February 2014 International Trade (Pulp, Paper & Paperboard)

Because several months have passed since we last published this blog, we provide a few notes on year-end 2013 results before jumping to the most recent (February 2014) trade data.

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• December 2013’s net exports were down sharply compared to December 2012, falling by nearly 20 percent.
• For the year, net exports were down by over 7 percent compared to 2012. Exports were off by 1.1 million metric tons while imports increased by 0.4 million metric tons.
• Further country detail tables for 2013 versus 2012 pulp and paper trade are available upon request. A brief description of results follows:
• Pulp exports for 2013 (26.3 million tonnes) fell by 4.6 percent compared to 2012, falling by 1.3 million tonnes. The top three destinations for 2013 were, in rank order from highest to lowest, China, Mexico, and India. Largest absolute decrease in pulp exports was to China (1.0 million tonnes) and largest absolute increase in pulp exports was to Belgium (0.2 million tonnes).
• Pulp imports for 2013 (6.4 million tonnes) increased by 4.5 percent compared to 2012, increasing by 0.3 million tonnes. The top three sources for 2013 were, in rank order from highest to lowest, Canada, Brazil, and Chile. Largest absolute increase in pulp imports was from Brazil (0.3 million tonnes) and the largest absolute decrease in pulp imports was from Canada (0.1 million tonnes).
• Paper and paperboard imports for 2013 (3.2 million tonnes) increased by 4.2 percent compared to 2012, increasing by 0.1 million tonnes. The top three sources for 2013 were, in rank order from highest to lowest, Canada, China, and Finland. Largest absolute increase in paper and paperboard imports was from Canada (0.1 million tonnes) and the largest absolute decrease in paper and paperboard imports was from South Korea (less than 0.1 million tonnes).
• Paper and paperboard exports for 2013 (2.6 million tonnes) increased by 7.1 percent compared to 2012, increasing 0.2 million tonnes. The top three destinations for 2013 were, in rank order from highest to lowest, Mexico, Canada, and India. Largest absolute increase in paper and paperboard exports was to Canada (0.2 million tonnes) and the largest absolute decrease in paper and paperboard exports was to Japan (less than 0.1 million tonnes).

With year-end 2013 results out of the way, we now present February 2014 data. 

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U.S. pulp, paper, and paperboard exports fell by 10 percent on a month-to-month basis, turning in the lowest level of exports since February 2010. Not to be outdone, U.S. pulp, paper, and paperboard imports fell by over 12 percent on a month-to-month basis, achieving the lowest level of imports since December 2012. The combination posted a 9 percent drop in net exports on a month-to-month basis.

Compared to prior year levels in February, exports, imports, and net exports all fell, logging a drop of 3.3% on net exports. Year-to-date through February net exports are 5.5 percent below 2013’s year-to-date activity levels; year-to-date imports are essentially flat with prior year-to-date but year-to-date exports are 183 thousand tonnes (3.7 percent) lower.

The six month trend on imports is decidedly declining while the export trend is declining only slightly. Theoretically, the declining import trend could be a result of a weakening U.S. dollar against most other currencies. The problem however is, with the exception of the euro, the U.S. dollar hasn’t been weakening. An alternative explanation is the decline in imports might suggest a slowdown in U.S. industry activity. This could be the case to a degree based on the trend in pulp and paper industrial production levels, which have been declining over the past eight months. However, more likely is the reduction in imports is because exports have also fallen, increasing domestic supplies. The recent reduction in exports suggests slowing global activity that translates into reduced demand for U.S. pulp, paper, and paperboard products.

In terms of notable shifts in country-level details:

• Pulp exports have dropped 3.5 percent compared to prior year-to-date levels. China accounts for 41 percent (67 thousand tonnes) and Italy accounts for 25 percent (40 thousand tonnes) of the 161 thousand tonne drop. Canada (12 thousand tonnes) and India (11 thousand tonnes) have posted the largest year-to-date gains.
• Pulp imports have dropped 4.6 percent (47 thousand tonnes) compared to prior year-to-date levels. The most significant drop is from Brazil, which has fallen by over 34 percent from prior year-to-date imports (116 thousand tonne reduction). Imports from Canada, where the Canadian dollar has been weakening against the U.S. dollar as of late, are up by nearly 9 percent (57 thousand tonnes) year-to-date compared to prior year levels.
• Paper and paperboard imports have expanded by over 10 percent (52 thousand tonnes) year-to-date compared to prior year-to-date activity. Once again Canada leads the way, accounting for virtually all the increase (52 thousand tonnes).
• Paper and paperboard exports have dropped by 5.5 percent (22 thousand tonnes) on a year-to-date basis. The “loss leader” is India (8 thousand tonnes) followed by Mexico (2 thousand tonnes). Bucking the weakening Canadian dollar trend, paper and paperboard exports to Canada are up by 6 thousand tonnes as are exports to Costa Rica.

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.