The General Administration of Customs recently officially released import and export data for the first three quarters of 2024. Data show that in US dollar terms, China’s imports in September increased by 0.3% year-on-year, lower than market expectations of 0.9%, and also declined from the previous value of 0.50%; exports increased by 2.4% year-on-year, also falling short of market expectations of 6%, and Significantly lower than the previous value of 8.70%. In addition, China’s trade surplus in September was US$81.71 billion, which was also lower than market estimates of US$89.8 billion and the previous value of US$91.02 billion. Although it still maintained a positive growth trend, the growth rate slowed down significantly and fell short of market expectations. It is particularly worth noting that this month’s export growth rate was the lowest this year, and it fell back to the lowest level since February 2024 year-on-year.
In response to the significant decline in the above-mentioned economic data, industry experts conducted an in-depth analysis and pointed out that the global economic slowdown is an important factor that cannot be ignored. The global manufacturing Purchasing Managers Index (PMI) has declined for four consecutive months to the lowest level since October 2023, directly driving the decline in my country’s new export orders. This phenomenon not only reflects the shrinking demand in the international market, but also has a significant impact on my country’s new export orders, making it face severe challenges.
An in-depth analysis of the causes of this “frozen” situation reveals that there are many complex factors behind it. This year, typhoons have been frequent and extremely intense, seriously disrupting the order of maritime transportation, causing the congestion of my country’s container ports in September to reach a peak since 2019, further exacerbating the difficulty and uncertainty of goods going out to sea. At the same time, the continued escalation of trade frictions, policy uncertainties brought about by the US election, and the deadlock in negotiations on the renewal of labor contracts for dock workers on the East Coast of the United States have together constituted many unknowns and challenges in the external trade environment.
These unstable factors not only push up transaction costs, but also seriously weaken market confidence, becoming an important external force inhibiting my country’s export performance. Against this background, the recent export situation of many industries is not optimistic, and the traditional chemical industry, as the backbone of the industrial field, is not immune. The August 2024 import and export commodity composition table (RMB value) released by the General Administration of Customs shows that the cumulative exports of inorganic chemicals, other chemical raw materials and products have declined significantly year-on-year, reaching 24.9% and 5.9% respectively.
Further observation of China’s chemical export data in the first half of this year shows that among the top five overseas markets, exports to India fell by 9.4% year-on-year. Among the top 20 overseas markets, domestic chemical exports to developed countries generally showed a downward trend. This trend shows that changes in the international situation have had a significant impact on my country’s chemical exports.
Faced with the severe market situation, many companies reported that there is still no sign of recovery in recent orders. Chemical companies in several economically developed provinces have encountered the dilemma of cold orders, and a large number of companies are facing the dilemma of having no orders to do. In order to cope with the operating pressure, companies have to resort to measures such as layoffs, salary cuts, and even temporary suspension of business.
There are many factors that have led to this situation. In addition to overseas force majeure and the sluggish downstream market, the problems of overcapacity, market saturation, and serious product homogeneity in the chemical market are also important reasons. These problems have led to vicious competition within the industry, making it difficult for companies to extricate themselves from the predicament.
In order to find a way out, coatings and chemical companies have been looking for a way out in the oversupplied market. However, compared with the time-consuming and investment-intensive innovation and research and development path, many companies have chosen the “quick-acting medicine” of price wars and internal circulation. Although this short-sighted behavior can relieve the pressure of companies in the short term, it may intensify vicious competition and deflation risks in the market in the long run.
In fact, this risk has already begun to emerge in the market. In mid-October 2024, the prices of multiple varieties in key quotation agencies in the chemical industry fell sharply, with an average drop of 18.1%. Leading companies such as Sinopec, Lihuayi, and Wanhua Chemical have taken the lead in reducing prices, with some product prices falling by more than 10%. Hidden behind this phenomenon is the deflation risk of the entire market, which needs to attract high attention from both inside and outside the industry.