Asian Interplay: The Intra-Asian Products Trade

Intra-Asian products trade has increased strongly over the last decade, generally at a faster pace than global seaborne products trade. By 2013, intra-Asian products trade totalled 3.4m bpd, accounting for 17% of the global total and 43% of total Asian products imports.

Sino-Support

Between 2000 and 2006 intra-Asian products trade grew at a CAGR of 7.0%, whilst global seaborne products trade grew at a CAGR of 5.1%. Growth in intra-Asian products trade during this period was largely driven by China, whose imports from other Asian countries grew at a CAGR of 9.1%, as a result of rapid industrialisation and was largely supplied 

by Japanese and Korean exports of heavier products. Meanwhile, Malaysian intra-Asian products imports more than doubled from 2000 to 2006, as shown by the Graph of the Month. This was as a result of a rapid expansion of the petrochemical sector, with import growth generally led by clean products imports from Singapore. However, overall intra-Asian trade growth was held back somewhat by a 61% fall in OECD Asian products imports from other Asian nations from 2000 to 2006.
Producing the Goods

Between 2006 and 2013 intra-Asian products trade grew slightly more slowly, at a CAGR of 6.5%, compared to a global CAGR of 3.3%. Average Chinese import growth slowed to 0.7% in this period, as a result of the rapid expansion in domestic refinery capacity. However, this growth led to an increase in the volume of Chinese products for exports to other Asian nations.

Further industrialisation of several smaller Asian economies, notably Thailand and Taiwan, has supported a rise in intra-Asian products imports by the ‘other’ non-OECD Asian nations. Intra-Asian products imports to these countries have risen to 0.9m bpd in 2013, from 0.5m bpd in 2006. During this period, Singapore’s intra-Asian products imports grew by roughly 40%, supported by its status as a bunkering port and oil storage hub. A large proportion of this growth was accounted for by imports from China.
Looking Forward in the Far East

In the short-term, future expected growth in the Chinese refinery sector will continue to suppress growth in Chinese products imports, which have declined by about 30% y-o-y in the year to date. However, China may continue to play an increasingly important role in the export of products, including within Asia. Import growth from other non-OECD Asian nations is likely to further bolster intra-Asian products trade, as is Japanese products import growth, following the closure of some refineries over the last few years.

Overall, intra-Asian products trade contributed 24% of total global growth between 2000 and 2013, providing some support for MR and Handy products tankers. Over this period the dynamics of this trade has changed, with China becoming an important exporter, whilst OECD Asian products exports have softened. The outlook for further growth in intra-Asian products trade remains positive, and as such it is likely to remain a vital part of the global seaborne products trade.
Source: Clarksons