Chemical loadings remain weak in May
July 16, 2012
May volumes were in line with expectation, but the outlook continues to weaken. Volumes are essentially at the same level they were before that late 2010 uptick, and we don’t expect to see much of a rebound in the chemical sector for at least the next year – perhaps longer. May loadings were unchanged from April at 5.058 million. The year-over-year declines continued for the eighth straight month, dropping 1.6%. Despite being negative it was the best showing since turning negative back in October. We don’t expect to see noticeable year-over-year gains until the end of 2012.
Our outlook for Industrial Production in the chemical markets took another big hit this month and we now expect to get growth of just 0.7% in 2012 followed by modestly stronger growth in 2013 and 2014 (~2-3%). Despite have some obvious advantages (namely low natural gas prices) our chemicals markets are not recovering as expected. Volumes will remain weak for several years.
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 will go negative in 2012 before modestly improving in 2013 and 2014. We expect that loadings will be down 1.7% in 2012 with positive growth in 2013 of just 0.9% and a further 1.8% 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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