Issue Date: July 7, 2008
Export Patterns Shift With Falling Dollar
THE SINKING VALUE of the U.S. dollar, especially compared with Europe’s euro, interrupted the 2006 trend of an upswing in exports from all major trading regions. The U.S. enjoyed a chemical trade surplus for the first time since 2001, in large part by taking business from European exporters who were hurt by the expensive euro. Meanwhile, although still a huge importer of chemicals, China has narrowed its trade deficit.
The fall of the dollar compared with other world currencies is working to the advantage of U.S. chemical exporters by making products manufactured in dollars more attractive when priced in foreign currencies. For example, in 2006, $100 worth of U.S. chemicals would sell in Europe for an average of 80 euros; in 2007, those same chemicals would sell for only 73 euros. In 2007, U.S. exports to Europe increased 15.7%.
Overall, because of more competitive pricing in overseas markets in 2007, growth in U.S. chemical exports exceeded growth in imports. In fact, exports rose significantly in all segments. Results for imports were mixed, however. U.S. imports of plastics fell for the first time in many years. Only in fertilizers did imports increase significantly, by 44.4%, as U.S. farmers turned to the international market to meet a huge increase in demand.
One segment where the U.S. has seen an increasingly negative trade balance is in medicinals and pharmaceuticals. In 2007, the gap widened to over $20 billion. U.S.-based drug companies increasingly use active pharmaceutical ingredients that are manufactured overseas.
Although Canada’s trade deficit has not been erased like the U.S.’s, it fell from $9.5 billion in 2006 to $7.3 billion in 2007, its lowest level since 1998. A big contributor to the country’s export increase was the basic chemical sector, which expanded its surplus from $200 million in 2006 to $1.9 billion last year. Although Canada is a large agricultural chemical maker, it imported 12.8% more in that segment.
Chemical sales for Europe as a whole were strong, but export growth slowed in major exporting countries such as Germany and France. The extremely strong euro made European chemicals seem high-priced compared with U.S.-dollar-priced goods. The European petrochemicals sector, in fact, saw a trade surplus decrease of almost 50%, according to the European Chemical Industry Council. Only pharmaceuticals and, to a lesser degree, consumer chemicals increased their trade surplus.
On a country level, Germany, Belgium, and the Netherlands managed small trade surplus increases, but the U.K. saw its trade surplus decline by about two-thirds because of a 16.5% increase in imports.
In Asia, Japan slightly increased its already strong trade surplus. Double-digit hikes in overseas shipments of synthetic resins and organic chemical shipments contributed to a total export growth of 11.5%. However, Japan is still a large importer of inorganic chemicals, and in 2007, its imports in that segment increased by more than 26%. Interestingly, South Korea’s petrochemical exports rose by almost 20% in 2007.
China’s results further amplified the important role it already plays in global chemical trade. The country absorbed more than $68 billion worth of chemicals in 2007. That’s almost half of U.S. chemical imports and an increase of 22.0% over the previous year.
Nevertheless, China still posted a large chemical trade deficit in 2007. But because Chinese chemical exports are increasing far faster than imports, its trade deficit is shrinking, with most of the deficit coming from organic chemicals. China’s chemical trade deficit was $17.4 billion last year compared with $18.4 billion in 2006.
- Editor's Page: Facts & Figures
- The most complete set of statistics on the chemical industry available anywhere for the cost of membership in the American Chemical Society.
- Introduction: Facts & Figures Of The Chemical Industry
- The chemical industry began to feel the impact of a changing economy in 2007
- Finances: Growth In Demand Mitigates Soaring
- Profits decreased, but strong finances supported capital spending
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- Employment: Jobs Decrease In Most Regions
- Japan was the only country to see major employment growth, U.S. continues decline
Download Employment (PDF size: 744 KB)
- Production: Gains In Chemical Output Decline
- Production growth tapered in Europe but increased in Asia
Download Production (PDF size: 304 KB)
- Trade: Export Patterns Shift With Falling Dollar
- U.S.'s trade balance turned positive, and Europe's costly exports faded
Download Trade (PDF size: 140 KB)
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