EsHapag-Lloyd’s new service to Charleston didn’t prevent a drop in shipments in January. We analyze which products might be next for a section 232 trade review in the U.S. There’s an increasing trend for mineral ownership in electric vehicle supply chains, the latest to move is Mitsubishi. Also: the Port of Boston’s performance in January; Nakilat’s 4Q revenues; trampolines aren’t toys; China still won’t let American chicken in; Canada goes to court over solar; NAFTA rules of origin talks are disrupted; and Mitsui OSK’s new northerly route.
Daily Datum: 86%
China’s share of America’s $14.3 billion of toy imports in 2017
NEED TO KNOW
Music Stops for Charleston as Volumes Fall Despite Hapag-Lloyd’s Big Ship Deliveries
Container handling by the South Carolina Ports Authority, including Charleston, fell 10% in January, the second decline in three months. Exports fared worst with an 11% drop and repeated a pattern seen at both east and west coast ports. Unlike those ports though imports also fell, with a 6% reduction driven in part by lower shipments of tires and furniture among others. Deliveries from China also barely increased compared to a 10% rise nationally.
Among the container-lines serving the port MSC (deliveries down 15%) and Evergreen (26% lower) lost out the most, while Hapag-Lloyd’s shipments surged 105% after starting neopanamax vessel operations to the port.
Read more →
Source: Panjiva
Conductors and Filters Could Be The Next Front in National Security Trade Reviews
The recently revealed U.S. section 232 “national security” reviews of steel and aluminum drew on a prior Presidential Policy Directive that requires critical infrastructure to have the ability to “withstand and rapidly recover from all hazards”. That includes having domestic manufacturing capability in infrastructure sectors such as power and water. Regular anti-dumping cases can be used – for example as has been the case for large electrical transformers. However, the Commerce Department’s has requested funds for more section 232 cases in the coming year.
Panjiva data shows imports of electrical conductors and insulators climbed 13% in 2017 on a year earlier, including a 29% rise in shipments from China. Similarly while the Chinese government has called for an increase in U.S. exports of advanced water treatment equipment, there has also been a 9% rise in Chinese exports of basic water equipment to the U.S. by suppliers including Kexun and Toshiba.
Read more →
Source: Panjiva
Ownership-Secured EV Supply Chain Race Accelerates As Mitsubishi Goes for Copper
Commodity trader Mitsubishi will increase its holding in the Peruvian copper mining project at Quellaveco. One motivation is a strategy to increase ownership of materials used in manufacturing batteries within wider electric vehicle supply chains. That would follow similar moves in cobalt and lithium by Tesla and Toyota among others.
Peruvian copper imports have accelerated in the past quarter, but risen by just 3% in the 12 months to January 31. Yet, Chinese buyers increased their imports from Peru by 23% to reach 51% of the total in the past 12 months. Peru only represented 5% of China’s $21 billion of refined copper imports last year – which increased 14% in total – lagging Chile’s 33% share.
Read more →
Source: Panjiva
GLOBAL TRADE WRAP
Coming back to ports, Boston’s performance was similar to Charleston’s. It also experienced a decline in handling of 10%, led by a 24% slump in exports and 8% drop in imports. The latter was broad-based with China down 15%, though imports from South Korea surged to 3.5x their year-earlier level. A 48% slide in shipments by MSC was the main reason for the reduced imports, and accounted for 38% of traffic in January. Hapag-Lloyd meanwhile saw volumes grow by 92% as new services got underway. (Panjiva Research – Logistics)
LNG tanker operator Nakilat reported 4Q revenues that were 2% better than last year and 4% above analysts’ expectations. That squarely beat the rest of the tanker sector where revenues are dropped in 4Q 2017 and have underperformed expectations. Profitability at Nakilat was also better than expected, though its reliance on Qatari gas exports may make for a challenging outlook as competition from U.S. and other suppliers increases. (Panjiva Research – Logistics)
Kids’ trampolines are used for exercise, not play, the U.S. CBP has ruled. That means tariffs of around 5% must be applied. Suppliers may have anticipated this, with U.S. seaborne imports having fallen by 57% on a year earlier in January. It is also a reminder that the duty-free nature of U.S. toy imports – which reached $14.3 billion in 2017 – isn’t guaranteed. With 86% of imports having come from China in the past year a reclassification of some categories and imposition of section 301-inspired tariffs by the Trump administration can’t be ruled out. (Panjiva Research – Industries)
China’s decision to cut duties on chicken exports from America, but to leave a bird-flu related ban in place, is the latest sign of deteriorating trade relations having an impact on agriculture. Chinese imports of chicken have been modest, reaching just $890 million in 2017. Brazil led with an 85% share, but it is also the subject of an anti-dumping review. For context U.S. chicken exports reached $3.4 billion last year. (Panjiva Research – Industries)
Canadian solar power manufacturers are appealing against the recent U.S. section 201 decision to apply tariffs and quotas on solar power equipment at the Court of International Trade. They contend that Canadian shipments should be exempted under U.S. law as they are minimal. While Canada accounted for just 3% of U.S. imports in 2017, there was a 6.8x surge in November and December vs. 2016. That may indicate pre-positioning by suppliers include Canadian Solar and Silfab for a larger share of U.S. sales. (Panjiva Research – Industries)
NAFTA Watch: The U.S. rules-of-origin negotiator, Jason Bernstein, has been recalled from the current round of NAFTA talks – which were meant to include three days of debate on the topic – to hold discussions with auto industry executives. That could be an encouraging sign that the U.S. may be about to soften its stance requiring a tightening of content rules. As discussed in our 2/09 report the automotive sector is the most important in terms of the U.S. trade balance – the Trump administration’s key trade metric. (Inside Trade)
Mitsui OSK and the Far East Investment and Export Agency have signed a MoU to develop shipping routes via the arctic northern sea route, initially for energy but which could include containerized traffic. While actual shipping as part of ongoing services are some way off – MOL would probably need to invest in new vessels – it does represent another threat to traffic via the Suez Canal as outlined in our 2018 Outlook for logistics operations. (Mitsui OSK)
