A very warm welcome back to all our valued customers and our best wishes for a positive and successful year ahead.
As we ease into January, herewith a brief update on latest news. We will resume with our full and more comprehensive Tradewinds edition later in the month.
Steel increases continue! Once again, the industry was notified of prices increases effective 1 January 2022.
All three major mills in South Africa have increased their pricing on products such as mining bar, smooth round bar, deformed bar, mesh bar and mill rods to name a few in the region of R700 – R850/Ton.
It seems the trend of import parity pricing is set to continue.
The PVC sector has also announced an increase of 8-10% on all products for the month of January, this comes after back-to-back increases totalling a whopping 63% increase on raw product throughout 2021 as well as force majeure announcements amongst global producers last year.
Truck drivers being harassed by ATDF again, eThekwini Metro police dispersed a crowd of illegal protesters who were stopping trucks near the old Durban airport site on Wednesday demanding to see truck drivers’ permits to check whether they are foreign employees or locals.
A post circulated on WhatsApp groups on Wednesday alleged that the protesters were members of the All Truck Drivers’ Forum (ATDF).
However, ATDF denied that it had been behind the protest action.
Road Freight Association has requested that ATDF supply details of non-compliant companies, which it had earlier alleged were flouting labour and tax legislation in the employment of foreign nationals, so that action could be taken against them.
Container shipment delivery times double, Data of container timelines measured by a San Francisco brokerage over the festive season period does not bode well for ongoing delays experienced along the transport value chain.
According to the latest information released, containers going via east trade lanes are taking twice as long as they did in 2019.
Shipments which would take roughly 45-50 days from the States to reach its destination out east are now taking around 110 days to complete the journey, the longest it has ever taken for a shipment from the States to reach Asia.
Moreover it is also noted that it now takes roughly 108 days for container in the Far East to reach its import destination in Europe, pre-pandemic trips would take 55 to 60 days on average.
Container availability is severely impacted across the globe because of double-time holdups on certain trade lines. According to the maritime consultancy’s own data, holdups rose by 9% last year, there are fears that freight rates will increase even more.
Freight rates are expected to climb as Lunar New Year approaches and any additional slow down due to COVID will likely exacerbate the congestion and backlog, causing higher container rates. Container rates quoted for January 2022:
- Global freight rates decreased 5% to$8,917 which is still 140% higher than this time last year
- Asia – US West Coast rates decreased 14% to $12,524 which is still 218% higher than this time last year
- Asia – US East Coast container rates stayed basically the same as the last week of 2021 at $16,495, which is 232% more expensive than last year
- Asia – North Europe container shipping rates also remained level, decreasing 2% to $14,240, nearly double last year’s rate
- North Europe – US East Coast rates decreased 10% to $6,230, however this is nearly 240% higher than December 2021
Airfreight rates out of China on the down for now, airfreight rates out of China to leading international destinations have fallen 30% since their mid-December peak of $15.13 per kilogram, rates to the United States were at an all-time high but has since sharply decreased to $10.68.
China-Europe rates, in comparison, are down 17% to $7.34 p/kg since reaching a festive season peak of $8.82 by the end of December.
With indications that port-side constraints and associated containerisation shortfalls will continue to put pressure on efficient flows, expectations are that a likely airfreight rate rise is again on the cards.
“Life is like a coin. You can spend it any way you wish, but you only spend it once.”
Expected steel price increase, A small transport fee has been added to the price of steel coming from the mills to combat the ever-increasing price of fuel in the region of 2.5% with an expected steel increase on the horizon as well. As of now there is no formal notice from the mills, but the sector is bracing itself for the inevitable as the industry continues to battle with fuel and labour hikes as well as electricity cuts whether the increase is for December or January remains to be seen.
HDPE prices will also increase at the beginning of next year in the region of 6.5% on all HDPE products.
Border updates, for the first time, we can report no issues at any of our surrounding borders, seems that delays at Beitbridge really are a thing of the past.
