Friday, August 12, 2005

US Pencil Imports Continue Growth

The latest update to US import statistics for wood cased pencils support the growth trend experienced for some years now. Over the past 5 years through 2004 pencil imports into the US have increased at an average annual rate of 6.0% on a dollar value basis and of 7.8% on a unit volume basis. This is reflects an average annual reduction of 1.8% in import prices over this period. In total 2004 unit volume imports were 17.6 million gross (this 2.5 billion pieces for the year or almost 9 pencils per capita).

Our own estimates indicate that imported pencils now represent approximately two-thirds of the total US annual consumption on a unit volume basis. We estimate that the share of US manufactured pencils has dropped from around 50% of the market just three or four years ago. Given net higher average average wholesale prices of US based production the dollar market share of imports is certainly less than that of import unit volume share. Of course a number of the US producers are also selling imported pencils or also adding further manufactured value to imports of semi-finished product so the US producers total share of US consumption is not quite as bleak as indicated purely by the import statistics. Also total wood cased pencil consumption does seem to be on the rise overall and 2005 is shaping up to be a good year, though the specific growth rate year on year is a bit more of a challenge to accurately analyze. Regardless, the continuing challenges to US based pencil manufacturing remain clear.

Looking at 2005, the Year-to-Date May figures are up just 1.6% on a dollar value basis and an astounding 21.0% in unit volume vs. the same period in 2004. This indicates a significant 12.8% average import price reduction year over year. If sustained through year end the percentage increase in volume would be the largest since 1996 and the reduction in average import prices year on year would be the largest ever. In 1997 there was an 11.3% reduction reflecting the largest single year price deflation of import pencils at the wholesale level.

Another surprising aspect of import figures thus far in 2005 is the indication that the most significant import growth is not coming from China which traditionally has the largest share of imports to the US market. In fact YTD May Chinese pencil imports are off 10.4% on a volume basis. The main growth thus far in 2005 is driven by imports primarily from Costa Rica, Indonesia and Thailand and a few other countries in smaller proportion. Key countries with declining shipments to the US so far this year are China and Brazil.

It is difficult to project such trends through the full year due to seasonal factors, the most notable being that distribution channels load up in the early part of the year to prepare for back-to-school shipments. So the final wood cased pencil import picture and trends by country may yet be different by year end. Other issues that may impact these trends this year or as we look forward to 2006 are the recent decision by China to allow the Yuan to float and changes in relative anti-dumping duty rates on Chinese imports for some manufacturers. See my upcomming discussion and update on anti-dumping and other pencil trade issues next week.

5 comments:

Pencil Revolution said...

Just curious:
Do these figures include drawing pencils (graphite, colored, watercolor, etc.) and drafting pencils, or only writing pencils.
Most of my writing pencils are made in the US, but most of my art gear is not.
Just wondering is all:)

WoodChuck said...

Yes, these figures include all forms of drawing, drafting, coloring and writing pencils encased in a rigid sheath which is most generally wood, but some are extruded plastic. The figures exclude items like mechanical pencils, paper wrapped crayons and cosmetic pencils whether cased in wood or plastic.

SeeJane said...

I'd like to buy my kiddos nicer pencils for school, but the current trend is "buy a bunch of pencils that get turned over at the beginning of the year and everyone shares them all." I detest this policy because I'd like them to have their own that write better and/or are personalized and ones that only have their own personal germs on them. Have you seen what elementary (and older) kids DO with pencils?!

WoodChuck said...

There's an idea for the industry; a special "disinfectant" coating that doesn't allow pick up and transfer of germs. Don't know if it's technically possible or not?

Thanks for commenting.

Anonymous said...

You said the stats don't include cosmetic pencils...do you have any numbers for them?