|Chemical Trade Balance||Chemical Wholesale Trade||Consumer Prices|
Running tab of macro indicators: 17 out of 20
The number of new jobless claims fell by 19,000 to 793,000 during the week ending 6 February. Continuing claims fell by 145,000 to 4.545 million and the unemployment rate for the week ending 30 January remained stable at percentage points to 3.2%. Claims remain historically and stubbornly high, suggesting that the labor market is still struggling.
Higher gasoline prices pushed overall consumer prices up by 0.3% in January. Excluding food and energy, core prices were flat for a second month. In addition to gasoline, there were smaller increases in the prices for apparel, medical care services, and food away from home. Prices declined for used cars & trucks, new vehicles, transportation services, electricity, and utility gas. Compared to a year ago, both overall consumer prices and core prices were ahead 1.4%. Inflation pressures remain muted.
Confidence on Main Street declined further in January as the NFIB Small Business Optimism Index fell 0.9 points to 95 in January. Business owners’ expectations for better business conditions six months ahead fell to the lowest level since November 2013 on fears of the lingering impact of COVID-19. Job growth continued in January but was uneven geographically and by industry. Four of the 10 index components declined, two improved, and four were unchanged.
Wholesaler sales rose 1.2% in December to $503.8 billion, an acceleration from the 0.3% gain in November. Gains were widespread although there was some weakness in distributors of furniture, professional equipment, electrical, machinery, paper, groceries, and alcohol. After a flat November, total wholesale inventories rose 0.3% to $651.5 billion at the end of December. As a result, the inventory-to-sales ratio eased from 1.31 to 1.29. A year earlier the ratio was 1.34. Wholesaler sales were up 1.7% Y/Y and inventories were off 1.7% Y/Y.
With weakness across many regions, global semiconductor sales fell 2.0% in December, the first month-to-month decline since June. That said, global sales were up 8.3% Y/Y with year earlier gains in all regions, and an 11.1% Y/Y gain in the Americas. Led by logic and memory products, for the year as a whole, sales grew 6.5% to $412.3 billion with a 19.8% gain in the Americas.
The rig count rose by eight rigs to 391 rigs during the week ending 5 February. Oil inventories continued to move lower as demand is gradually firming and both U.S. and OPEC production. As a result, Brent oil prices rose above $60 per barrel this week, the highest since before the pandemic. With sharply colder weather, there was a larger-than-typical draw on natural gas inventories. Inventories remain above their five-year historical band, however.
For the business of chemistry, the indicators still bring to mind a green banner for basic and specialty chemicals.
According to data released by the Association of American Railroads, chemical railcar loadings, the best ‘real time’ indicator of chemical industry activity, fell by 442 to 33,581 railcars the week ending 6 February (week 5). Loadings were up 2.8% Y/Y, up 4.1% YTD/YTD and the 13-week moving average, which is used to smooth out volatility, was up 3.6%.
Chemical wholesaler sales rose 2.0% in December to $10.36 billion, an easing from the 4.3% gain in November. After falling 0.7% in November, total wholesale inventories rose 1.4% to $11.86 billion at the end of December. As a result, the inventory-to-sales ratio eased from 1.15 to 1.14. A year earlier the ratio was 1.16. Wholesaler sales were off 4.9% Y/Y and inventories were off 5.9% Y/Y.
ANNUAL CHEMISTRY TRADE ANALYSIS
Total U.S. trade in chemicals (imports + exports) contracted in 2020 by 6.5% to $222 billion. This follows a 4.7% contraction in total chemicals trade in 2019. U.S. exports of chemicals declined 7.6% in 2020 to $125 billion and imports were down 5.1% to $97 billion. As a result, the US trade surplus in chemicals declined by $5 billion to $29 billion in 2020.
Chemical exports fell in every category in 2020. The contraction in petrochemicals exports – which were down 8% Y/Y – pulled down the headline figure. Petrochemical and derivatives exports have grown to represent more than half of total U.S. chemical exports. Chemical exports had been building momentum through the first quarter of 2020. However, exports fell dramatically in April – by 17% – as the global COVID pandemic and economic fallout began to manifest through supply chain disruptions and a drop-off in consumer demand. U.S. chemical exports only partially recovered in 2020. Chemical exports were up 5% in December compared to November and up 3% Y/Y. In December, the U.S. posted strong exports in agricultural chemicals, inorganics, plastic resins, and other specialties chemicals.
Compared to 2019, chemical imports in 2020 were down in agricultural chemicals and basic chemicals and up in consumer products and specialties. Imports of plastic resins were down 13% Y/Y while imports of bulk petrochemicals and intermediates were stable on a Y/Y basis. Like chemical exports, imports also gained strength through Q1 of 2020 but dropped off with the impact of the global recession and pandemic. Though imports did not fall as sharply, contraction began in April and only partial recovery occurred over the course of 2020. Chemical imports were up 7% in December compared to November and up 7% Y/Y. The U.S. posted strong imports in inorganics, bulk petrochemicals and intermediates, synthetic rubber and other specialties.
ACC members can access additional data, economic analyses, presentations, outlooks, and weekly economic updates through MemberExchange.
In addition to this weekly report, ACC offers numerous other economic data that cover worldwide production, trade, shipments, inventories, price indices, energy, employment, investment, R&D, EH&S, financial performance measures, macroeconomic data, plus much more. To order, visit http://store.americanchemistry.com/.
Every effort has been made in the preparation of this weekly report to provide the best available information and analysis. However, neither the American Chemistry Council, nor any of its employees, agents or other assigns makes any warranty, expressed or implied, or assumes any liability or responsibility for any use, or the results of such use, of any information or data disclosed in this material.
Contact us at ACC_EconomicsDepartment@americanchemistry.com
“The State of the Chemical Industry: Outlook for 2021 & Beyond” Virtual Event
Joseph Chang – Global Editor, ICIS Chemical Business; Rob Westervelt – Editor-in-Chief
IHS Chemical Week; and Peter Young – CEO & President, Young & Partners
17 February (1:00 – 2:15 pm)
Société de Chimie Industrielle
ICIS World Base Oils & Lubricants Conference Liv
“JP Morgan: What’s Ahead in Chemicals” Webinar
Chris Power – Managing Director & Global Co-Head of Chemicals, JP Morgan Securities; Evan Junek – Managing Director, Corporate Finance Advisory, JP Morgan Investment Bank; and Brian Orkin – Investment Partner, Arsenal Capital (moderator
4 March (11:00 am – 12:15 pm)
Chemical Marketing & Economics
The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy we keep a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:
Green – 13 or more positives
Yellow – between 8 and 12 positives
Red – 7 or fewer positives
For the chemical industry there are fewer indicators available. As a result we rely upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.