New covid variant causing havoc in SA, the newly discovered covid variant B.1.1.529 has sent shockwaves throughout South Africa and the world alike, as countries like the UK, Germany and Italy have banned flights from South Africa as of midday today with the European Union considering banning all flights from South Africa as well. The UK has also banned flights from Namibia, Lesotho, Botswana, Eswatini and Zimbabwe.
Israel also announced it will ban its citizens from travelling to southern Africa, covering the same six countries as well as Mozambique and barring the entry of foreign travellers from the region.
The rand has taken a huge knock as the country has been placed on the UK’s red list further weakening an already struggling economy.
Fuel price driving inflation up, South Africa’s transport sector was the largest contributor to inflation in the country, the Bureau for Economic Research says in its latest weekly assessment.
With the headline Consumer Price Index measured at 5% year-on-year in October, it marks the sixth consecutive month that inflation has been above 4.5%, the Bureau says.
This is also the midpoint of the Reserve Bank’s target, hence last week’s 25 basis point increase in the repo rate.
The largest contributor to the annual inflation figure was transport, which climbed 10.9% year-on-year, adding 1.5% pts. This was mainly attributable to fuel prices which increased by 23.1% year-on-year, up from 19.9% year-on-year in September.
Local mines could invest R60 billion to combat load shedding, South African mining companies are poised to spend 60 billion rand ($3.8 billion) on renewable energy projects in hope to help ease the country’s electricity supply crisis.
The industry is planning 3,900 megawatts of solar, wind and battery energy projects, which could supplement supplies from state-owned utility Eskom Holdings SOC Ltd.
Earlier this year, President Cyril Ramaphosa raised the limit on companies producing power without a license to 100 megawatts from 1 megawatt, clearing the way for miners to start generating their own electricity.
South Africa experienced record outages this year, stifling an economic rebound from the pandemic in the continent’s most industrialized economy.
The industry, including the world’s top platinum and rhodium producers, is the country’s biggest user of electricity.
Sibanye Stillwater plans on adding 475 megawatts of solar and wind-power capacity, whilst Anglo American Platinum Ltd aims to start generating around 100 megawatts of renewable power at its Mogalakwena mine by the end of 2023.
Impala Platinum Holdings Ltd. is weighing options to have all its mines in South Africa and Zimbabwe use solar power.
SA Port costs too high considering turnaround time, South Africa’s private sector freight industry, for the most part, believes that the country’s port costs are too high.
Especially at congested ports like Durban.
Constant equipment failure, labour issues, and efficiency headaches contribute to widely shared criticism that the country’s ports are not being run as they should.
Looking at where the World Bank rated SA ports during a performance index released in May.
Not only were South Africa’s ports outperformed by the likes of the Port of Djibouti, but it also served to stoke fears that nearby ports like Walvis Bay, Maputo, Beira and even Dar es Salaam, were sniffing at a slice of the country’s ports’ pie.
Transnet National Ports Authority doesn’t seem to be sharing the view that the ports aren’t run properly.
In a media briefing, Transnet said that they were so efficient that the price was almost irrelevant, suggesting that they were worth the cost.
What exporters and importers pay to ship through South Africa’s ports, it said, translated into savings elsewhere along the supply chain.
Brace yourselves, Airfreight rates to rise further, Airports are under the whip as demand continues to exceed capacity and Covid-safe work practices and apparent labour shortages continue to place immense pressure on UK, EU, US and global air freight hubs, creating congestion from Heathrow to Azerbaijan.
According to UK-based logistics provider Metro Shipping which points out that while there are different situations at different airports, the demand for air cargo is exceptionally high. In addition, ground-handling operations are proving to be consistently ineffective at servicing the upturn in freighters, and passenger freighters, with problems at Heathrow, Amsterdam, Brussels and Frankfurt in Europe alone.
Metro believes that despite the congestion, the already exceptionally high airfreight prices will climb further as supply chain disruptions force ocean freight shippers to switch to airfreight.
The issue is however endemic as US, European and Asian hubs are experiencing the same problems. Metro believes it’s unlikely to improve any time soon as ocean freight is continuing to look at airfreight as a logistic solution.
Predictions are that the air cargo boom will continue well into next year, and possibly 2023, as it may take that amount of time for the passenger schedule to return to pre-Covid levels.
