steel

Trade Winds update volume 53

Dear Valued Customer,

We would like to draw your attention to possible disruptions that may occur due to the ongoing Ukraine conflict that can affect all downstream supply chains in various forms.  Already we are seeing manufacturing plants in Europe suspending production due to the extraordinary increases in energy costs that continue to rise daily.  It is impossible to quantify or offer any direction except to highlight the possibility of price increases and supply problems across the board at some time in the future without notice.

Our hope is for a positive outcome to the crisis and that operations around the world can normalize as soon as possible.

ArcelorMittal’s planned maintenance comes into effect, ArcelorMittal has given notice that one of its furnaces situated at Vanderbijlpark plant will come offline and go into maintenance, this furnace is one of two that is used for flat products which is expected to result in a shortage in special sized coil as well as certain Carbon Steel plate sizes. Although the furnace is only expected to be offline for three weeks, it takes roughly another four weeks for the furnace to get back to optimal production levels.

The offline period for Blast Furnace D is 3 March to 23 March 2022.

The second blast furnace in Vanderbijlpark will continue to operate at full production capacity and in addition, the Vaal Meltshop will run for a longer period than planned in support of the interim repair of the Newcastle blast furnace scheduled for late April to end June 2022.

Announcement of price increase of Zinc extras; following a review of the international zinc prices over the past few months and zinc extras for Galvanised

(PL140) and Colour Coated (PL145, PL147) products, ArcelorMittal has concluded that the extras should be adjusted with effect from 1 April 2022.

The zinc extras will therefore increase around 19.2% or roughly 2.5% of the final product price. The impact of the changes will vary based on the specific products purchased and could be higher or lower than this.

Aluminium prices set to increase; effective 1st April 2022 the price of Aluminium Alloys in South Africa will increase across the board by approximately 11%.

Stainless Steel prices unstable due to Nickel Price increase; Stainless Steel prices are currently extremely volatile, supported by the huge increase in the price of nickel, prices are currently being confirmed on the day of order placement and this will remain the trend for the foreseeable future.

Load shedding is back and could be worse than ever, Eskom announced on Monday that load shedding would be in place at stage 2 later that day and run until Saturday, on Wednesday the country dropped into stage in 4 load shedding although latest news is more positive and we could return to stage 2 on Friday.

With the current fuel crisis and Eskom’s coal generators breaking down, the cost to keep the lights on are extremely high as the power utility requires 9million litres of diesel a day to generate power.

Fears are that once surplus diesel levels run out, the embattled power utility will not be able to cope with high costs of fuel and the country could slip into total darkness.

Fuel price on constant rise, due to the Ukraine/Russia conflict, fuel prices are on a steep rise across the world. South Africa has just recently endured a R1.43 increase taking the price per litre to R21.47.

A further increase is expected next month with an audacious price on the cards of nearing R40/Litre. The impact the fuel hikes are having are not felt yet but will be in the coming weeks and months as the price hikes affect base prices of plastic products such as PVC, HDPE as well as push logistic prices up.

Please expect a notice of increase in logistic rates soon!

Airline & Seafreight war surcharges are being implemented for all cargo movement within certain global zones and more information regarding this will be advised soon.

“Ambition is the path to success. Persistence is the vehicle you arrive in.”

Trade Winds bimonthly update volume 52

Mittal shutdown postponed; ArcelorMittal has announced that their planned shutdown at the Newcastle Furnace has been delayed till the end of March.

The announcement comes after the mill decided to build up steel supplies to carry the industry over the three months that it will be in care and maintenance.

There is the rising concern that South Africa will once again face a shortage of steel at the beginning of the second quarter going into Q3 due to Mittal’s shutdown as well as price increases to go along with the shortage.

Please be mindful of the shutdown and plan accordingly.

Global steel prices expected to remain elevated in 2022, players within the steel sector are becoming increasingly cautious in their purchasing requirements. The forward view on global prices is, gradually, turning more negative, particularly for coil products. The record high values reached towards the end of 2021 took many by surprise.

