LONDON (ICIS)--International trade continues to evolve in the fallout of the pandemic, affecting the chemicals industry and related downstream markets.
This weighed on German producers sentiment, according to the latest data from the Ifo Institute on Wednesday, as Ifo Export Expectations for manufacturing fell to 23.0 points in May, from 23.9 a month prior.
Despite this Germany’s export industry remained a key driver for industrial activity.
Expectations in the chemicals industry remain optimistic about export demand in the coming months.
The furniture industry is experiencing an uptick in export orders after several months of struggling with low demand.
Healthy demand was echoed in electrical and electronics industries, as well machinery and equipment manufacturing.
In contrast, sentiment in the automotive industry has fallen significantly with paltry new orders expected from overseas expected in the near term.
The slowdown in vehicle manufacturing has been caused by the shortage in semiconductors, which has characterised the automotive industry so far this year.
A similar picture was presented in the food industry, the textile and clothing industry also struggled on the export front.
Supply affected sentiment in some German markets according to the ifo, as constrictions in material availability left producers in the construction and manufacturing segments led to order backlogs.
The pandemic has been prominent in shaping supply chains for international markets but this was not the only factor for the UK and its trading partners, according to the latest trade data from the country’s Office of National Statistics (ONS).
Imports into the UK decreased from Germany since April 2019, in part due to the pandemic-related crash in production, but also as Brexit regulations were finalised.
The UK has imported more goods from China than any other country since the second quarter 2020.
Total trade in goods from non-EU countries surpassed that from EU countries in the first quarter, which only dipped 0.8% in Q1 2021, compared with Q1 2018 – before the UK decided to leave the EU – in stark contrast with the 23.1% drop in trade with EU countries over the same period.
Firms on both sides may have been stockpiling ahead of the deadline of 31 December 2020 to ensure there were no shortages as supply chains adapted to the changing conditions.
Ireland tracked the most significant decline of the UK’s top exporting partners following the EU transition period, with food and chemicals particularly in demand as buyers stockpiled to avoid shortages.
UK chemicals exports to Ireland in December 2020 rose by 33.5% to £0.6bn compared to a year prior, plummeting to £0.1bn in January 2021 after Brexit regulations had come into effect.
Although trade legislation details are yet to be ironed out for the UK chemicals industry, market dynamics will continue developing against a backdrop of more promising demand over the second quarter.
Front page picture: The UK's ferry border
in Dover; archive image
Source: Guy Bell/Shutterstock
Focus article by Morgan Condon