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Trade Winds bimonthly update volume 43

Bulls are on the rampage, in the aluminium market!  The Shanghai Futures Exchange contract paved the way and rocketed to a 13 year high on Monday.

The London Metal Exchange followed shortly thereafter hitting its own 10 year high of $2726.50 per tonne on Tuesday.

The driver of the rally stems in China’s own supply chain problems with energy restrictions thereby reducing smelter output.  Shanghai exchange inventory has fallen from more than 392,000 tonnes in April to a current 248,926 tonnes and the world’s largest producer continues to absorb aluminium from the rest of the world.  China imported 1.06 million tonnes of primary metal last year and another 744,000 tonnes in the first half of 2021 and there are no signs that anything is slower down anytime soon!

The copper price has fallen slightly on the back of slower factory activity in China but the outlook into next year sees the price remain in the $9,000 average.

Iron ore prices plunged due to production curbs in China on Wednesday and the expectation is for further price drops for the remainder of the year. Baoshan Iron and Steel Company, one of the largest listed producers in China predicts further decreases this year.

International supply constraints remain, the end of the current “norm” seems to be but a dream, with constant uncertainty surrounding pricing and delivery; projects, quotes and contracts are being heavily affected.

Supply of material remains inconsistent with delivery times often pushed out on a weekly basis, mill-rollings are frequently being pushed back by at least 3 months.

Steel prices are somewhat levelling out however HDPE and rubber prices are on the rise with back-to-back increases, the international petrol price is a big contributor as the price of fuel affects the raw material directly whilst some force majeure conditions and material allocations remain in place as well, resin producers have implemented increases for the last two months with some already nominating for a further increase at the end of September.

Resin production has returned for the most part, and can even be considered robust, however, after fulfilling contracts, producers are holding back resin to rebuild inventories, leaving little resin available for spot sales.

Numsa begins demonstrations, The National Union of Metalworkers of South Africa has started with nationwide demonstrations, while wage negotiations with the Steel and Engineering Industries Federation of Southern Africa are ongoing.

It is noted that the nationwide demonstrations, so far, are peaceful demonstrations and not picketing which may only be embarked on in support of a protected strike or in opposition to a lock-out, but neither parties have served strike or lock-out notices on the other.

Negotiations are ongoing after Seifsa’s wage offer in July was accepted by other trade unions but Numsa shortly after declared a deadlock with the federation. 

Border updates, it has been over a week since cargo processing issues at the Beitbridge Border Post resulted in truck queues stretching south for kilometres, the situation seems nowhere near being resolved.

Drivers have been advised to stock up on supplies such as food and water in Musina as the queue was at least 11 kilometres long and going nowhere slowly.

It is said that dawn-to-dusk operating hours by clearing agents north of the border had resulted in delays south of Beitbridge, adding to the backlog were Zimbabwean drivers who are allowed three days to transit through their country compared to counterparts from neighbouring states who aren’t.

The dawn-to-dusk and transit time issues are relatively new, a third obstacle at Beitbridge has been in the mix for years, a weighbridge for northbound traffic that’s situated on the other side of the N1 where trucks going north have to cross over into the oncoming lane for this inspection, geographical and space constraints are the reason behind this procedure which makes matters worse, at the Vehicle Inspection Department on the Zim side, all northbound trucks have to be weighed again, causing traffic to back up over the bridge and blocking the movement of traffic going into the truck park immediately south of the Limpopo River crossing.

In addition, construction work north of the border is constraining facilities, impacting on the manoeuvrability of truck traffic.

The Kazungula One-stop Border Post bridge across the Zambezi River is not yet operating at the desired speed expected of a modern multimodal transit.

More than three months after the opening of the bridge, the streamlining system that is in place is still reporting processing times in excess of 30 hours, given existing cross-border challenges, such as unaligned Covid-testing measures delaying truckers at various transits, transporters were hoping that teething issues at Kazungula would soon be sorted out and that hopes of a true one stop border post could be in place.

Keep expectations low on cargo delivery, latest maritime consultancy findings are showing that carriers are no less reliable, but they’re also no better.

The Global Liner Performance report, which includes figures up to and including July, reveals that reliability has been hovering around 35%-40% for most of the year.

In July it dropped by -3.8 percentage points month-on-month, on a year-on-year level it was down a massive -39.7 percentage points. The average delay for late vessel arrivals continued to deteriorate. The level of delays this year has been the highest across each month compared to previous years.