Zim economy on the right path, the Zimbabwean government has broken the shackles the economy has been in and is on the right path to start realising meaningful returns despite economic headwinds that have hindered its progress.
Mr. Holtzman, Chairman of CBZ Holdings, Zimbabwe’s biggest bank, expects a full turnaround by the end of this year after a challenging financial year.
The growth prospects for Zimbabwe come at a time where the IMF has upgraded its estimate for economic growth this year to 6 percent from 5.1 percent on the back of increased activity within the manufacturing and construction sectors.
Zimbabwe currently possesses potential which if exploited correctly can turn the country’s fortune around with agriculture being singled out as one sector which has gained a considerable amount of traction as farmers are now drifting towards high-value crops for the export market.
Excluding the agriculture sector, Zimbabwe currently has huge nickel and lithium deposits, minerals whose importance is increasing given the global trends in technology where economies are moving towards the use of electrical cars and cleaner energy.
DRC looking to develop domestic battery manufacturing, DRC mines the majority of the world’s cobalt, an ingredient in lithium-ion batteries, and is Africa’s leading producer of copper. Demand for the minerals is rising to power electric vehicles and electronic devices.
However, on the flipside DRC, which ranks among the world’s least developed countries, exports its minerals for only a fraction of the final cost of the batteries, which are mostly manufactured in Asia.
Prime Minister of DRC, Sama Lukonde announced a series of measures aimed at speeding the development of a battery manufacturing industry which includes the creation of a “Battery Council” with the aim of driving the government’s policy to develop a regional value chain around the electric battery industry.
Minister Lukonde did not provide specific details about how long these initiatives would take to set up or how they would be funded, although several development banks, including the African Development Bank, has signed a pledge to help develop Congo’s battery industry
President Hakainde Hichilema of neighbouring Zambia, Africa’s second-largest copper producer has said that his country is ready to work with Congo and others in the region to develop Africa’s industrial capacity.
Bureau Veritas hit with cyberattack, Bureau Veritas (BV), detected an attempted cyber-security breach last week, forcing the company to take its data and servers offline.
Earlier this week it was reported that BV had decided to immediately institute the necessary preventative measures.
The attack comes after BV recently warned that it had become aware of increased risk to global supply chain interests, especially against the backdrop of ongoing pandemic challenges.
The disruption caused to supply chains the world over by the virus, risk assessors say, is playing into the hands of cyberattackers wanting to exploit existing conditions of instability.
Please note all BV inspections have been halted for now and we will continue to monitor the situation.
World’s first electric container ship sets sail, The world’s first electric and self-propelled container ship, Yara Birkeland, has set sail.
The self-propelled container ship departed from Horten in Norway on the morning of November 18 and arrived in Oslo in the early evening.
A joint venture between chemical production firm Yara and maritime technology company Kongsberg, the vessel is expected to cut 1 000 tonnes of CO2 and replace 40 000 trips by diesel-powered trucks a year.
It will be used to transport fertiliser between Porsgrunn and Brevik.
Plans for the construction of the vessel were announced back in 2017.
Its launch marks the start of a two-year testing period of the technology that will make the ship self-propelled, and finally certified as an autonomous, all-electric container ship.
The 80-metre-long vessel has capacity for 120 TEUs and the cost of construction is estimated at $25 million.
In parallel with the project, Yara has initiated the development of green ammonia as an emission-free fuel for shipping, through its newly launched Yara Clean Ammonia.
Yara, the world’s largest producer of fertilisers, relies on ammonia to make fertiliser, and to help feed an ever-growing population. At the same time, current ammonia production represents 2% of the world’s fossil energy consumption. This corresponds with about 1.2% of the world’s total greenhouse gas emissions.
“Nothing in the world is ever completely wrong. Even a stopped clock is right twice a day”
Steel price increase reminder! As of 1st May 2021 steel prices on flat product in South Africa will be increasing by R2,250 ton as announced by ArcelorMittal earlier this month, the biggest single increase the country has seen, taking the grand total of increases this year to R6000,00 ton.
Thankfully there has been no increase notices from the other steel mills within South Africa.
