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BP, Shell provide temporary boost to British exports

The level of political certainty for industrial supply chains remains high even after the parliament passed a law requiring Boris Johnson to request an extension to Article 50 if he cannot secure a deal with the EU at an Oct. 17-18 summit.

Panjiva's analysis of official data shows U.K. international trade activity improved by 2.5% year over year in July, led by a 5.8% surge in exports while imports rose by just 0.1%. Both represent an improvement from the second quarter when total trade fell by 1.2%.

That masks a continued downturn in trade with the EU, with exports that fell 3.8% year over year in July, compared to 4.6% in the second quarter while imports fell 1.5% versus a 7.5% slump in the prior three months.

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The return to growth is largely down, therefore, to a 15.1% jump in exports to countries outside the EU. That represented the seventh straight month of growth, and may be linked to a continued decline in sterling. The most significant improvements include a 75.8% surge in shipments to China, equivalent to 46.3% of the sterling increase in trade, and a 21.6% rise in exports to the U.S. which represents 42.4%.

Around two-fifths of the increase in exports to China were accounted for by a 305% surge in crude oil shipments while just under 10% was due to a 434% jump in sales of power generating equipment.

In the case of exports to the U.S. in dollar terms, Panjiva's data shows the top three areas of growth included a 98.1% jump in shipments of pharmaceuticals to $389 million; a 191.1% climb in exports of crude oil to $268 million; and a 21.7% increase in shipments of cars and light trucks.

It is not immediately clear that any of those growth streams will prove sustainable. As outlined in Panjiva's research on Sept. 9 the surge in auto shipments may reflect a bounce in sales in August and face threats from the Section 232 review of the industry by the U.S. in November. Shipments of pharmaceuticals may face a challenge from long-awaited healthcare pricing reforms.

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Shipments of crude oil meanwhile can prove volatile Panjiva's seaborne shipping data shows U.S. imports from the U.K. may have fallen by 14.8% in August and are partly a function of differential pricing spreads as much as fundamental demand.

Shipments associated with BP PLC may have had the largest volume among the major shippers in the 12 months to Aug. 31, with 30.8% of total shipments after a 85.7% year-over-year jump in July and 9.3% in August. That was followed by imports by Royal Dutch Shell PLC representing 17.4% and EnQuest PLC with 8.7% of the total though neither appears to have made significant shipments in August.

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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.