Chemical Commerce Grows And Shifts

Global trade in chemicals gained steam in 2011 for the second year in a row. In 2009, growth in trade had taken a brief time-out as the recession interrupted a decadelong trend of globalization.

U.S. chemical exports reached a new peak last year, growing 9.7% to hit $207.4 billion. Producers in the U.S. have been gaining in global competitiveness as a result of access to low-cost natural gas feedstock. Surprisingly, however, imports of chemicals to the U.S. grew even more than exports, largely because of big jumps in imports of organic chemicals, inorganic chemicals, and fertilizers. As a result, the U.S. chemical industry’s trade surplus shrank last year, although it was still at the second-highest level in more than a decade.

The U.S. chemical trade balance is largest for plastics, at $22.5 billion in 2011. But, as in 2010, chemical trade was negative for pharmaceuticals, organic chemicals, fertilizers, and inorganic chemicals.

The battle to be the second-largest regional trading partner of the U.S. had a new winner in 2011. Latin America, buoyed by demand for chemicals from the fast-growing Brazilian economy, beat out Canada for the first time. The U.S.’s positive trade balance with Latin America is striking; exports to the region reached close to $50 billion, an increase of more than 20% from 2010. Imports to the U.S. from Latin America were a much smaller $13.2 billion, although that amount represented growth of close to 30%.

U.S. chemical trade with Europe also grew, despite the much-discussed weakness of the European economy. Indeed, Europe continues to be the largest chemical trading partner of the U.S. In 2011, for the first time, the value of U.S. imports from Europe exceeded $100 billion.

As did the U.S., Europe expanded its chemical imports faster than its exports with most trading partners. Trade with Japan was the exception for both the U.S. and Europe. Japan’s chemical exports all over the world grew more slowly than the country’s imports. The difference is likely due to its recovery from the March 2011 earthquake and tsunami, which affected chemical production and created domestic shortages.

Although Europe and the U.S. are strongly linked by their trade in chemicals, both regions’ growth in trade with China in recent years has been more rapid. In 2011, Europe’s exports to China grew by 16.8%, and its imports by 17.8%. Similarly, U.S. exports to China grew by 13.3%, and its imports by 29.8%.

Overall, China’s chemical trade in 2011 grew briskly, with exports to all regions expanding by 29.5% and imports by 26.7%. By volume, China’s trade in organic chemicals leads its other chemical sectors. During the year, China’s negative trade balance for pharmaceutical products increased, while its positive trade balance for fertilizers widened.

In South Korea, imports and exports of petrochemicals and of the “all other” category of chemical products increased significantly last year, although not at the 30%-plus rate of 2010. Exports in both categories rose faster than imports; exports grew 27.6% for petrochemicals and 24.0% for chemical products.

In Canada, chemical trade increased significantly in 2011, with growth in exports outpacing growth in imports. For the second year in a row, the Canadian trade deficit shrank, dipping to $12.3 billion from $13.1 billion in 2010. The export strength came from basic chemicals; exports in that category were $11.8 billion in 2011, up 19.4%.