Introducing Thungela Resources, Anglo American PLC will be separating its South African coal mines into a new business this year.
Anglo American has been mulling an exit from thermal coal for over a year now and constantly reiterated that separating its South African business was the most likely outcome.
The new business, known as Thungela Resources Ltd is expected to be listed in Johannesburg and London in June. Investors will receive one Thungela share for every ten Anglo American shares.
The world’s biggest miners have been looking to exit thermal coal mining as investors say they don’t want exposure to the fuel and pollution. Anglo American PLC has already dramatically reduced its production in recent years, cutting output by more than half.
Implats Q3 production rises, South Africa’s Impala Platinum’s third quarter group output rose by 4% to 5.59 million tonnes at managed operations, with higher volumes reported at Impala Rustenburg, Impala Canada and Marula.
High prices for metals mined by Implats such as platinum, palladium and rhodium gave the mining company a lifeline despite the impact of the COVID-19 pandemic.
The platinum miner said group production in the nine months to March 31 rose by 11% to 17.38 million tonnes, the miner also noted the benefits from the inclusion of Impala Canada, which was bought in 2019, for the full reporting period.
Border updates, last week, transporters working the North-South Corridor into the Copperbelt and back were advised that there were holdups being experienced at Chirundu Border Post between Zambia and Zimbabwe.
The queue was roughly around 7kms long with around a 2-3 day waiting period for when trucks could move, there was no real confirmation as to why the border had a hold up, as it stands, its business as usual at the Chirundu border.
Staying in Zambia, there is some good news looming, with the leaking of the anticipated Kazangula bridge being opened. An inside source has told the Transit Assistance Bureau that a date has been proposed for the long-awaited opening of the Kazungula Bridge being May 10.
Although it seems too close to be true, being less than two weeks away, transporters are becoming quite excited by the announcement made by Transist.
The long-delayed structure, which was completed last September may finally be opened after being closed to traffic while public sector concerns were delaying the process and Zambia’s perennial cash flow issues impeded its ability to pay its share of fees to the contractors.
As of today, transporters entering Botswana via Pioneer Border Post from South Africa have been advised that health authorities in Gaborone have reinstated the PCR test.
The testing measures at the border has been tightened because drivers have been diverting their journeys to Pioneer because of not having to furnish PCR results.
The news has had an immediate effect in cross-border transport circles, with hauliers saying PCR costs which are roughly $46 and regular transits in and out of landlocked Botswana are going to hit them hard.
The pandemic has affected all forms of transport over the past year whether it be road, sea, air or rail transport and it seems that the struggle will continue for some time as ocean freight costs as well as air freight has surged with no positive outlook at the moment, in some countries such as America, it is noted that cargo can sit up to a month before it can be moved to the ports for transport.
Iron ore demand drives global steel prices, steel prices are spiking from Asia to North America, and iron ore’s relentless march towards a record is accelerating, as bets on a global economic recovery fuel frenzied demand.
The outside world is finally catching up with the Asian markets as a global rebound drives a powerful wave of buying that cannot be matched by production.
The manufacturing and construction sectors are ramping up production as governments have pledged to splurge on infrastructure as they set their eyes on post covid growth.
Prices for hot-rolled coil are up three times the “normal” price in North America and they continue to soar in Europe. In China, steel is at its most expensive since 2008.
It is expected that worldwide steel demand will grow 5.8% this year to exceed pre-pandemic levels, China’s consumption which contributes to about half of the global total will keep growing from record levels, whilst the rest of the world rebounds strongly. It is noted that demand outside of China in April has been higher than that of previous years.
Iron ore is enjoying a near record level as spot prices are less than $1 away from their peak of $194/tonne. China’s steelmakers keep output rates at more than a billion tonnes a year to supply consumption to the ever-demanding economy, Beijing has set a goal of reducing steel production this year however that could prove difficult with consumption as strong as it currently is.
Top miners are enjoying their takings as Iron ore prices have bolstered their earnings even though they continue to struggle to supply enough of the raw material.
On the Stainless Steel front, the Chinese government has cancelled all tax refunds for Stainless Steel sheet, plate, pipe and fittings thus increasing production cost by roughly 13%.