The peak of the price highs occurred at differing points in each region. European prices peaked at their highest level in June of 2021, while those in North America peaked in September as Asian prices levelled off.

The outlook for the start of 2022 is clouded again by Covid-19 sweeping across the globe. The ominous Omicron variant perhaps slowed the recovery in the steel market.

Prices are expected to find support above historical averages, due to increased mill input expenditure and moves to decarbonise the industry. The economic outlook for 2022 is also relatively strong. This is despite downside risks associated with new Covid variants and the expected tightening of monetary and fiscal policy in many countries.

Supply chain shortages are still disrupting the global steel market and are preventing a strong recovery in 2022. Due to the backlogged steel orders, the demand will remain high throughout the year. 

Because of the demand for the limited inventory available, steel prices will continue to go up in 2022. The U.S. steel industry is currently valued at $180 billion and began to boom in 2020 thanks to the disruptions caused by COVID-19. 

Increased business and consumer spending habits have driven up the demand for steel-bearing products, which are needed for everything from vehicles to food cans. Buyers in some instances are willing to pay more for these products and will continue to pay increased prices throughout 2022.

ATDF, again denies protest, The Port of Richards Bay was the scene of a peaceful, albeit illegal, protest against the employment of undocumented foreign truck drivers on Thursday morning as protesters pulled over several truck drivers before the police intervened.

Upon arrival at the scene, SAPS spoke to a person who was identified as the leader of ATDF on site however, the secretary for the All Truck Drivers’ Forum, Sifiso Nyathi, said the organisation had nothing to do with the protest and that it appeared that unemployed people were using the name, although they had no affiliation to the forum.

Nyathi said the ATDF would oppose the hiring of illegal immigrants via formal, legal channels.  Forums have been set up to engage with all relevant parties and government authorities and hopefully it will result in a workable policy that allows the industry to move forward in a positive and safe way.

Airfreight on a tricky path, spike in demand, soaring rates, and a tricky balance between certain markets remaining closed to curb Covid and others reopening to global trade, necessitate fine footwork from the airfreight sector.

The current situation of high demand and even higher rates was expected to last for the duration of the 1st quarter, before tapering off in Q2.

At least that’s what Aero Africa is hoping for, that there’s respite for shippers somewhere in the near future.

Until then, the struggle to find space and allocation for clients in a confined market continued, especially out of China.

Snags on the ocean side are fuelling an overflow of critical orders to air, sustaining demand, but capacity into Africa and its important sub-Saharan transhipment hub of South Africa remained a problem.

South Africa’s block space agreement out of China is on hold because the carriers are on hold, China cannot commit to freighters in South Africa because they are going into the US where the yield is better and as a result, options out of China have become few and far between, with agents fighting for space that is often elsewhere allocated because of market dynamics which is attributed to the strength of the dollar and the primacy of American imports to name a few.

Ocean freight costs expected to remain high throughout 2022, Shipping rates are expected to stay elevated well into 2022, setting up another year of booming profits for global cargo carriers.

The spot rate for a 40-foot container to the US from Asia peaked at just over US$20,000 last year up from less than US$2,000 a few years ago and was recently hovering near US$14,000.

Tight container capacity and port congestion also mean that longer-term rates set in contracts between carriers and shippers are running at around 200% higher than a year ago, which signals that elevated prices are here to stay for the foreseeable future.

Larger customers like retail or tech giants have the power to negotiate better terms in those deals or absorb the added expenses whereas the smaller importers and exporters that rely on carriers to haul everything from electronics and apparel to grains and chemicals, cannot easily pass those costs along or weather long periods of stretched cash flows.

Regulators from the US, the EU and China met in September and determined there was so far no evidence of anti-competitive behaviour in container shipping. Governments are on high alert as global supply chains are being pushed to the breaking point.

