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Datamyne Blog

Covering trade & transport, with tips on using import-export data to advantage

Census Trade Data Suppression: How to Hide a $1 Billion Profit?

Category: Resources, Trade Data

by Brian J. McCormick, guest columnist  The US Census, the source for US import-export trade statistics, routinely modifies or suppresses selected data, primarily to protect confidentiality. Thus, statistics for two or more ports may be combined and published under an arbitrary designation, or shipping weight or value excluded from an individual port’s statistics.

In addition to protecting confidentiality, this Census practice can potentially hide significant US supplier profits – in amounts as large as $1 billion for single commodities.

To gauge the effects of Census data suppression, we’ll investigate the trade data for ethylene (ethene). Ethylene is often abbreviated as “C2” and is a principal building-block monomer for common large-scale polymers such as polyethylene plastics (polyolefins), advanced copolymers, and critical petrochemicals such as ethanol, ethylene glycol, ethylene oxide and ethanolamine.

C2 is assigned two different Harmonized System (HS) code numbers, although the material classified under either code is one and the same:

Ethylene HS CodesSome trade intelligence data users may not be aware of HS code 2711.14.00.10 from the Chapter on “Mineral Fuels, Mineral Oils, and Products of Their Distillation.” Many Canadian C2 imports come into the country under this code.

Chart 1 covers C2 average import CIF prices in $/mt from 2007 to 2013 as derived from two sources: Datamyne trade data (in blue), and Census data (in red) as obtained from www.usatradeonline.gov.

Chemcost Chart 1 US C2 import pricesThe C2 prices from Datamyne are consistently lower than those from the Census data. Over seven years the price different amounts to $371/mt! On average, the Census price appears to be about $1,000/mt throughout the time period. A market convinced that $1,000/mt is the best available C2 price yields a tidy profit improvement for producers.

Chemcost posits that the $371/mt C2 price differential is attributable to Census trade data suppression of lower cost C2 shipments.

It’s important to understand that Datamyne gets its C2 import trade data in a feed directly from Census. So, Datamyne and Census are starting with the same original datasets. Census then suppresses select data prior to its release of trade statistics to the public – as well as other government agencies. Here, for example, is a USGS report that acknowledges the suppression of data in a footnote:

USGS report footnote on suppressed dataLet’s consider the impact of possible Census suppression of C2 tonnage in MMmt.

In Chart 2, pay close attention to the low volumes in the barely-there yellow patches – the C2 volumes from Census. And the higher volume blue peaks are the C2 volumes from Datamyne.

Chemcost Chart 2 C2 import volumesThese volume data support a preliminary conclusion that Census regularly suppresses about 3MMmt of C2 trade per year. We might further infer that up to 99% of the C2 trade data in Census reports may be hidden from public scrutiny.

If we use the $371/mt price differential, we can calculate that 3MMmt in suppressed volume per year translates into a $1 billion potential annual upcharge risk to US customers who purchased C2-based polymers and chemicals.

For added insight, Datamyne routinely reports trade data by shipment.  In Chart 3, note the downward rolling trends in C2 shipments at the average net weight per shipment of 15,567mt over our seven-year survey period.

Chemcost Chart 3 C2 monthly shipment averagesYou can see the effect of the financial meltdown in 2008 and the general recovery into 2011. Declines in recent C2 imports might reflect increasing supply of quality low-cost domestic shale gas as primary alkene feedstock.

Chemcost’s takeaway is that, depending on the commodity sought and understanding that some teasing of the data may be needed, US import statistics from Datamyne can prove far more effective than Census data in uncovering opportunities for savings in chemicals sourcing.

Copyright © 2014 Chemcost Interactive, LLC

About Brian J. McCormick

Brian J. McCormick, ChemcostBrian J. McCormick was instrumental in developing procurement costing and quality assurance for P&G over a 34-year career. He is the founder and managing director of Chemcost Interactive* LLC (CI), a company offering research and analysis to support cost-efficient supply chain management.

Chemcost can assist Datamyne’s customers in identifying lower price opportunities through consulting and training. Chemcost also offers annual subscriptions to global and regional price bulletins on 225 commodities across 8 major chemical spend classes. Learn more and contact Chemcost at www.chemcostinteractive.com

The opinions expressed in this article are those of its author and do not purport to reflect the opinions or views or Descartes Datamyne. In addition, this article is for general information purposes only and it’s not intended to provide legal advice or opinions of any kind and my not be used for professional or commercial purposes. No one should act, or refrain from acting, based solely on this article without first seeking appropriate legal or other professional advice.

Date posted: February 11, 2014

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