic conditions, China’s demand for raw materials declined last year resulting in lower imports of U.S. scrap. In mid February, the “Green Fence” policy was launched with the objective to drastically increase the inspections of containers carrying scrap products to screen off adulterated products and improve China’s environment. Shipping executives began to notice the policy’s impact over trade volumes soon after its implementation. But, what was the monetary impact of the policy over the U.S. – to – China scrap export trade in the months following the policy’s launch?

SEVERE IMPACT ON U.S. SCRAP PLASTIC EXPORTS TO CHINA

U.S. exports of scrap materials to China have been struggling for over a year on weak global demand. But, it appears the Green Fence policy exacerbated the export problems. Before the policy’s implementation in mid February, U.S. exports of scrap plastics to China in nominal value were expected to decline in March by 14.4% y-o-y and amount to $40.4 million, but the value of exports actually declined 31% y-o-y and totaled $32.6 million. April was no better. The expectation for April was a drop of 12% Y-o-Y but the value of exports actually tumbled 39.7%. The expectation for May was a drop of 6.8% y-o-y but the contraction was more severe, down 26.3%.

US Scrap Plastic Exports to China

MODEST IMPACT ON U.S. SCRAP PAPER EXPORTS TO CHINA

The policy’s impact over U.S. scrap paper exports appears to be less severe. Before the policy’s implementation in mid February, U.S. exports of scrap paper to China in nominal value were expected to decline in March by 10.6% y-o-y and amount to $175.5 million, but the value of exports actually declined 14.3% y-o-y and totaled $168.2 million. The expectation for April was a drop of 2.9% y-o-y but the value of exports actually declined by only 1.6%. The expectation for May was a drop of 5.9% y-o-y but the value of exports actually declined by 8.6%.

US Scrap Paper Exports to China

SEVERE IMPACT ON U.S. SCRAP METALS EXPORTS TO CHINA

Before the policy’s implementation in mid February, U.S. exports of scrap metals to China in nominal value were expected to decline in March by 6.7% y-o-y and amount to $635.7 million, but the value of exports actually tumbled 22.9% y-o-y and totaled $525.3 million. The expectation for April was an increase of 5.4% y-o-y but the value of exports actually tumbled by 22.5%. The expectation for May was an increase of 19.2% y-o-y but the value of exports actually declined by 5.9%.

US Scrap Metal Exports to China

More of Moreno’s trade and economic analysis can be obtained by subscribing to JOC Insights or by following him on Twitter @MarioMoreno_JoC.

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U.S. Agriculture Exports on the ‘Grow’

September 17, 2013

The volume of agricultural exports, especially those that move in containers, will be higher in the coming year than they were following the drought of 2012, according to agri-business shippers who addressed the South Carolina International Trade Conference this week.

“Agricultural exports as a whole may go up, though the commodities will change,” said Doug Grennen, senior manager of the BCO group at the Scoular Co.

US Agriculture Exports Growing

For example, some cotton farmers this year shifted a portion of their acreage to higher-demand crops, and therefore cotton exports will likely be down about 8 percent, said Michael Symonanis, regional head of execution, North America, at Louis Dreyfus Corp.

Crop substitution makes sense because China the past two years stockpiled cotton, and therefore there will be less of the commodity moving to this important market. And the U.S. has relatively little inventory following last year’s drought.

Because the U.S. is the high-cost producer of cotton, importing nations will source more of their product from lower-cost countries. The bottom line this year is that there is “nothing pulling our commodity through the value chain,” Symonanis said.

The opposite scenario is developing with soybeans. The U.S. is a primary supplier of soybeans, a commodity that is in great demand overseas, especially in Asia, and soybean production should be strong this year.

The U.S. Department of Agriculture projects soybean exports to China — the largest buyer of U.S. soybeans — in the coming year will be 17 percent higher than they were this past year.

Although 93 percent of U.S. grain exports move in bulk vessels, the share of containerized grain is edging up, because some buyers value the financial flexibility and infrastructure advantages inherent in shipping 25 metric tons of grain in a container compared with 55,000 tons in a bulk vessel, Grennen said.

However, documentation requirements for smaller shipments are 10 to 20 times higher than for bulk shipments, and the freight cost per ton is higher. That is why shippers of containerized grain must differentiate themselves through their logistics advantages, he said.