The US Federal Maritime Commission says it has increased monitoring of carrier alliances, to better track trends and spot potential illegal behaviour, such as artificially limiting supply or not competing on prices.

Zambia to continue with plans to sell KCM, Zambia’s state-appointed liquidator who is managing the affairs of KCM said he would proceed with the dismantling of the company and the sale of its assets.

This was after the Lusaka Court of Appeal earlier this month declined to discharge the liquidator, Milingo Lungu, despite ruling earlier that he should arbitrate a dispute with KCM’s majority shareholder, Vedanta Resources.

ZCCM Investment Holdings, a 20.6% stake holder in KCM, applied to put the company into provisional liquidation in 2019. Vedanta argued the step was unlawful as there were conditions in their shareholders’ agreement allowing for dispute resolution.

ZCCM said Vedanta had failed to invest in KCM’s assets and had not paid dividends as previously promised.

Despite being asked to enter into arbitration proceedings with Vedanta, Lungu said that he would divide KCM into halves, effective January 31, and then embark on an asset disposal programme.

Zimplats allowed to set up solar plants. The Zimbabwe Energy Regulatory Authority announced on Friday that it had granted Zimplats a licence to construct, own, operate and maintain a 105 MW solar power plant at Ngezi Mine.

A similar notice was also published but this time for the generation of an 80 MW solar power plant at Zimplats’ Selous Mine in Chegutu.

Zimplats says setting up the two power plants will cost the company as much as $201 million.

Zimplats is not the only miner that has turned to solar power as gold miner Caledonia Mining, which runs Blanket Mine in Zimbabwe is constructing a 12 MW solar plant which is expected to be operational this year and will exclusively supply Blanket with approximately 27% of its daily electricity usage. 

Copper prices on the rise, the copper price rose on Wednesday, supported by expectations of further policy easing in China.

March delivery contracts were exchanging hands for $9,856/tonne on the Comex market in New York, up 2.3% compared to Tuesday’s closing.

The most-traded March copper contract on the Shanghai Futures Exchange was steady at $11,026.46/tonne.

China, the world’s biggest buyer of metals, has been stuck in a property market slump, credit stress and repeated virus outbreaks. In response, the central bank this week cut its policy interest rate for the first time in almost two years, signalling the beginning of an easing cycle. 

China’s copper exports rose to an annual record of 932,451 tonnes in 2021, according to customs data.

Gold also rose to its highest in two months this past Wednesday.

Fears that insurgents planning more attacks in Cabo Delgado, The SADC has warned that insurgents are regrouping for more coordinated attacks.

While SADC has noted considerable gains in Cabo Delgado, there are genuine fears that insurgents have withdrawn to regroup and are planning rejuvenated attacks. 

“The insurgency is not yet neutralised. The violent extremists are regrouping, launching attacks from several parts of Cabo Delgado and they are also expanding to neighbouring province Niassa where they have launched significant attacks,” said Professor Adriano Nuvunga – the Director of the Centre for Democracy and Development.

SADC sent in its Standby force into Mozambique’s gas-oil rich Cabo Delgado in July last year, a month after Rwanda sent in troops.

At the onset of the SADC Mission in Mozambique, Nuvunga said the insurgents were disbanding. However, six months later, they had changed their strategy.

At the beginning of the deployment, the country saw violent extremists disbanding. Now they have seen them regroup and move in terms of recruitment.

On December 15 last year, Islamic extremists in Nova Zambezia, Macomia district, beheaded a pastor and instructed his wife to take his head to the police with a message: “While you [government forces] are walking on tarred roads, real men [insurgents] are in the woods.”

As a show of power, the insurgents operating from the bush ambushed SAMIM forces in the east of Chai in the northern Macomia district on the night of December 19, resulting in the death of a South African soldier.

Intel also suggests that the insurgents have support within communities they operate, with some civilians assisting them in transporting arms.

Since the insurgency began in 2017, there have been 1,111 cases of political violence with 3,627 reported fatalities during these attacks and 1,587 reported fatalities from violence targeting civilians.

