Page 18 - NBIZ June2021

A detailed analysis of trade patterns for Houston’s barrels per day (b/d) of petroleum and liquid fuels in
top 20 markets can be found under the Business Re- April, an increase of 15.8 million b/d from April 2020
sources tab at http://www.houston.org/publication/ and only 6.0 million b/d below the pre-COVID peak.
global-houston-trade-2021.
WAITING FOR THE SURGE
Doctor Copper’s Prognosis
“Doctor Copper” is lingo for this metal that has a "Ph.D. Trying to determine whether this surge has reached
in economics" because of its ability to predict turning Houston poses a challenge. Not enough data has been
points in the global economy. Copper is used in everything reported year-to-date for 2021 to compare with data for
from new home construction, computer assembly and 2020. Statistics for the Houston Airport System and the
video games to power transmission lines, and vehicle Ports of Houston, Galveston, Freeport, and Texas City are
manufacturing. When copper prices are rising, that indi- only available through March of this year. The pandemic
cates strong demand and an expanding global economy. did not fully impact Houston’s economy until April of 2020.
When prices are falling, that indicates weak demand and Data for April 2021 will not be available until June at the
a sluggish global economy. In April, global copper prices earliest. And even then, the data may not tell much. Some
were up 84.4 percent compared to April 2020. chemical plants in the region have yet to fully recover from
the mid-February freeze, thus affecting waterborne trade.
A wealth of data supports Doctor Copper’s prognosis. Bans on international travel remain in place for the U.S.
and many foreign nations, limiting the number of foreign
0 IHS Markit and JPMorgan Chase’s snapshot of the flights into Houston.
health of global manufacturing, based on surveys of The one April data set that is available is container
multiple purchasing managers, came in at 55.8 in May. traffic at the Port of Houston, which does show a pickup
A number above 50 signals expansion. in international activity. Through the first three months
of 2021, it was up 4.3 percent. But the activity is lopsided.
0 The Baltic Dry Index (BDI), a measure of shipping Containerized imports are up 24.5 percent while con-
capacity versus the supply of ocean-going bulk tainerized exports are down 13.4 percent. The consumer
carriers, is at its highest level since 2010. buying binge of the last 12 months is driving the growth
in imports.
0 Global trade in goods during Quarter 1 of 2021
surpassed pre-pandemic levels according to UNCTAD.
However, trade-in services (including travel) has yet to A New Set of Problems
recover. The global recovery has created a new set of problems
that will impact Houston if it has not already. Surging
0 In a mid-April survey of corporate executives, consumer and business demand is upending global supply
McKinsey & Company found 73 percent expect global chains. In an article titled, The World Economy Is Suddenly
economic conditions to be moderately to substantially Running Low on Everything, Bloomberg explained:
better over the next six months. That is up from 56
percent in mid-January. Copper, iron ore, and steel, corn, coffee, wheat, and
soybeans, lumber, aluminum cans, semiconductors,
0 The Conference Board’s Global Consumer Confidence Index plastic, and cardboard for packaging are low. The
improved from 98 in Quarter 4 of 2020 to 108 in Quarter 1 world is seemingly low on all of it. Corporations are
of 2021. Readings above 100 are considered positive. The buying more than they need to survive the breakneck
Quarter 1 2021 level exceeds the pre-pandemic reading of speed at which demand for goods is recovering and
106 and is at the highest level since the survey began in 2005. assuage that primal fear of running out.

0 According to the U.S. Energy Information The reasons for the shortages vary by commodity. Early
Administration (EIA), the world consumed 96.2 million in the pandemic, the lumber industry assumed business
“

Trying to determine WHETHER THIS SURGE HAS

REACHED HOUSTON poses a challenge.

Not enough data

18 NBIZ ■ June 2021