Maersk Line was the most reliable carrier in July (47.3%) followed by Hamburg Süd, the only other carrier with a figure higher than 40% whilst Evergreen was the least reliable, coming in at 16.2%.

None of the carriers recorded a month-on-month improvement.

Fuel hike again, despite expectations of a price drop, the price of unleaded and lead-replacement petrol increased by 4 cents per litre this past Wednesday.

However, diesel prices will go down by 15 cents per litre for 0.05% sulphur and 14 cents per litre for 0.005% sulphur.

There is also the implementation of a slate levy, with an increase of 8 cents per litre implemented in the price structures of petrol and diesel. The slate levy is a mechanism implemented to finance under-recovery by the South African petroleum industry. 

Whilst there is a slight relief in a diesel decrease, the effects will be null and void coming of the back of the huge increase last month, freight has been directly affected as running costs have increased as well as the petrol price increases directly affecting Rubber and PVC prices.

Zimbabwe to use IMF aid to boost currency, Zimbabwe will use more than half of the $961 million allocated by IMF in the form of special drawing rights to support its struggling currency. 

The government abandoned a 1:1 ratio between a precursor of the reintroduced Zimbabwe dollar and the U.S. dollar in February 2019. The currency now trades at 85.82 to the U.S. dollar and even lower on the black market.

The IMF injected a record $650 billion of reserve assets to build confidence and stability in the global economy in the wake of the devastation caused by the pandemic. The reserves are allocated to all fund members, with an estimated 70% going to the Group of 20 largest economies and just 3% to low-income nations. 

Zimbabwe won’t use any of its reserves to pay towards the $8 billion in external debt it owes, even though its arrears have effectively blocked it from borrowing more money from multilateral lenders.

Hippo Valley Estates, is planning a US$40 million cane development project and has already cleared half of the 4-000 hectares designated land secured for the project.  It is a partnership between Government and local banks and the hope is to boost the current sugar output of 400 000 tonnes per year significantly.

Zambia plans to reboot economy, after years of mismanagement and defaulting on international debt loans, Zambia is looking at turning its finances and fortunes around following the inauguration of a new president Hakainde Hichilema on August 24.

One of the first major steps by the newly elected president, was the appointment of fellow economist Situmbeka Musokotwane as the new cabinet’s minister of finance.

Sworn in on Friday last week, Musokotwane, in much the same vein as President Hichilema, got right down to business by announcing that copper production would be a primary objective of the new government as it strives to double the production of the raw metal by 2026 and if successful, will see Zambia’s copper output increase to two million metric tonnes in five years’ time.

The precious metal accounts for roughly 70% of Zambia’s revenue from export earnings however under former president Edgar Lungu, a wedge was driven between the previous government’s relations with the mining industry, causing exports to dwindle while government debt ballooned due to unchecked infrastructural expansion projects.  It was reported on BBC news 1st September that President Hichilema is horrified at the empty treasury he has inherited and was quoted as saying the hole is much bigger than expected but remains determined to change things around and create a corrupt free and freshly energized country.

The immediate changes by Hichilema resulted in the kwacha and government bonds surging to record highs as the international business community had a more positive outlook on Zambia.

The best way to dig Zambia out of its debt hole was to fill it with copper, said Musokotwane.

Mozambique’s Cabo Delgado returns to normal, over a thousand people in Mozambique’s Cabo Delgado region who had been displaced by insurgency, have successfully returned to their homes. Local refugees have been moved from the Quitunda camp and are now back in Palma to rebuild their lives.

The insurgents operated from the north in a town called Mfundi which had a gas plant, Rwandan forces moved to Palma and went on to Quitunga until they captured the stronghold, Mocimbia de Praia, which was the main city where operations were being planned by IS.

Once the Rwandan forces had secured the central and northern axis of the insurgent operations, they began reclaiming the villages in the joint operation with Mozambican troops.

Focus now is on moving people out of the displacement camps back into their homes.

A Defence Force spokesperson says it’s still too early to tell when they will be able to pull out of Mozambique because while there have been small victories, the instability persists in other parts of the region.

Spring is in the air! We would like to wish all our customers a happy spring day for earlier this week!

 “It is spring again. The Earth is like a child that knows poems”

Trade Winds bimonthly update volume 22

Prices on the rise as materials disappear, buckle in!!  Further steel price increases have been announced for November which will be the ninth consecutive increase this year exacerbated by low stocks countrywide.  South Africa is facing a steel shortage and explosive prices. 

