Chemical loadings may have bottomed, up 0.9% in April
June 18, 2012
Chemicals movements have weakened considerably over the last year after improving drastically at the end of 2010. Volumes are essentially at the same level they were before that late 2010 uptick. It does look like we may have hit bottom and started rebounding back up; however, our outlook continues to weaken and we don’t expect to see much of a rebound in the chemical sector for at least the next year – perhaps longer. April loadings were up 0.9%, to 5.050 million, but the prior two months saw downward revisions. The year-over-year declines continued for the seventh straight month, dropping 3.2%. We don’t expect to see noticeably year-over-year gains until the end of 2012.
Our outlook for Industrial Production is showing modest growth in the chemicals markets for 2012 (up just 2.2%) followed by stronger growth in 2013 and 2014. However, the risks are moving to the downside for this market as several key components are still struggling (namely, plastic resin production). This is directly impacting our weak chemical movements forecast for 2012 and beyond.
After dropping throughout 2008, chemical freight bottomed out in 2009Q3 and rebounded through the start of 2011, with just a small downtick in Q2 of 2010 interrupting the growth. After peaking at the end of 2010, volumes moved lower throughout 2011. Loadings have stabilized over the last 5 months after bottoming in November and bouncing up in December.
Loadings fell in both 2008 and 2009, dropping 8.3% and 7.5%, respectively, before growing 3.6% in 2010. 2011 growth was reduced to a gain of just 1.4%. Growth may go negative in 2012 before modstly improving in 2013 and 2014. We expect that loadings will be down 1.5% in 2012 with positive growth in 2013 of 1.9% and a further 2.6% in 2014.
Chemicals Products are movements of refined or processed chemicals. This includes such items as plastics, cosmetics, paints, agricultural chemicals, and basic industrial chemicals. It does not include mining activities. FTR’s data is seasonally adjusted and measures both short and long-haul OTR segments.
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