Steel prices remain volatile, steel prices and supply remains volatile within South Africa and across the world at the moment, prices abroad are seemingly increasing per ton on a weekly basis.
Currently there are no talks of a further increase for the month of August but this could change in the coming week, if no increases are announced then the rumours from earlier in the year that the industry would settle by 3rd quarter could prove true.
Another possible contributing factor is that fuel in South Africa has increased on a month-to-month basis thus increasing charges on the logistic side of things which in turn will push up production costs.
EU steel shortages to continue throughout the remainder of the year, European steel distributors have been struggling to get the necessary volumes of finished steel from either domestic or overseas suppliers, adding that they do not expect the situation to improve any time soon.
In addition, end users are also facing problems securing steel products while also having to contend with rising steel prices.
So far, mills can get higher prices and distributors, manage to pass this rise to the end users. The impact of the price increases have yet to been seen on the relevant industries and companies.
Steel sector faces potential crisis from China, the global steel market is facing short-term headwinds due to China’s unfavourable policies to harness inflation whilst aiming to achieve net-zero carbon emissions.
China’s commitment to control steel production this year has led to price adjustments recently.
As Chinese steelmakers have seen profit decline to around breakeven level, there is limited room for further price cuts, with steel prices forming a bottom, however global steel demand remains strong, thanks to the rolling COVID-19 vaccinations easing the global health crisis together with worldwide government stimulus packages.
Steel demand from construction companies and automakers has shown no signs of subsiding but steel supply remains tight due to limited shipping capacity and labour shortages.
Based on international steel prices, as well as increases in iron ore and coking coal prices, we expect China Steel to raise prices further in the third quarter.
Level 4 announced, on the 27th of June, President Cyril Ramaphosa announced that South Africa would enter a level 4 lockdown for two weeks.
It is noted that the current level is expected to be extended by a further two weeks which has once again, become detrimental to the economy.
Currently all gatherings are prohibited within Gauteng as well as Schools, Gyms and restaurants to name a few on a national level. The sale and distribution of alcohol is also prohibited unless the use is for sanitisers. There is also a curfew in place from 21:00 – 04:00.
Border updates, no current delays or issues have been reported at the various borders within Southern and Central Africa.
Delays were experienced at Beitbridge just over a week ago, however this was due to peak times of the month where cargo movement is at its highest.
Transnet reaches wage agreement, Transnet has reached a wage agreement with its recognised labour unions, the SA Transport Allied Workers’ Union and United National Transport Union.
In terms of the agreement signed at the beginning of the month, the parties have settled on a 5% increase for the current financial year for bargaining unit employees.
The company’s main focus remains on ensuring financial sustainability and operational improvements in the business, to drive competitiveness of South Africa’s logistics system in all the segments that they operate.
Ocean rates soar, shippers are paying well over 300% more per box carried at sea, yet have to contend with the worst schedule reliability that the export-import industry has had to deal with since the advent of containerisation.
The exact year-on-year increase is as high as 332% for the majority of lines.
However, the exorbitant increase in ocean freight rates is not reflected in schedule integrity and is in fact far from it.
Transpacific traffic has recorded 401 vessels being at least 14 days late or longer so far this year. For the same period, Europe-Asia traffic had 144 vessels arriving late, also by more than two weeks or longer.
Previously, the average delays had been around four days, the new average was now at least six days.
The rising cost of ocean freight rates could see traders coming up with alternatives to the status quo.
Demurrage and detention charges are also contributing to increased rates as a recent report showed that average D&D charges across the world’s 20 biggest ports have doubled since last year with an estimated increase of +104% after two weeks.
2nd Quarter shows jump in revenue for TEU, evidence of the continued upward trajectory in carrier fortunes is prominent in the latest results released by Hong Kong-based OOCL.
In the second quarter ended June 30, total volumes were 15.4% up from the same period last year while total revenues increased by 119.0%.
Overall, the average revenue per TEU was up by 89.7% compared to Q2 last year.
Loadable capacity was up 12.4% with the overall load factor 2.2% higher.
Looking at a year-on-year comparison for the first half, total revenues went up a massive 107.6% while total volumes increased by 19.5%.
Loadable capacity increased by 13.7% and the overall load factor was 4.2% higher.
Overall average revenue per TEU increased by 73.8% compared to the second half of last year.
Air cargo on the upward, the latest air cargo results for May, reveal the sector’s continued strong growth trend.
Global demand, measured in cargo tonne-kilometres (CTKs), was up 9.4% compared to May last year. Seasonally adjusted demand rose 0.4% month-on-month in May, the 13th consecutive month of improvement.
The pace of growth slowed slightly compared to April, which saw demand increase 11.3% against pre-Covid-19 levels. Notwithstanding, air cargo outperformed global goods trade for the fifth consecutive month.
Zimbabwe planning on curbing smugglers, Zimbabwe is drafting legislation which will compel small-scale gold miners to register their operations as the southern African nation seeks to curb gold smuggling.
Government is in the process of putting a statutory instrument for all the gold producers in an effort to stop prevent the gold from being taken out of the country, similar to what the country does under tobacco where there is a grower’s number.
Zimbabwe’s gold deliveries for the five months through May plunged 24% to 7,030 kilograms from a year earlier.
More than $1.5-billion of gold is illegally shipped out of Zimbabwe every year, depriving the cash-strapped economy of crucial foreign-exchange revenues.
Looming hunger crisis in Mozambique, over 730,000 displaced people in conflict-ridden Mozambique could face a hunger crisis unless urgent funding is secured.
Insurgents have been wrecking havoc in the gas rich region of Cabo Delgado for over four years now with attacks escalating over the past year with one of the deadliest attacks taking place earlier this year where dozens were killed and thousands had to flee.
There is currently an urgent appeal for $121 million by the UN World Food Programme to support affected people until the end of the year but there is warning that the WFP could see itself rationing or completely pulling all food assistance in August if no additional funds are raised.
“He who refuses to obey cannot command”