This trend has now moved over to the HDPE and Plastics sector and shortages of raw materials are being experienced by all the major manufacturers. Output as a general for HDPE polymers was 3,300 Tons per month which then dropped to 2,500 tons and as of the latest notice a further 15% drop is expected in production.

Various factors have been blamed both locally and internationally and Force Majure has been announced by many different industries who find themselves unable to perform to their pre-covid-19 service and production levels.

Output as a general for HDPE polymers was 3,300 Tons per month which then dropped to 2,500 tons and as of the latest notice a further 15% drop is expected in production.

Border updates, Chaos at Beitbridge over the past week, A motorist sadly passed away last week when a bakkie travelling south towards Musina from the Beitbridge border post between South Africa and Zimbabwe collided with a truck that had reportedly crossed into the oncoming lane to overtake gridlocked traffic heading north. The fatal collision once more demonstrates that traffic officials should be held culpable for allowing cars and trucks going north to drive three abreast on a single-lane highway.

Intervention seems to be on the cards after the build-up of traffic south of South Africa’s Beitbridge border with Zimbabwe has deteriorated to such an extent that some sources say it is the worst it has ever been this century.

This comes after northbound transporters stuck at the Limpopo crossing posted video footage on social media of the Transit Assistance Bureau clearly showing how trucks, cars and buses were milling around as if no traffic officials were present to establish order. The queue already stretched to the Baobab truck stop some six kilometres south of the border.

Suggestions were made to officials that the border should be opened up to clear the congestion and alleviate pressure on officials clearly incapable of coping with mounting volumes.

Since the suggestions were made, South Africa’s Beitbridge border into Zimbabwe has virtually transformed and a recorded 18km queue has been reduced down to less than 1km. The northbound queue has also has also been reduced to a single lane of traffic. 

Last week at the Lebombo Border Crossing there was also a backlog as vehicles trying to cross into Mozambique from South Africa came to a standstill, chrome trucks, general cargo and the bakkie brigade loads jockeying for position whilst customs continue to take their time.

Call went out for the border to operate 24/7 and it seems that the cries were heard, transit times at the border have been substantially reduced with around 450 trucks cleared every 24 hours.

Meanwhile there is no certainty about what the border authorities have done but it’s obviously helping, bringing much-needed relief to private sector interests who often complain of extended standing time at the border.

The real test will come towards the end of the week as volume often picks up towards the weekend.

Finally, the opening of the Kazangula Bridge may happen before the end of the year, the bridge was initially supposed to be completed back in 2018 but due to various delays there is now a promising outlook that the opening will be soon, this comes after it was reported that ZRA had announced that it would be moving its regional office from Livingstone to the southern Zambian town from which the much-hyped linkage has taken its name.

Speaking to a Zambian news site, ZRA emphasised that the $70-billion bridge into Botswana would boost trade in Zambia’s southern province significantly, with tangible benefits for revenue collection.

Transporters will also not need much persuasion to divert traffic away from other north-south route border posts such as Beitbridge, considering the shambles it has been of late.

Zimbabwe mineral production increases, The Zimbabwe mining industry has managed to stay afloat with sustainable, profitable and balance production results whilst still fighting off the challenges faced within the mining sector.

Adding onto this, the mining sector has become quite optimistic about 2021 with the ever-improving commodity prices and a favourable local fiscal the sky is the limit for Zimbabwe in 2021.

90 percent of miner’s plan on upscaling production in the coming year with the other 10 percent expecting production to remain the same. Gold output is expected to increase around 30% in the coming year, followed by platinum and coal spurred by world commodity prices that continue to move upwards.

Terrorism crossing the border!  The Islamist terrorist group operating in the Cabo Delgado region of Mozambique have made their away across the border to Tanzania, where it is reported 20 people were beheaded.

The attack was carried out against the village of Kitaya, in Mtwara province, near the border with the Cabo Delgado district of Palma.

According to military sources cited by the newsheet, the terrorists entered Tanzania by sea, going up the Rovuma river that forms the border between Mozambique and Tanzania.

The raiders burnt down houses, destroyed an armoured vehicle and stole money and military equipment. The terrorist network that calls itself “Islamic State” claimed responsibility for the attack, and reported three Tanzanian soldiers had been killed in the ensuing battle that followed.



 “Rain does not fall on one roof alone”

HDPE Price Increase Notice

Dear Valued Customer,

Please click on the following link for the latest HDPE Price Increase Notice

Kind Regards,

Ropa Mhlanga
Operations Director – Southern African Region