“Great things are done by a series of small things brought together.”

Trade Winds bimonthly update volume 51

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.”

Trade Winds bimonthly update volume 50

Hello and welcome to our 50th edition of Trade Winds, before we continue, we would just like to thank each and everyone one of our valued customers for being a part of this journey so far and for your continued support throughout the year.

Are steel price increases a thing of the past? Steel prices surged during the post covid-19 recovery as supply struggled to keep up with demand. Prices for some products and markets hit all time highs in 2021 and detached from costs. However, the steel price cycle peak may be behind us.

Long products and rod saw huge increases in 2021, levels that were not even seen during the Global financial crisis back in 2008. Flat products had the biggest increases, making the increase on long products seem okay in comparison.

The surge in high prices experienced in 2021 are seen as a once in a decade phenomenon and this trend is not expected to be seen again within the foreseeable future, however with the global carbon steel prices seeming to be tapering down, South Africa is yet to follow suite.

There remain caution however in some circles since inflation in developed countries continues to rise which will further negatively impact global pricing particularly with regards to labour and logistics.  This is already evident in imports from the U.S.A.

Border updates, there were some reports of delays at Beitbridge last week however the border is flowing once again with no issues. No other issues have been reported amongst the other border posts.   The only issue is the time of year and  increased cargo movement resulting in longer waiting times for trucks.

It is really important to plan ahead!

N3 Truck driver protesters arrested, A week ago, truck drivers blocked off Van Reenen’s Pass, a busy North-South corridor between Durban port and Southern Africa. The protest started in the early hours of Friday morning and lasted till the evening, causing huge delays.

Twelve truck drivers were expected to appear in the Ladysmith Magistrate’s Court after they were arrested last week Friday for using their rigs to obstruct traffic.

The blockade was in protest of the presence of foreign national drivers working in South Africa’s Road freight sector.

Wide condemnation has since been expressed over the impact of Friday’s blockade, with Durban Chamber of Commerce CEO Phalesa Phili saying losses of about R800 million a day are lost when the country’s most important supply artery is affected in this manner.

Economists have expressed how this protest was bad for South Africa’s image as a key partner for intra-African trade, especially in light of the African Continental Free Trade Area.

New covid variant poses threat to eased freight rates, The impact of vaccination rates will play a significant role in projected global economic growth in 2022, with predictions that it will slow to 4.3% from 5.7% this year on the back of a downward trend in the post-pandemic rebound.

Freight shipping rates have already pulled back somewhat from their September high, but that said, the new Omicron variant poses a risk in this regard. If it leads to widespread border closures and tougher domestic restrictions, this could spur renewed demand for goods over services.

Stricter lockdowns could also see a repeat of port disruptions, with the attendant impact on cargo flows that has been evident throughout the pandemic.

Ocean freight reliability on the rise, with schedule reliability edging up slightly but still well below acceptable norms, some analysts have said that shippers’ price is sometimes secondary to the predictability of getting product to market.

It is also noted that the new strain has caused a stir with some countries now advising that any vessels arriving at their respective ports are to anticipate a quarantine window period, thus causing further impact on vessel schedules globally.

Further on, South African ports are currently experiencing delays which has been caused by severe weather, terminal congestion and berthing delays ranges from 3-5 days, with a further delay of 5 days expected in Cape Town and an additional 2-day delay in Durban. 

Major impact remains on import delivery, clients are now faced with huge demurrage charges as transport booking slots are still impacted by the terminal congestions.

Africa, the leaders in air cargo growth,  there is some bad news with airfreight due to cancelled PAX flights, the capacity remains constrained in and out of South Africa as countries tighten travel rules over the Omicron variant, belly cargo capacity may fall again in the coming weeks. 

Iron ore price rockets, Iron ore price surged on Tuesday after customs data showed China’s iron ore imports rose 14.6% in November from a month earlier to hit their highest since July 2020.

