Chinese chemicals and pharmaceuticals reach Europe and the USA via oceans and seas
By Marek Grzybowski
Liner ship and container terminal operators boast of ever-increasing volumes of transported and transhipped full containers. Many of them are receiving industrial and retail electronics, many are receiving solar panels and electronic systems for machines, devices, cars, and household appliances. Many are receiving chemicals and pharmaceutical products or their components. The world has become completely dependent on the chemical industry of the People’s Republic of China.
The chemical industry is the basis of production for most sectors of the modern economy. Dependence on the chemical industry of China has made the economies of developed countries additionally dependent on the efficiency of global transport connections. And ocean connections and efficient container terminals often play a decisive role in maintaining the continuity of production. we wrote about it here
China has adopted a strategy to first become self-sufficient in industrial and household chemicals, and then lead the industry globally. – China is already the world’s largest chemical market, which gives Chinese producers a key advantage in their domestic market. In 2022, China accounted for 44% of global chemical production and 46% of capital investment in this industry – Robert D. Atkinson of the Information Technology and Innovation Foundation (ITIF) synthetically summarizes the potential of the PRC’s chemical industry.
Atkinson notes that “Chinese chemical companies are strong in basic chemicals, where innovation plays a smaller role, but they are focused on gaining global market share in fine chemicals and consumer chemicals.” – Indicators of chemical innovation, including patents, R&D spending, and the most cited scientific articles, show the rapid progress of Chinese chemical companies – emphasizes Atkinson.
The reality is that China currently dominates the global market for many chemicals. The country accounts for about 55% of global acetic acid production capacity and about 45% of global titanium dioxide production capacity. For many industrial chemicals, China started out as a net importer, then built up domestic production capacity and eventually became a major exporter.
Another segment with a strong Chinese presence is fine chemicals – fairly complex organic molecules that can, however, be sold on a specification basis only, rather than requiring application knowledge. Examples include vitamin C (China has about 80%), selected agrochemicals such as glyphosate (China has about 58%) and active pharmaceutical ingredients such as ibuprofen, acetaminophen and aspirin.
These are all chemicals that require only a limited level of technology and innovation. Customers tend to know how to use them and therefore do not expect application knowledge from their suppliers. In addition, these chemicals are produced in large volumes, allowing Chinese producers to benefit from strong economies of scale. As their production decreases in Europe and the United States, these chemical products fill larger and larger containers and flow in a wide stream across the Atlantic and Pacific to Africa, South America and the developed world.
Chinese chemistry dominates
– In June 2024, China’s chemical exports amounted to USD 17.1 billion, while imports amounted to USD 14.6 billion, which translated into a positive trade balance of USD 2.48 billion. In the period from June 2023 to June 2024, China’s chemical exports increased by USD 945 million (5.84%) from USD 16.2 billion to USD 17.1 billion, while imports increased by USD 103 million (0.71%) from USD 14.5 billion to USD 14.6 billion – experts inform on the OEC.GLOBAL portal.
In June 2024, chemical products were exported mainly to the European Union (around USD 3.5 billion), South Korea (USD 1.51 billion), the United States (USD 1.49 billion), India (USD 1.46 billion), Brazil (USD 1.09 billion) and Japan (USD 873 million), and imported mainly from the United States (USD 1.76 billion), Japan (USD 1.66 billion), South Korea (USD 1.53 billion), Germany (USD 1.16 billion) and Ireland (USD 870 million).
Experts on the OEC.GLOBAL portal state that “In June 2024, the year-on-year increase in chemical exports was mainly due to an increase in exports to Poland (USD 171 million or 91.1%), South Korea (USD 160 million or 9.4%) and Belgium (USD 103 million or 28.4%). In June 2024, the year-on-year increase in chemical imports was primarily due to increases in imports from Chile (USD 643 million, or 248%), Germany (USD 436 million, or 28.6%) and Canada (USD 263 million, or 189%).
China exported $248 billion worth of chemical products in 2022, becoming the world’s second-largest exporter of chemical products. In the same year, chemical products were the fifth most exported product in China. The main recipients of China’s chemical exports are the European Union (over $54 billion), the United States ($23.7 billion), India ($19.1 billion), South Korea ($17 billion), Brazil ($14.5 billion) and Japan ($13.2 billion). The fastest-growing export markets for China’s chemical products in 2021-2022 were South Korea ($4.46 billion), Brazil ($4.03 billion) and the United States ($3.05 billion). In 2022, China imported $161 billion worth of chemical products, becoming the world’s third-largest importer of chemical products. In the same year, chemical products were the third most imported product in China. China imports chemicals mainly from the United States ($20.3 billion), South Korea ($20.2 billion), Japan ($17.2 billion), Germany ($11.6 billion), and Chinese Taipei ($8.27 billion).\The fastest growing chemical import markets to China in 2021-2022 were Chile ($5.76 billion), the United States ($2.6 billion), and Ireland ($1.86 billion).
