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US commodity exports to China recover
Source
American Shipper
Post Date
07/02/2021

Amid the trade turmoil initiated by the Trump administration, China retaliated by curtailing purchases of American agricultural goods and energy commodities such as propane, liquefied natural gas (LNG) and crude oil.

The good news is that China is buying more American exports again.

Soybeans — China’s most important role as a buyer is in the soybean market. U.S. soybean exports to China collapsed in 2018 due to trade politics and the African Swine Flu’s impact on China’s pig population (soybeans are used to feed pigs).

Data from the U.S. Department of Agriculture shows that Chinese buying recovered by 2020, when 54% of U.S. soybean exports went to China. Total U.S. exports jumped to a record 64.1 million metric tons last year. Chinese buying continues this year, with the country taking 47% of Q1 2021 U.S. export volumes.

U.S. soybean exports to China have recently helped propel rates for dry bulk ships in the Panamax class (bulkers with capacity of 65,000-90,000 deadweight tons) to decade highs.

Propane — In the tanker markets, China is an important destination for American propane. The propane is transported aboard large 84,000-cubic-meter liquefied petroleum gas tankers and is used by China for residential consumption and as a feedstock for plastics manufacturing.

U.S. propane sales to China evaporated in 2019 during trade hostilities. But in full-year 2020 and Q1 2021, China came back to the market, taking 10% of U.S. seaborne propane exports, according to Energy Information Administration (EIA) data.

LNG — China overtook Japan last year to become the world’s largest importer of LNG. China stopped buying U.S. LNG in 2019 amid trade tensions, but accounted for 9% of America’s LNG exports last year. In Q1 2021, 8% of U.S. exports went to China, according to EIA data.

Crude oil — Chinese imports from America play a key role in demand for ships called very large crude carriers (VLCCs, tankers that carry 2 million barrels of oil). VLCC demand is measured in ton-miles: volume multiplied by distance. The sailing distance from the U.S. Gulf to China is more than double the distance from the Middle East to China. Thus, the more China imports from the U.S. instead of from the Middle East, the better for VLCC rates.

China accounted for just 5% of U.S. export volume deliveries in 2019, at the height of the trade war. Its share bounced back to 17% in 2020 and 13% in Q1 2021, according to EIA data.

Trade balance no better than pre-trade war

Overall, U.S. goods exports to China averaged $11.6 billion per month in January-April, up 38% from the same period in 2019.

The U.S.-China goods trade balance (exports minus imports) averaged minus $26.1 billion in the first four months of this year — slightly better than in January-April 2019, pre-COVID, due to the higher U.S. exports.

As for the effectiveness of the Trump administration’s tariffs, which have not been reversed by President Joe Biden, the average goods trade balance was minus $25.5 billion in January-April 2016, before Donald Trump’s election.

In the same period this year, the balance was 2% higher, in favor of Chinese exports to America.


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