Zimbabwe gold output down, Zimbabwe’s gold production fell 30% to 3.98 tonnes in the first quarter of this year, while export earnings from the yellow metal also declined.
The Reserve Bank of Zimbabwe did not give a reason for the decline, but small-scale miners who produce half of the mineral blamed the abnormal rainfall during this period which in turn resulted in shafts being flooded.
The Reserve Bank said the nation, which faces constant shortages of foreign currency earned $200 million from gold exports in the first quarter which is down from $226 million during the same period last year.
Total gold output tumbled nearly a third to 19 tonnes last year after small-scale producers diverted the metal to illegal private dealers who pay more than the central bank.
Zambia assures investors of better policies, Zambia’s president Edgar Lungu assured mining investors, in a speech this past Thursday, that his country will develop a more simplified tax administration system to facilitate them.
Zambia’s mining tax regime has been a thorny issue since the privatization of mines in the early 1990s. He said the he expects the mining investors to take advantage of the improved copper price of close to $9,000 a ton to up production and create jobs which in turn should fulfil the investors social responsibilities to benefit the locals.
Zambia is Africa’s second highest copper producer and is hoping to increase its production from the current 800,000 tons per annum to a million tons per annum.
The key to achieve this goal will be through a continued working relationship with investors such as First Quantum Minerals, which runs the country’s biggest mining operation at Kalumbila, northwest of the country.
Jubilee’s Project Roan delivers its first copper concentrate, the successful delivery of copper concentrate from Project Roan to the fully operational Sable Refinery is the first major step in the company’s commitment to achieve the targeted production of 25,000 tons per annum of copper within the next four years and taking a leading role in the processing of surface tailings in Zambia.
Project Roan is the first of three copper processing facilities that Jubilee target to implement to achieve this goal. Completion of Phase 1 on schedule demonstrates the team’s ability to deliver on their goals in a new jurisdiction.
The targeted significant ramp up of copper operations in Zambia is expected to further improve on Jubilee’s recently published record interim results for the six-month period to 31 December 2020, generating long term, quality earnings.
The company is confident that the completion of Phase 2 of Project Roan will be on time during Q3 2021, which will further increase the copper concentrate being delivered to the Sable Refinery.
Kamoa Copper launches corporate identity, Kamoa Copper will operate the Joint Ventures mines in the high-grade Kolwezi copper district of Lualaba, in the Democratic Republic of Congo.
Ivanhoe Mines and Zijin Mining each own 39.6% of Kamoa Copper, while the DRC government owns the balance.
The Kamoa-Kakula project which is operated by Kamoa Copper, is expected to begin producing copper in July and through its phased expansions, will become one of the world’s largest copper producers.
According to a progress update issued by Ivanhoe in April, Kamoa Copper shattered all previous records in March, mining 400,000 tons of ore grading 5.36% copper, including 100,000 tons of ore grading 8.7% copper from the centre of the Kakula mine.
The company’s first phase of its 3.8-million-tonne-a-year mining and milling operation is 92% complete and the commissioning of its concentrator plant is under way.
Troika summit in Mozambique postponed, The Southern African Development Community has postponed an Extraordinary Troika Summit of the Organ on Politics, Defence and Security due to the unavailability of heads of states.
The leaders of SADC agreed to the postponement as SADC Organ chairperson, Botswana president Dr Mokgweetsi Masisi is currently in quarantine and incoming chairperson South Africa president Cyril Ramaphosa has been testifying at the Zondo Commission on South Africa.
The meeting, which was expected to take place this past Thursday in Maputo, is now expected to take place at a later date.
When the heads of state met on April 8, they, among other things, mulled over measures to address terrorism in Mozambique after the continued attacks by the Islamist insurgents in Cabo Delgado where dozens of civilians were killed and many others displaced.
SADC leaders directed an immediate fact-finding mission to assess and investigate the situation on the ground in Mozambique before and form of response is actioned.
“Seeing is different than being told”
Dear Valued Customer,
Please click on the following link for the latest Steel Price Increase Notice.
Operations Director – Southern African Region