The world’s biggest consumer of iron ore brought in 104.96 million tonnes last month, up from October’s imports of 91.61 million and were also up 6.9% from November 2020.

Bureau Veritas slowly recovering from Cyberattack, The French classification company’s internet services remain deactivated after it detected an attempted cyber-security breach two weeks back, forcing BV to take its data and servers offline.

As of last week, more than 80% of operations were running at a normal level and some regions still have IT systems running at a reduced rate.

The company expects to recover most delayed activities in a short period of time and are evaluating any potential impact.

Currently the company is issuing inspections and certificates manually via email, there is a backlog as BV has lost three weeks of work however slowly services are returning.

The festive season is upon us!

We would like to thank our valued customers for all your support throughout this challenging year.  We hope we have served you well and whatever 2022 brings, we will continue to strive for service excellence, reliability and competitively priced product for mutual success and stronger partnerships.

Thank you!!

We wish you and your families a happy and safe festive period!

“You are the artist of your own life, don’t hand the paintbrush to anyone else”

Please note that Trade Winds will be taking a break until later in January.

Trade Winds bimonthly update volume 49

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”

Trade Winds bimonthly update volume 48

Steel price increases on the way? After our last Trade Winds update advising of a steel increase of R1200.00/Ton set for next week, rumour has it that the two other major steel mills are increasing their prices as of next month.

Prices are increasing, demand remains high but with ArcelorMittal’s care and maintenance closure at their Newcastle Plant, supply has dipped and is expected to continue to be low throughout Q4 and into Q1 next year.

The care and maintenance is expected to start from 22nd November 2021 and run into early next year.

Whilst the strike remains in place at the Vanderbijlpark plant there is little to no disruption at the moment.

Plastics, HDPE, Rubber and PVC have once again climbed in pricing due to international force majeures as well as the rising price of oil which directly fuels the raw material price of the abovementioned products.

Border updates, Beitbridge is currently recording preclearance times that have not been seeing in decades.

According to the latest GPS data received from the once heavily congested transit, it is now taking less than 12 hours for a truck to pass through the border with the latest on-average processing times as follows:

  • Four hours from Zimbabwe into South Africa.
  • Eight hours from South Africa into Zimbabwe.

To put it into perspective, at the Kazungula Bridge across the Zambezi between Botswana and Zambia, processing still takes longer than 24 hours on average however, the difference is that Kazungula is a single-window one-stop border post compared to Beitbridge which isn’t.

Closer comparison reveals that at Kazungula it takes up to 25 hours for northbound trucks entering Zambia.

Where week-long waiting queues had been the norm up until early October, the speed in which cargo is now being processed at Beitbridge, is simply due to transporters adhering to preclearing procedures. If trucks arriving at the border with documentation not being in order, they are then set to a truck yard where they are then marshalled towards a holding area.

Fines of R20 000 had been recently introduced by the SA Revenue Service for non-compliance with clearing procedures.

This is great news for importers, exporters and everyone involved at the border as the notorious congested border crossing is now a free-flowing port.

Truck drivers’ strike struck off the roll, the imminent truck driver struck has been cooled as government has stepped in.

The South African Transport and Allied Workers Union (Satawu) has welcomed government’s plans to crack down on foreign drivers who are working in the country illegally.

The Departments of Labour, Transport, Police and Home Affairs recently announced that they may change legislation to make it tougher for non-South African workers in the sector which includes the prohibition of foreign nationals from operating South African registered trucks using foreign professional driving permits.

It follows last month’s blockading of several national highways by striking truck drivers.

Load-shedding to be eased by energy investments, as new electricity generation capacity comes online, energy investments are said to help overcome the debilitating load-shedding that the country is currently experiencing.

Cyril Ramaphosa has said that energy continues to be an area of growth in South Africa as the 25 preferred bidders in the fifth round of the Renewable Energy Independent Power Producer Procurement Programme were together, expected to invest around R50 billion into the economy.

