Exports of chemical and plastic products continue to recover towards end of 2020
January 14, 2021
Chemical and plastic products continued to recover as 2020 wound to a close. Strong demand as economies re-opened in the summer and fall of 2020 brought chemical and resin inventories to their lowest levels in several years. Trade data from November shows exports of commoditized chemicals having their strongest end to a year in some time. The graphs below show the export volumes of some of Canada’s commoditized products through November.
On an aggregate level we are seeing the value of exported chemical and plastic products exceeding 2019 levels as we ended 2020. The American Chemical Council is a seeing similar trends to start the year.
Significant differences underlie these aggregate trends. Products whose downstream sectors remain deeply impacted by COVID-19 (auto manufacturing, oil and gas drilling, paper product manufacturing, and travel, as examples) or those continuing to face overcapacity or logistical pressures are further back in the recovery. Plastic Product manufacturers were severely impacted in the spring of 2020 by lockdown restrictions but since then, exports have reach multi-year highs. Strong demand from nearly all sub-sectors have been seen in the fall with auto parts and construction materials showing some counter seasonal trends this year.
A crucial trend for 2021 will be further price strengthening accompany the strong demand. A large share of the gains seen in the graphs above are from volumetric gains. Margins remain compressed across a wide variety of chemical products. During third-quarter earnings calls in October 2020, several CEOs expected global chemical demand to remain tight through early 2021 with the normally slower winter months used to rebuild inventories and hopefully providing a boost to prices and seasonal demand normalizes in the Spring of 2021.