Commodity price inflation, and not volumes, drives EXIM trade’s sharp growth: Nomura

“Core EXIM trade rose 27.3% y-y vs Apr 2021 (down ~6% m-m). This was led by a sharp 36.6% y-y growth in core imports (-4.5% m-m), while core exports rose at 18.3% y-y (-7.3% m-m) over Apr-21. However, we note that a large part of this was driven by commodity price inflation rather than underlying volume growth,” said the report. 

The graph (below) plots the growth in EXIM trade against volume handled at major ports and key private ports. “The sharp divergence between value of EXIM trade and port volumes indicates the impact of a sharp surge in commodity prices,” said the report.

Volumes at major ports were driven by POL (petroleum, oil, lubricants) and coal volumes. The report said, “POL (petroleum, oil and lubricants) and coal volumes came in strong, rising 14.7% y-y and 6.3% y-y, respectively, while iron ore volumes were weak, declining 17.5% y-y. Fertilizers volumes (+13.8% y-y) remained strong during Apr-22.”

“Container volumes came in weak at 943k TEUs, were stable y-y (-3.1% m-m). In tonnage terms, container volumes remained flat y-y,” it added.

In handling the port volumes, the Railways seems to have gained in market share over roadways. This inference was drawn from the fact that the Railway EXIM container volumes rose 7.2% in April 2022 even when port container volumes remained flat y-o-y.