Trade Winds update volume 47

Abeyla Exports > News > Trade Winds > Trade Winds update volume 47
Oct 29, 2021 Posted by: Abeyla Exports Trade Winds

NUMSA strike over, industry feeing effects, the national steel strike in South Africa, which started on the 5th of October came to an end last week Friday.

NUMSA and SEIFSA came to an agreement of 6% as opposed to the 8% NUMSA was fighting for.

Whilst the strike is over the industry is feeling the effects as backlogs are clearing up, lead times are being pushed out as manufacturers and merchants a like cannot keep up with current demand.

There are also steel price increases on the horizon with one major mill already announcing a R1,200.00/Ton price increase across the board and the possibility of ArcelorMittal increasing their prices is almost a given.

Loadshedding, another blow to the sector has shown its face this past week and it seems its here to stay. South Africa has fallen over a load shedding tipping point as and it’s noted that Eskom is the worst it’s ever been and is getting worse.

Stage 2 loadshedding was announced out of the blue last weekend for this week, however as of noon on Wednesday, stage 4 has kicked in. Businesses that have just managed to get over the pandemic’s destruction, followed by NUMSA’s interference now face the challenges of loadshedding once again.

The price of petrol is also skyrocketing next month with the country expected to pay R20/Litre by December. These are all devastating blows to the industry and downstream players.

ArcelorMittal, Africa’s biggest steel mill has just sent out notice of strike action starting next week 3 November 2021, with the knock-on effects from this strike possibly being catastrophic, we will update our clients as and when we receive any information.

Border updates, relief at Beitbridge as for the first time in more than two months, truckers stuck at the continent’s worst crossing can speed up in the queue as efforts to decongest the crossing take effect.

Serious interventions have taken place to address the cause of the bottleneck, transporters sending drivers to the border without paperwork that’s in order, to name just one of the reasons.

The following procedures have also been enforced:

Zimra will deploy officers at the south gate and on the N1 outside Gateway Truckpark to check if trucks are fully precleared on the Zimbabwean side.

If not fully cleared they will not be allowed to proceed to port, and will be directed to truck parks on a first in-first first-out principle, once they are clearing-compliant.

If a truck is fully precleared, it will be given identifying marks to proceed to port and be directed to a fast lane.

Penalties will also be handed out to truckers who stay longer than necessary when they arrive on the Zimbabwean side, drivers will need to finalise border processes immediately and not stay over and the same applies to those who arrive in Zimbabwe without the necessary preclearance compliance.

Furthermore, Zimra has continuously pleaded with clearing agents and runners to be available throughout the night, and appealed for improved communication between all concerned, transporters, drivers, and the aforementioned border staff.

This news is welcomed as the interventions appear to address all the issues previously mentioned as causes for congestion at Beitbridge.

As for the argument by some long-distance hauliers that the cost of using Zimborders’ facilities costing $201 for a conventional truck has resulted in resistance to the cross-border route via Beitbridge.

A trip via Groblersbrug through Botswana will cost as there is currently a 12-kilometre queue there which could cost up to R5000 a day that could end up costing around R25 000 extra for the entire trip, or one could pay R5000 at Beitbridge and cross the border in half an hour.

Since the implementation of the new procedures, drivers are claiming that the processing rate at Beitbridge is so quick that the turnaround time is no longer than half an hour to get through.

Truck drivers’ strike on the cards, the N3 highway had been blocked off earlier this week near Harrismith as part of a national protest by truck drivers.

Around 30 truck drivers had parked their trucks on the N3, closing the road totally. They are demanding to see transport Minister Fikile Mbalula, their main grievance is foreign truck drivers being allowed to drive trucks in the country.

According to All Truck Drivers Foundation (ADTF) secretary-general Sifiso Nyathi, the nationwide shutdown by local truck drivers is aimed at forcing freight companies to stop employing foreign nationals.

He said ATDF was not behind the protect action, which the truck drivers themselves allegedly organised, but added that the organisation did support the mass action.

In June 2020, ATDF threatened a national strike to protest claims that foreign nationals were being employed by the industry instead of local drivers. At the time, the Gauteng High Court in Pretoria granted an interdict against the planned strike.

There have been reports of violence in certain areas as trucks are being torched and drivers badly beaten with one report claiming a driver had lost his life.

Carriers schedule reliability remains bleak, it may not have plummeted further, but 34% schedule reliability is hardly a cause for celebration.

According to the latest Global Liner Performance report published by maritime consultancy Sea-Intelligence, there was a 0.6 percentage point improvement to 34.0% in September, maintaining the range of 34%-40% seen throughout the year.

On a year-on-year basis, reliability is down 22.0 percentage points, where the average delay for late vessel arrivals also improved marginally, dropping to 7.27 days.

Copper prices expected to decline into next year, copper prices are due to extend their decline next year from record levels this year as mine supply ramps up and economic growth tapers in China.

The precious metal soared to a record peak of $10,747.50/tonne in May, but has since then retreated around 10%, weighed down by weak Chinese factory output, debt problems in the property market and an energy crunch.

Analysts have revised their forecast for the copper market balance next year to a surplus of 82,000 tonnes from a deficit of 100,000 tonnes.

Zimbabwean miners losing out thanks to exchange rate, Zimbabwe’s miners are losing 20% of their export proceeds due to a widening gap between the official and black-market currency exchange rate.

The Zimbabwe dollar is trading at 93 to the dollar on the official market, but is quoted as low as 180 against the greenback on a thriving black market.

A survey commissioned by Zimbabwe’s mining chamber found that the mining companies were losing money due to the exchange rate mismatch. Exporters from Zimbabwe are required to surrender 40% of their foreign currency earnings to the central bank, in exchange for local currency at the official rate.

The mining companies said they were also battling electricity shortages, low levels of investment and the high cost of capital, but despite the challenges, the survey found that miners were more confident about their prospects for 2022 compared to this year.

Zimbabwe recorded earnings of $3.65-billion from mineral exports last year, with platinum group metals and gold accounting for 82% of the earnings.

Central bank governor John Mangudya has promised to let miners retain 80% of their export earnings if they increased production although he did not specify what increase he would like to see.

KCM liquidator denies all charges, state-appointed provisional liquidator of Zambia’s Konkola Copper Mines this past Tuesday appeared in court and denied charges of money laundering and the theft of 4.4-million Zambian kwacha.

Zambia’s Drug Enforcement Commission, which also handles money-laundering cases, last month arrested liquidator Milingo Lungu and charged him with money laundering and the theft of more than $2 million between May 2019 and September this year.

“I deny the charge,” Lungu told magistrate Felix Kaoma when the charges were read to him. The case was adjourned to November 29 for the trial to start. Lungu’s police bond was extended.

Local elections, the time has come again for South Africans to go to the polls, this time for local elections where new mayoral candidates have the opportunity to be elected, please note our offices will be closed on 1 November 2021.

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