Issue Date: July 5, 2010
Economic Downturn Hobbles Commerce
Worldwide trade in chemicals, which soared in 2008 despite a mounting recession, took a break in 2009. Even business with China—which increased in some cases by more than 40% in 2008, boosting the worldwide exchange of goods for that year—saw steep declines in 2009.
Even with the trade slowdown, the U.S. chemical industry kept its coveted position as the country’s second-largest exporter after the machinery sector. But within chemicals, both imports and exports fell last year. Imports fell more sharply than exports, with the result that the U.S. trade surplus in chemicals almost quadrupled to $8.6 billion in 2009 compared with 2008. The last year in which the U.S. had a negative trade balance in chemicals was 2006.
The only category of chemical trade that increased for the U.S. in 2009 was medicinals and pharmaceuticals, where exports spiked by 15.7%. Still, the U.S. took in $15 billion more in pharmaceuticals than it exported. Trade in all other categories of chemicals dropped by more than 10%, except for perfume, toilet, and cleaning materials, which slipped by only 3.9% in the export column.
U.S. exports to all regions fell markedly, except to China and Vietnam, where exports rose 8.9% in 2009. U.S. imports from most regions, including China, declined more than 10%. Although growing competition from Chinese manufacturers has been in the news, the U.S. chemical industry continues to maintain a positive trade balance of almost $2 billion with China.
North American chemical exports were supposed to benefit from low natural gas prices and the strength of Asian economies. In Canada, however, the chemical trade deficit grew by nearly $3 billion in 2009. And the basic chemicals and resins sector, which might have been expected to benefit from low feedstock costs, saw trade surpluses swing to deficits during the year.
Exports from Europe’s chemical producers were a bit more lively and slowed markedly only to Russia and South Korea. Exports rose by 19.3% to China, 9.1% to Japan, and 7.2% to Saudi Arabia. Meanwhile, European imports from Brazil, China, Russia, Saudi Arabia, and South Korea saw double-digit declines. Imports from the U.S. dropped nearly 6%.
In Japan, exports and imports of all chemical goods declined in 2009, except for cosmetics, which enjoyed a 6.9% jump in exports and a 1.5% rise in imports. The drop in inorganic chemicals trade was especially dramatic; both imports and exports plummeted by more than 30%. Trade in rubber also went down steeply, with exports shrinking 17.6%.
In South Korea, overall chemical exports fell by 12.4% and imports dropped 14.1%. Within the petrochemical category, exports sank 14.5% and imports fell by 22.6%.
In 2008, trade with China helped buoy the fortunes of chemical firms in the developed world because the country imported more raw materials to feed its bustling factories.
However, in 2009, China’s chemical trade withered. The country’s imports of inorganic chemicals were 29.0% below 2008’s, and its imports of organic chemicals fell 8.0%. China also imported reduced amounts of fertilizers, dyes, and pigments than in the previous year. Exports of chemicals from China were similarly constrained. Trade in pharmaceutical products increased, however. China took in 18.7% more medicinal goods and exported 23.0% more than in 2008.
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