November 2014 International Trade (Pulp, Paper & Paperboard)

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Month-over-Month, Year-over-Year (YoY), and Year-to-Date (YTD):

* On a month-over-month basis, November’s net exports posted a scant increase of 4 thousand tonnes, or 0.2%, after October net exports were up by 21% from September. Despite November essentially flat-lining, the marginal increase resulted in November posting the highest level of net exports since January 2014.

* While this performance seems to belie the well documented West Coast port slowdown, when viewed on the basis of total tonnes processed (imports plus exports), the slowdown is more apparent, dropping from 3.3 million tonnes in October to 3.1 million tonnes in November. November’s net exports grew marginally because imports fell by 106 thousand tonnes while exports fell by 102 thousand tonnes, resulting in a net increase of 4 thousand tonnes.

* On a YoY basis November exports were down 51 thousand tonnes and imports down 94 thousand tonnes, resulting in a YoY increase in net exports of 43 thousand tonnes. On a YTD basis, exports are down 182 thousand tonnes while imports are up 132 thousand tonnes, yielding a decline in net exports of 314 thousand metric tonnes (-1.8%). The YTD increase in imports and decline in exports is consistent with 2014’s emerging trends of slowing global growth and a strengthening U.S. dollar.

Six-month Cumulative Activity and Trends:

* Cumulative activity over the six months ending November 2014 shows net exports are 1.0% below the pace seen over the six months ending in November 2013. Cumulative six-month net exports are principally lower due to higher imports (up 61 thousand tonnes or 1.3%) compared to exports (down 29 thousand tonnes, or 0.2%).

* Six-month trend lines were fit to the data to study recent trends beyond simple cumulative activity. November’s six month trend line on net exports switched to positive compared to October’s negative six month trend line. As noted previously, the reason for the change from negative to positive is more about the decline in imports than the increase in exports. Exports’ six-month trend did tick up from slightly negative in October to flat for the six months ending in November. On the other hand, the six-month import trend line became negative for November after being flat in October. 

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In terms of notable shifts in country-level details:

* Pulp exports (24,096 thousand tonnes YTD) are down slightly (-0.1%) compared to last year’s YTD levels. China remains the chief destination of U.S. pulp by a wide margin, representing 56% of YTD shipments. Nevertheless China’s exports have declined by 4.2% YTD compared to the same period in 2013. India surpassed Mexico as the second-ranked destination for U.S. pulp exports, representing 7.3% of YTD exports compared to Mexico’s 7.2% share. While Mexico’s receipt of U.S. pulp export are up nearly 10% YTD and India’s are up by 25%. Among 2013’s top 10 destinations, the most significant change is Indonesia where U.S. pulp exports are 43% higher than prior YTD levels, causing it to jump from the ninth-ranked 2013 YTD destination to the sixth-ranked 2014 YTD destination. In terms of declines among 2013’s top 10 destinations, Italy posted the most notable drop on a percentage basis (nearly -25%). 

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* Paper and paperboard exports (2,215 thousand tonnes) dropped by 6.6% on a YTD basis. Canada has leapfrogged Mexico as the top destination for U.S. paper and paperboard exports, growing by 15.8% YTD over same period in 2013, while Mexico’s purchases of U.S. paper and paperboard declined by 6.2%. Among 2013’s Top 10 destinations, the “loss leader” is India (102 thousand tonnes, -45.0% from prior YTD) followed by Mexico (32 thousand tonnes, -6.2% from prior YTD), Japan (22 thousand, -12.5% from prior YTD) and China (16 thousand tonnes, -25.1% from prior YTD). Canada’s receipt of U.S. paper and paperboard exports bucks the general decline. 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 21 thousand tonnes (+4.1%) and Guatemala is up over 7 thousand tonnes (+16.1%). 

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* Pulp imports (5,778 thousand tonnes YTD) decreased -1.3% compared to prior YTD levels. Canada and Brazil -- the first- and second-ranked pulp import sources, respectively -- account for nearly 94% 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 nearly 85%. Likewise Mexico has increased its pulp imports by over one-third compared to prior YTD levels. As a supply source, Uruguay has climbed to the sixth-ranked source for imported pulp in 2014 after not recording any shipments through the first 11 months of 2013. Among 2013’s YTD top-ten sources for pulp, Germany (ranked tenth YTD  in 2013) posted the largest percentage drop (nearly 28%), dropping to the 12^th-ranked source for 2014 YTD. 

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* Paper and paperboard imports (3,126 thousand tonnes YTD) have expanded by over 7% YTD compared to prior YTD activity. Once again Canada leads the way, accounting for nearly 88% of the total import volume and 67% of the YTD increase (139 of 208 thousand tonnes). One notable development on a percentage basis is Australia, which has vaulted from being the 29^th ranked supplier during the first 11 months of 2013 to the 7^th ranked supplier during the first 11 months of 2014, posting an eye-popping increase of 13,293% (from 164 tonnes YTD through November 2013 to 21,925 tonnes YTD through November 2014). In other top-ten changes from 2013, Sweden dropped from number four to number five, with pulp and paperboard imports declining by over 18%, Germany dropped from number six to number eight on a 15% decrease, and Indonesia dropped from eight to number nine on a 29% decline.

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.