The Red Sea freight restrictions are hitting metal markets with issues from higher costs and delays to shipments, according to special analysis by Fastmarkets.
Attacks by Houthi rebels in Yemen on commercial vessels in the area in recent weeks have prompted shipping lines to divert their fleets, which means using the Cape of Good Hope. Experts suggest this adds about nine days to a typical journey from Taiwan to the Netherlands.
On 5 January, Danish shipping giant Maersk said it would extend its diversion of vessels from the Red Sea for the ‘foreseeable future’. ‘The situation is constantly evolving and remains highly volatile, and all available intelligence at hand confirms that the security risk continues to be at a significantly elevated level,’ a Maersk statement added.
Fastmarkets has produced a cross-metal update which suggests that for cargoes of materials with higher dollar-per-tonne values such as cobalt, delays arising from the longer journey times from China to Rotterdam are causing headaches.
‘For materials with lower overall prices, the increase in container prices for shipments from China to Europe has increased CIF-basis prices. FM adds that higher costs for transportation from China to Europe has led producers of high-power graphite electrodes to compensate by reducing their prices on an FOB basis,’ the update states.
It reports delays of up to one month for new deliveries of aluminium into Europe, raising prices for those caught short. Sources in the steel market also expect freight rates from Asia and India to Europe to increase and lead times to stretch.
‘Scrap suppliers are currently in a stand-off with overseas containerised buyers due to the rise in freight costs, with both sides digging in to create gridlock in the market,’ says FM.