As the Exhibit below shows, the US manufacturing industry is on fire, driven by strong domestic demand and all of the logistic and social issues associated with importing. There is both a consumer and a big box retailer desire to buy “American” and it helps to explain why we are seeing such significant raw material shortages in the US. The China export headline linked is also probably correct as it applies to shipments to the US and to Europe, where the higher costs of freight are adding cost pressure and making the “buy locally” decision easier. For the chemical industry, this is more US domestic demand versus exports for most products, which is a net positive. For Europe, it will likely be more net chemical and polymer imports, which will be good for EU producers as prices will be higher and good for US exporters as Europe is close and has higher pricing.
The wild card will be surpluses in China and what they do to local pricing – will we still be as interested in buying US furniture or appliances if the price of Chinese products falls 20%?
Source: Bloomberg, C-MACC Analysis, April 2021