Distillers’ dried grains, which are a byproduct of ethanol production, are a booming export commodity. DDGs are a popular feed commodity for cattle, pigs and chickens. “Pigs love DDGs,” Grennen said.

China has 600 million pigs, or 10 times the number in the U.S. DDG exports to China could total 4 million metric tons this year, up from 1 million tons just three years ago.

A problem shared by many shippers of containerized agricultural products is that crops are grown in rural areas, but the empty containers that are needed to carry the grain are located in cities. Repositioning of empties from urban areas to grain silos and transload facilities in the interior can be costly.

However, as ocean carriers continue to introduce bigger container ships into the U.S. trades, they will actively seek grain exports for the back haul to Asia, Grennen said. He indicated carriers could make money on containerized grain exports. “It’s far from the best rate, but it’s not the worst rate,” he said.

Chilled and frozen meat products command a higher freight rate than dry commodities, and they have a bright future in Asia, where the burgeoning middle class seeks high-quality protein products.

Chicken exports are leading the way, said Diogo Lobo, president of Lineage Logistics, but exports of beef and pork are also steady, he said. The U.S. and Brazil are positioned the best to satisfy the growing demand for protein products in the export markets, Lobo said.

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U.S. Containerized Imports of Furniture Up in 2Q

September 11, 2013

U.S. containerized imports of furniture continued to grow in the second quarter of 2013, with volume up 1% year-over-year to 561,689 20-foot-equivalent units. This increase, the seventh consecutive quarterly year-over-year rise, was at a slower rate compared to the past four quarters, but despite this, import volume reached its highest level since the second quarter of 2007.

PIERS- Furniture Imports Q22013

Second quarter 2013 containerized furniture imports jumped 5.7% from the first quarter. Mainland China, not including Hong Kong, held 71.7% of the U.S. furniture import market in the second quarter of 2013. Other top countries of origin for U.S. furniture imports in the second quarter were Vietnam, with a 9.4 % share; Malaysia, 3.2%; and Indonesia, 2.9%. Furniture imports from Indonesia in the second quarter jumped 19 % in volume year-over-year.

Italy remained the sixth-largest supplier of U.S. furniture imports in the second quarter, with containerized volume up 10 % year-over-year.

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U.S. Containerized Exports Drop to Two-Year Low

September 4, 2013

U.S. containerized exports fell 6.1% year-over-year in June, to 925,043 TEUs, according to PIERS Data. This was the lowest volume seen since June 2011 and the first time volume fell below 1 million TEUs since January 2013. June containerized exports tumbled 12.5%from May.

USContainerizedExports201306

“Asia appears to be the main source of weakness,” said PIERS/Journal of Commerce economist Mario Moreno in the August report of JOC Insights. “Foreign investors are pulling billions of dollars out of emerging bond markets in response to signs the Fed may start scaling back its stimulus program, adversely impacting emerging economies in Asia.”

U.S. containerized exports to Asia in June fell 7.5% y-o-y. The trade to Asia also inched down 0.7% year-to-date. January through June exports to all regions increased 0.3% compared with the first half of 2012.

Of June’s top 25 containerized export commodities, the largest declines were in automobiles, down 36%; pet and animal feeds, down 35%t; and auto parts, down 32%. The highest year-over-year increases were in miscellaneous grocery products, which soared 178%; metalware, up 119%; and miscellaneous apparel, up 21%.

Among June’s top 25 destination countries, shipments to Indonesia fell the most, down 43% y-o-y to 12,662 TEUs. Volume to Singapore declined 22% to 10,555 TEUs, and Vietnam followed with a loss of 16% to 13,331 TEUs. The Netherlands saw the steepest growth in exports from the U.S. in June: shipments rose 16% to 18,655 TEUs. Shipments to Belgium totaled 24,472 TEUs in the month, up 14% y-o-y. Exports to India also climbed 14%t, to 29,312 TEUs.

Thanks to our unique data operations infrastructure, which includes onsite port staff who are able to manually scan every export Bill of Lading (including those not filed electronically), PIERS can proudly say we are the only source for complete U.S. export transactions. To learn more about how you can benefit from PIERS export data register to receive a free demo.


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