South Africa has recently secured an initial commitment of around R131 billion to fund a just transition to a low-carbon economy by investing in renewable energy, green hydrogen and electric vehicles.

The country has been once again rocked by power cuts this past week with stage 4 load-shedding disrupting the day to day lives of citizens and businesses.

Airfreight on the rise, latest figures show on airfreight that year-on-year capacity for October has increased by 17% with a three percentage point drop-off in dynamic load for the same year on year period, with take-up currently standing at 68%, an increase of 2% from the previous month suggesting that demand is slowly catching up.

Interestingly flights ex-Asia Pacific-Europe remained virtually full, lifting rates by a further 20% over September 2021, while Apac-North America rates reached a double-digit level per kilo. Overall, international rates rose 10% month over month.

Although capacity for air cargo is increasing, neutral consolidator CFR Freight says available space is limited and that rates are regularly upsold at the time of booking due to excessive demand.

It is recorded that rates have increased by up to 37% at the end of September compared to the previous year.

Maersk signs transport deal, Vestas, a Danish wind turbine manufacturer has gone into a joint venture with Maersk in a long-term strategic partnership for all its containerised transport needs which in turn will ensure that Vestas gets direct access to container capacity at a fixed price

The deal includes door-to-door transport from the company´s suppliers to their factories and service warehouses, as well as containerised site parts and transport equipment.

Airfreight shipments are included in the deal.

Non-containerised road transport and outbound shipments will continue to be managed by DSV and other partners.

Metal sector to continue its recovery into the new year, S&P Global Market Intelligence states that the metals sector is set to continue its rebound from the effects of the covid-19 pandemic through 2022. 

Pent-up consumer spending, government stimulus efforts and the accelerating energy transition are all contributors to the continuation of driving demand, prices and exploration budgets.

The upswing in demand growth will drive prices higher across a range of metals in the medium term and there is a projection of increase in iron ore price volatility into 2022 due to the combination of underlying market tightness, potential supply disruptions and project delays as well as global supply and power constraints.

Copper on the other hand is expected to have a demand from solar and wind energy generation to reach 852,000 tonnes by 2022 and the growing electric vehicle market to account for 1.1 million tonnes in 2022.

Margins are also expected to remain healthy in 2022 for most metals, following the high prices and relatively steady costs experienced by producers in 2021.

Gold price climbs to 5-month peak, Gold kept its hot streak going this past Wednesday, rising by 2% to a five-month high after a surge in US consumer prices last month elevated gold’s appeal as an inflation hedge.

Spot gold was up 1.1% at $1,852.36 per ounce, having earlier hit its highest since June 15 at $1,857.09.December gold futures rose 1.4% to $1,856.70 per ounce.

Zimplats planning major expansion, Implats’ Zimbabwe-based unit Zimplats has announced plans to invest a total of US$1.8 billion over the next seven years towards mine expansion, as well as the establishment of a base metal refinery.

The bulk of the funds, amounting to US$386.2 million, will go towards the development of Mupani mine, which is a replacement for the depleting Rukodzi, Ngawarati and Mpufuti mines, whilst the base metal refinery plant will cost US$200 million.  

The miner also plans to set up a 110 MW solar power plant at a total cost of US$201 million.

An expanded smelter will cost US$280 million and will see smelting capacity increased from 132 kilotons to 380 kilotons of smelted concentrators, while the development of Hartley mine will cost US$289 million.

The project will also enhance the company’s capacity to smelt its own resources and for local third parties.

Zambia implements tax breaks, Zambia will implement tax breaks for mining companies, with mining royalties to be deductible from income taxes, something the mining companies have complained about that not being able to deduct royalties resulted in double taxation and deterred investment.

Finance Minister, Situmbeko Musokotwane, did not discuss any changes on the royalty rates. Royalties are currently ranging from 5.5% to 10% which is dependent on the copper price.