Pharmaceuticals flow between continents
– In June 2024, Chinese pharmaceutical exports amounted to USD 1.11 billion, while imports amounted to USD 3.77 billion, resulting in a negative trade balance of USD 2.66 billion, experts said on the OEC.GLOBAL portal. Between June 2023 and June 2024, Chinese pharmaceutical exports increased by USD 188 million (20.5%) from USD 920 million to USD 1.11 billion, while imports increased by USD 509 million (15.6%) from USD 3.26 billion to USD 3.77 billion. In June 2024, pharmaceutical products were mainly exported to European Union countries (over USD 560 million), including: Denmark (USD 132 million), France (USD 49.7 million), the United States (USD 240 million), India (USD 41.5 million) and Hong Kong (USD 36.8 million), and imported mainly from Ireland (USD 740 million), the United States (USD 598 million), Germany (USD 512 million), Switzerland (USD 317 million) and Italy (USD 247 million). In June 2024, the year-on-year increase in pharmaceutical exports was mainly due to an increase in exports to the Netherlands (USD 5.3 million or 32.7%), France (USD 5.28 million or 8.19%) and Singapore (USD 3 million or 40.2%), OEC.GLOBAL states. In June 2024, the year-on-year increase in pharmaceutical imports was primarily due to increased imports from Germany (USD 406 million, or 57.6%), Canada (USD 215 million, or 658%) and China (USD 120 million, or 5.8 thousand%).
China exported pharmaceutical products worth $ 15.3 billion In 2022 In the same year, pharmaceutical products were the 32nd most exported product of China. The main directions of pharmaceutical exports from China are: the country of the European Union (over $ 7.6 billion), including: France ($ 697 million), Denmark ($ 641 million), Italy ($ 550 million) and the United States ($ 3.39 billion) and Hong Kong ($ 528 million). The fastest growing export markets of China’s pharmaceutical products in 2021-2022 were the United States ($ 260 million), Australia ($ 90.1 million) and Italy ($ 67.7 million), OEC.GLOBAL reports. In 2022, China imported pharmaceutical products worth $ 37.4 billion, becoming the 5th largest importer of pharmaceutical products in the world. In the same year, pharmaceutical products were the 13th most imported product to China. China imports pharmaceutical products mainly from European countries, including Germany ($5.24 billion), Switzerland ($5.23 billion), Ireland ($4.22 billion), France ($1.78 billion), and the United States ($8.96 billion). The fastest growing pharmaceutical import markets for China in 2021-2022 were the United States ($2.29 billion), Ireland ($1.64 billion), and Switzerland ($600 million).
– The pharmaceutical market in China could reach $117.50 billion in revenue in 2024. Among various markets, Oncology drugs are expected to be the largest market with a market volume of $21.02 billion in the same year – Statista experts have determined. The industry is estimated to grow at a compound annual growth rate of 5.82% (CAGR 2024-2029), leading to a market sales value of USD 155.90 billion by 2029. For the rest of the world, the United States is expected to generate the highest varnish sales revenue of USD 630.30 billion in 2024.
Chemicals Sector Drives Shipping
Globally, the chemical sector has grown slower than global gross domestic product (GDP): 149% from 1995 to 2020 in U.S. dollars, compared with 174% of global GDP. About 49% of the sector’s value added was concentrated in countries of the Organization for Economic Co-operation and Development (OECD) in 2020, down drastically from 82% in 1995, notes Robert D. Atkinson of ITIF.
According to the OECD, China was already the world leader in chemical production in 2020, with 29.1% of value added. The growth in a short period was shocking, since in 1995 the domestic chemical industry provided 3.8% of value added to the PRC economy. Recent leaders are taking the next places. In second place is the United States, with a value share of 18.3 percent of chemical plant production in 2020 (compared to 23.2 percent in 1995). Third place is occupied by Japan (5.6 percent, compared to 17 percent), followed by Germany (5 percent, compared to 11.1 percent). Poland is not included in these rankings at all.
Globally, the chemical industry generates a total income of about four trillion US dollars per year, Statista experts have determined. Almost 45% of this amount came from China alone in 2020 and was still growing. China not only generates the highest chemical industry revenue in the world, but is also the leader in chemical exports, with an annual export value exceeding 72 billion US dollars. At the same time, domestic chemical consumption in China amounted to 1.1.77 trillion US dollars and has been growing since 2020. The Chinese pharmaceutical market is experiencing rapid growth due to increased government investment in healthcare and a growing middle class. The pharmaceutical market in China is expected to reach a revenue of 117.50 billion US dollars in 2024. Among the drug markets, oncology drugs are expected to be the largest market with a market volume of 21.02 billion US dollars in the same year. More and more medicines or components for their production are flowing into the wide world, including Poland.
We see this in the form of an increasing number of containers with chemicals and pharmaceuticals and bulk carriers with fertilizers and other chemical products manufactured in China. With the greater supply of products from the Chinese chemical and pharmaceutical industry, the need to increase the transshipment capacity in container and bulk terminals and to maintain an appropriate level of security in ports and on intermodal connections and chemical supply routes to final recipients is growing.