The shipping number of the week provides numbers with a brief analysis of relevant developments in the shipping markets.
US exports of the Phase One agreement goods to China peaked in December at USD 10.4 billion, their highest recorded month, bringing total export of the goods in 2020 to USD 80.0 billion or 58.0% of the agreed goal of USD 137.9 billion.
Strong December exports were driven by soya beans and the highest ever crude oil exports when measured in value, which is what the agreement is based on. In volumes, crude oil exports were higher in May, but record high volumes didn’t translate into record high values due to the oil price collapse in Q2 2020. US crude oil exports to China in May totalled 5.0m tonnes and 2.8m tonnes in December, their second highest on record.
Overall, the fourth quarter of the year was by far the strongest when it came to US exports of the Phase One goods to China. Coming in at USD 30.5 billion it was the strongest quarter ever and up 34.6% from Q4 2017, the previous high.
The full year exports of USD 79.95 billion is 8.8% higher than in 2017, which served as the base for the deal and was the last year before the trade war disrupted trade between the world’s largest economies. To have reached the commitments, exports of the goods in 2020 needed to rise by 94.3%, a target which was far out of reach even before the pandemic hit.
Despite exports falling short of the commitments, the fact that there has been growth in US exports to China is good for shipping. Higher exports of agricultural and energy goods are particularly beneficial for the shipping industry as they add considerable front-haul tonne mile demand. The higher exports also reflects that some of the damage done by tariffs and trade restrictions implemented over the past few years has been reversed, with importers and exporters re-establishing relationships. However, tensions between the two countries remain high.
The ‘Phase One’ agreement, signed in January 2020, also covers 2021, with commitments this year even higher than those in 2020 at USD 172.1 billion. This target is just as unlikely to be met as the 2020 target was, but as with last year, anything that brings extra volumes and avoids the trade war getting worse is good news for shipping.