September 2014 International Trade (Pulp, Paper & Paperboard)

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On a month-to-month basis, September's net exports reversed August's 10.3 percent increase, posting a 14.3 percent decrease. September's drop reasserted the downward string of month-to-month declines that occurred between March and July. September year-to-date (YTD) net exports trail prior YTD levels by 380,000 tonnes (2.6 percent), falling further behind August's YTD pace. Consistent with slowing global growth, lower YTD exports accounted for over two-thirds of the change from August YTD. Meanwhile, U.S. imports YTD increased from the prior month's pace, closing 2.8 percent higher than the prior year's level.

Cumulative activity over the six months ending September 2014 shows net exports are 1.6 percent below the pace seen during the same period in 2013; cumulative net exports are lower due to higher imports. Six-month trend-lines were fit to the data to study recent trends. September's six month trend-line on net exports became more negative compared to August's six month trend-line. Exports’ six-month trend also became more negative compared to the August's trend-line. The six-month import trend-line became more positive in September. 

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In terms of notable shifts in country-level details:

Pulp exports (19.661 million tonnes YTD) are essentially flat (-0.04 percent) compared to last year's YTD levels. China remains the chief destination of U.S. pulp by a wide margin, representing 55 percent of YTD shipments. Nevertheless China's exports have declined by 4.0 percent YTD compared to the same period in 2013. India narrowly surpassed Mexico as the second-ranked destination for U.S. pulp exports, representing 7.4 percent of YTD exports compared to Mexico's 7.3 percent share. While Mexico's receipt of U.S. pulp export are up nearly 10 percent YTD and India's are up by nearly 27 percent. Among 2013's top 10 destinations, the most significant change is Indonesia where U.S. pulp exports are over 46 percent higher than prior YTD levels, causing it to jump from the ninth-ranked 2013 YTD destination to the sixth-ranked 2014 YTD destination. 

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Paper and paperboard exports (1.808 million tonnes) dropped by 7.7 percent on a YTD basis. Among 2013's top 10 destinations, the "loss leader" is India (-87,000 tonnes, or 46.5 percent from prior YTD), followed by Mexico (-44,000 tonnes, or 9.9 percent from prior YTD), Japan (-17,000 or 11.5 percent) and China (-14,000 or 26.7 percent). Bucking the general decline in paper and paperboard exports, Canada's receipt of U.S. paper and paperboard exports are up by 71,000 tonnes (+16.9 percent). Costa Rica and Guatemala are also receiving higher levels of U.S. paper and paperboard exports; Costa Rica's YTD receipts are up by over 18,000 tonnes (+43.0 percent) and Guatemala is up over 4,000 tonnes (+11.8 percent). 

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Pulp imports (4.805 million tonnes YTD) increased 0.3 percent compared to prior YTD levels. Canada and Brazil, the 1st and 2nd ranked pulp import sources, respectively, account for 94 percent of the pulp imported. Despite their top ranking, both have logged declines in pulp imported compared to prior YTD levels. On the other hand, Chile, while maintaining its number three rank, has increased its imports YTD by over 86 percent. As a supply source, Indonesia has climbed from being the twelfth-ranked supplier during the first nine months of 2013 to the ninth-ranked supplier during the first nine months of 2014, posting a YTD increase of 66 percent. 

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Paper and paperboard imports (2.570 million tonnes YTD) have expanded by over 8 percent year-to-date compared to prior YTD activity. Once again Canada leads the way, accounting for 88 percent of the total import volume and 68 percent of the YTD increase (133,000 of 194,000 tonnes). One notable development on a percentage basis is Australia, which has vaulted from being the 29^th ranked supplier during the first nine months of 2013 to the 7^th ranked supplier during the first nine months of 2014, posting an eye-popping increase of 85,889 percent -- from 19 tonnes to 16,682 tonnes.

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.