Minister Musokotwane also said that the government will cut its budget deficit target, and that debt restructuring negotiations with creditors are expected to conclude in early 2022.

Gemfields finds largest emerald at its Kagem Mine, Gemfields has found a emerald weighing in at a 7,525-carat (1,505g) named Chipembele, which means “rhino” in the local dialect of Bemba.

Whilst there are no official records, it is extremely rare to encounter a gemstone weighing more than 1,000 carats and only a couple of dozen unique enough to deserve their own name.

The last time a comparable emerald was found was in 2018, when the same mining company unearthed a 5,655-carat emerald, name Inkalamu, meaning “lion”. Prior to that, a 6,225-carat dug up a emerald in 2010, which was named Insofu – Bemba for “elephant”.

“You are today where your thoughts have brought you; you will be tomorrow where your thoughts take you”

Trade Winds bimonthly update volume 47

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.

Table Mountain, Africa’s leading attraction!

Cape Town’s iconic Table Mountain in South Africa has been voted as Africa’s leading tourist attraction by the 2021 World Travel Awards, a spot that it has held since 2019.

October is a special month for Table Mountain and the Mother City as the Table Mountain Cableway, which first opened on October 4, 1929, celebrates its 92nd birthday and has been nominated as the World’s leading Cable Car.

Table Mountain’s reign at the summit comes on the back of multiple awards for Cape Town in 2021. The city has also been named Africa’s leading city destination as well as its airport being voted as number one on the continent.

Table Mountain beat out some strong competitors to retain its pole position in 2021 including Mountain Kilimanjaro in Tanzania, the Ngorongoro Crater in Tanzania, and the Pyramids of Giza in Egypt.

“Success is not final, failure is not fatal, it is the courage to continue that counts”

Trade Winds bimonthly update volume 45

NUMSA strike to start next week! Confirmation is out that the anticipated, dreaded steel strike action will commence next week Tuesday, confirmation has come from NUMSA themselves that they will embark on industrial action at 5am on the day.

Over 430,000 workers across 9,000 steel and engineering companies will down tools.

NUMSA initially demanded a 15% increase across the board, however in August, it revised the wage demand down to 8% after declaring a dispute at the Metal and Engineering Industries Bargaining Council.

NUMSA says the strike can only be avoided if employers meet workers’ demands.

We will keep our customers up to date with the latest developments as and when received.

Please note that we will be working tirelessly around the clock to ensure that all orders can be dispatched prior to the strike and we will evaluate the situation on a day-by-day basis.

Border updates, over a month, 44 days to be precise, that’s how long the current phase of bottlenecking in the northbound lane south of Beitbridge has lasted.

On the bright side, the queue of trucks waiting to cross into Zimbabwe is around 6kms currently which could also be seen as a norm, drivers on average having to wait roughly four days to get through the border.

Word is out that there is a new charge system being implemented next month that will see transporters fork out additional costs that have been put in place by the Zimbabwean minister of transport, as it stands heavy vehicles will be paying an additional $100, goods vehicles $175 and abnormal load operators will have to pay out $300 a load.

With just a few days remaining before the revamped facilities at Beitbridge come online on the Zimbabwean side of the notoriously congested crossing, transporters are eager for relief from long delays in the northbound queue south of the border. Some of the upgrades to note is a new weighbridge, refurbished scanners a warehouse and newly built roads and a parking area.

The teething issues at the Kazungula Border Post, which a month ago still meant trucks took 30 hours on average to pass through a single-window system, have been sorted out that there is no processing queue at the moment.

It is noted that transporters who are currently using that route can do Johannesburg to Lusaka and offload in three days.

US ports battling record volumes, a behemoth of carrier queues, building up at anchorage off the United States west coast, has over 60 box ships waiting to berth at the ports of Long Beach and Los Angeles.

65 container vessels were waiting for slots as the US economy gathers momentum and importers rally to meet demand by building up their inventories., The two ports, which are said to handle about 40% of America’s inbound goods, used to record maybe one ship waiting to offload in pre-Covid times.

