Month-over-Month, Year-over-Year, and Year-to-Date:
* On a month-to-month basis, August's net exports posted a slight increase of 12.9 thousand tonnes. Details for August, the prior six months, year-over-year, and year-to-date performance are presented in the table below.
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* Despite month-to-month net exports growing, August exports declined by 92.7 thousand tonnes (3.6%) from July. The reason net exports increased even though exports declined is because imports declined even more, dropping by 105.6 thousand tonnes (12.8%).
* On a year-over-year basis August exports were up 74.4 thousand tonnes and imports down 94.7 thousand tonnes, resulting in a year-over-year increase in net exports of 169.1 thousand tonnes.
* On a year-to-date basis exports are up 545 thousand tonnes while imports are down 363 thousand tonnes, yielding an increase in net exports of 908 thousand metric tonnes (7.1%). Net exports are on track to achieve the third highest level since 2005. The year-to-date decline in imports and increase in exports is counterintuitive with reported stronger 2015 US growth compared to global growth and a strengthening U.S. dollar. However, this trend has been consistently evident and expanding in this series since April 2015's YTD; in the five months of reported data since April four of the five have been the second highest month of net exports since 2005 and one has been the third highest month.
While the West Coast port slowdown may explain some of the early 2015 results, the continuing expansion in exports (145 thousand tonnes YTD increase through May2015 compared to YTD May 2014 to 545 thousand tonnes YTD increase through August 2015 compared to YTD August 2014) and continuing decline in imports (121 thousand tonnes YTD decrease through Feb 2015 compared to Feb 2014 YTD to 363 thousand tonnes through August 2015 compared to August 2014 YTD) suggests other factors are responsible for the YTD performance through August.
In particular, the reduction in imports might suggest US economic activity may not be as strong as is generally believed. With a strong U.S. dollar and active U.S. growth compared to global growth the expectation would be imports would increase to support U.S. domestic economic growth. Cheap oil should have made such an outcome even more likely. The most notable drop in imports is from Canada. The bulk of the YTD increase in exports was driven by exports to China, suggesting China's slowdown has not yet adversely impacted sectors consuming pulp. More country by country details are covered below.
Six-month Cumulative Activity and Trends:
* Cumulative activity over the six months ending August 2015 shows net exports are 11.1% above the pace seen over the six months ending in August 2014. Cumulative six-month net exports are principally higher due to higher exports, up 808 thousand tonnes or 5.6 percent, compared to imports which are down 243 thousand tonnes, or 4.8 percent.
* Six-month trend-lines were fit to the data to study recent trends beyond simple cumulative activity. Two of the three trend lines (exports and imports) switched from being strongly positive on the six month trend ending in July (16.43% and 12.58% for exports and imports, respectively) to negative on the six month trend ending in August. In both cases the principal cause for the switch in slope was dropping early 2015 months, which had been affected by the West Coast Port slowdown, from the six-month trend line calculation. Because the rate of decline on imports is greater than the rate of decline on exports in the latest six month trend, the net export trend declined but remains on a positive slope (18.28% in six months ending July to 2.29% in six months ending August).
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Notable shifts in country-level details:
* Pulp exports (18,223 thousand tonnes YTD) are higher (3.3%) compared to last year's YTD levels. China remains the chief destination of U.S. pulp by a wide margin, representing 58% of YTD shipments; August 2014 YTD figures pegged exports to China at 56% of the U.S. total. China's exports have increased by 8.3% YTD compared to the same period in 2013. Mexico leapfrogged India as the second-ranked destination for U.S. pulp exports, representing 6.8% of YTD exports compared to India's 6.1% share. Pulp exports to both countries are down YTD: Mexico's receipt of U.S. pulp export have fallen by over 3% and India's are down by over 13%. In addition to Mexico and India swapping spots in 2015, among 2014's top 10 destinations Japan and Indonesia also swapped, Japn moving up from number 7 to number 6 by purchasing 4.4% more pulp YTD while Indonesia has purchased 7.2% less pulp YTD.
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* Pulp imports (3,987 thousand tonnes YTD) decreased -6.3% compared to prior YTD levels. Canada and Brazil, the 1st and 2nd ranked pulp import sources, respectively, account for over 93% 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 18%. Norway has climbed from a 10th ranked place in 2014 to 7th in 2015 with a nearly 550% increase in pulp imports to the U.S., the Philippines from 12th ranked in 2014 to 9th ranked in 2015, and Germany from 13th ranked to 9th ranked. As a region Europe shows the largest percentage increase in imports into the U.S. at 63.2% while Caribbean nations collectively posted the largest percentage decline at 91.4%.
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* Paper and paperboard imports (2,185 thousand tonnes YTD) have dropped by over 4% year-to-date compared to prior YTD activity. Once again Canada leads the way, accounting for 86% of the total import volume and 139.4% of the YTD decrease (131 of 94 thousand tonnes). Finland easily held onto its number 2 rank on a 10.5% increase in imports to the U.S. while China maintained its hold as the 3rd ranked source of paper and paperboard imports despite a drop of 8% YTD. One notable development on a percentage basis is Australia, which has vaulted from being the 7th ranked supplier during the first eight months of 2014 to the 4th ranked supplier during the first eight months of 2015, posting an increase of 288%. Mexico slipped from the 4th to 5th place ranking despite importing 16.8% more into the U.S. YTD. In other top 10 changes from 2014, Swedan has dropped from 5th in 2014 to 7th in 2015 with a 17.1% drop in paper and paperboard imports into the U.S and South Korea slipped from 6th to 9th with pulp and paperboard imports declining by nearly 53%. Meanwhile Taiwan vaulted to the 8th ranked spot from 12th ranked in 2014 with an increase of 247.2% in imports shipped to the U.S.
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* Paper and paperboard exports (1,586 thousand tonnes) dropped by 2.0% on a YTD basis. Mexico and Canada swapped places as the number 1 destination for U.S. paper and paperboard exports, with Mexico growing by 20.1 percent YTD over same period in 2014, while Canada's purchases of U.S. paper and paperboard declined by 1.3 percent. Among 2014's Top 10 destinations, the "loss leader" is India (-22 thousand tonnes, -24.2% from prior YTD) followed by Japan (-19 thousand tonnes, -16.0% from prior YTD), and Costa Rica (-16 thousand, -30.0% from prior YTD). Bucking the general decline in paper and paperboard exports, as already noted, Mexico's receipts of U.S. paper and paperboard exports is up. South Korea (+7.0%) and China (+7.1%) are both receiving more U.S. exports of paper and paperboard as well. Guatemala (+0.4%) and Honduras (-0.3%) are essentially level with 2014's activity thus far in 2015.
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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.
