The Supply Chain Daily provides a curated overview of Panjiva's research and insights covering global trade policy, the logistics sector and industrial supply chains and draws from global shipping and freight data.
Uniqlo far from unique in needing fast fix for Chinese apparel exposure
Fast Retailing Co. Ltd.'s Uniqlo brand will reportedly shift the supplier base for its U.S. stores toward Southeast Asia and away from China in response to U.S. duties. The latter already applies to $38.7 billion of annual imports of apparel, footwear and textiles from China by all U.S. importers as of Sept. 1, per Panjiva data.
Uniqlo has been growing rapidly, with U.S. seaborne imports associated with the firm having jumped by 26.6% year over year in 2018. There has been renewed growth of 8.2% in July and 29.5% in August as the firm builds up inventories, likely ahead of the new tariffs. The need for action is apparent – China represented 58.6% of shipments linked to Uniqlo in 2018.
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Kronos takes time to build pigment imports; Lanxess counts cost of paint tariffs
The home decorating industry has felt the effect of U.S. tariffs on Chinese exports, with the imposition of list 3 duties, including pigments and paints, in Sept. 2018 at a rate of 10%, rising to 25% in May 2019. According to Panjiva data, seaborne imports of pigments and paints from China fell 33.0% year over year in the three months to July 31, outpacing the 23.8% drop seen for the market overall.
Shipments associated with LANXESSA fell the fastest with imports from all markets to the U.S. falling by 58.8% while those by The Chemours Co. declined 16.3% despite the firm not being exposed to shipments from China. The latter may mean demand for paint is waning more broadly. The outlier has been Kronos Worldwide Inc. Shipments associated with the titanium dioxide specialist climbed 29.2%.
(Panjiva Research - Chemicals)
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Ground being prepared for next round of U.S. agricultural trade conflicts
The U.S. International Trade Commission received nine requests for trade violation investigations in August, though none were for antidumping cases for the first time since January. The U.S. Trade Representative, or USTR, has also requested a review of restrictions by other countries on U.S. exports of agricultural products.
It is concerned about rules on minimal residual levels of fertilizers and pesticides (MRL) with an initial review due by April 2020. The MRL investigation, and resulting tariffs or other actions, may be a tool for the Trump administration's trade negotiations with the EU, Japan, China and other countries.
Yet, U.S. exports of fruit, vegetables, cereals and beans appear healthy recently. Exports to the EU climbed 10.8% and those to Japan grew by 10.3% year over year in the 12 months to June 30. The USTR may instead target other Southeast Asian countries whose imports from the U.S. fell 1.9% over the same period.
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Raizen, Valero may find ethanol growth in India
The Indian government may incentivize ethanol production to cut the country's reliance on foreign oil rather than just for environmental reasons. Import duties may also be applied if the incentives encourage increased imports, which already rose 4.7% year over year in the 12 months to May 31 to reach $517 million, according to Panjiva data.
The U.S. has been the major supplier to India. U.S. exporters, including Raízen Group and Valero Energy Corp., could benefit from increased exports to India after shipments to Brazil slumped 25.4% year over year in the 12 months to June 30. The latter could yet recover, however, following revised Brazilian import quotas.
EU may have more to fear than China as Trump's trade metric worsens
The United States' international trade in goods and services activity slipped 0.2% year over year in July. The trade-in-goods deficit fell as the result of a 1.1% slide in imports. Services surplus also slowed due to lower travel and transport exports.
The latter may be linked to trade tensions with China and meant the overall trade deficit increased to $53.9 billion from $52.4 billion a year earlier. According to Panjiva data, a 13.8% drop in exports of goods to China outpaced an 11.9% decline in imports, but there was nonetheless an improvement in net exports in dollar terms – imports outscale exports by 1.5:1 – such that the trade deficit with China fell to $32.8 billion, or 11.4% year over year.
The bigger challenge for the Trump administration is that the deficit versus the EU jumped to a record high of $20.1 billion. President Donald Trump may be spurred to take action against the EU, which he has already described as being "worse than China."
Canada joins Americas export downturn in July as oil slips
Canada's international trade activity fell 1.8% year over year in July, driven by a 2.7% slide in exports to the U.S, according to Panjiva's analysis of official data. Oil accounted for half the drop in exports in dollar terms, though Canada's poor performance may reflect a global trade economy malaise. Exports to China dropped by 21.1%.
Canada joins the U.S. and most other countries in the Americas region with falling exports. The region, including North, South and Central America, saw exports drop 1.5% year over year in July.
(Panjiva Research - Economics)
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence.
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