With containers at sea, US retailers and suppliers are running short of everything, from toys to timber, clothes and construction materials, most of which are coming in from China.

Container rates and availability having negative impact, the worldwide container crunch is continuing to weigh heavily on the bottom line of shippers as the unavailability of boxes and related costs mount up while freight forwarders increasingly find themselves unable to cope with rising costs and crippling delays.

The backlog for booked containers continues to grow with current container availability reaching a two-week backlog and on top of that, almost no carrier space to be had until the middle of October all whilst carriers are still charging for detention and demurrage.

US shippers and truckers are still awaiting feedback from a Federal Maritime Commission undertaking to take action against the liner industry for D&D charges, agricultural and industrial exporters in the US have approached President Joe Biden to intervene in week-long delays for containers, related costs and loss of income.

China completes Maersk deal, a transaction said to be netting Maersk $987.3 million reportedly the most lucrative in the line’s history of some 94 odd years, will see the Danish line part with its container manufacturing subsidiary after China International Marine Containers succeeded in the purchase of Maersk Container Industry.

With the deal now finally in the bag, after months of negotiations, Chinese factories will be responsible for manufacturing 96% of the world’s dry bulk containers, and 100% of all reefer boxes effectively handing China a monopoly in the global container business.

China power constraints cause havoc, Copper prices fell on Wednesday as investors reduced risk exposure amid uncertainty caused by a power restriction in China.

Power restrictions in China have hurt supplies of some metals in recent months, but electricity curbs recently spread to more downstream sectors such as tech giants Apple and Tesla which poses a threat to supply chains and could break at the peak season for the sale of electronic goods and items in China.

A trade squabble with Australia has led to the shortage of coal where almost 60% of the Chinese economy is powered by coal, it is estimated that up to 44% of China’s industrial activity has been affected by power shortages which has enraged the public and has also caused shutdowns to traffic lights and 3G mobile phone coverage in some areas.

President Xi Jinping’s decision for Beijing to stop building new power plants overseas is bad news for Zimbabwe too as the African country is heavily dependent on China after it had sanctions imposed on it by the United States and some European countries because of former President Robert Mugabe’s human rights abuses and a policy of seizing land from white farmers.

Zimbabwe was planning to build several coal-fired power plants costing a total of US$15 billion, with Chinese lenders initially committing to fund them.

However, earlier this week, in a pre-recorded speech to the United Nations General Assembly, Xi sounded a death knell for several coal projects, including in Zimbabwe, for which Chinese lenders were expected to provide financing.

China is going on a week-long holiday starting October 1, with investors squaring positions ahead of the break to reduce exposure in a volatile market environment.

Zimasco completes feasibility Study, the Zimbabwean ferrochrome producer has completed a feasibility study for the construction of the Mberengwa furnaces, where it also hopes to open new mines in the same district.

The company announced a US$35 million investment in new furnaces at its Kwekwe smelting facility, as part of a goal to expand output by 40% by the end of next year.

Zimasco had plans previously to create a joint venture with Afrochine, a Chinese mining firm for the Neta project however, after Afrochine, a subsidiary of Tsingshan Holding Group, backed out of plans to build an iron ore mine and a carbon steel plant in Zimbabwe, the company will now pursue this alone.

The Mberengwa furnaces will have the capacity to produce 160,000 tonnes of ferrochrome per annum

The new Kwekwe furnaces will have a capacity of 72,000 tonnes per year, increasing Zimasco’s ferrochrome production from 180,000 to 252,000 tonnes.

A 300,000-tonne-per-year sinter plant is part of the project, where the company will be able to exploit its crumbly ore resource, something it has previously been unable to accomplish due to obsolete technology at existing chrome smelters.

Liquidator at KCM arrested, State-appointed provisional liquidator of Konkola Copper Mines has been arrested and charged with laundering more than $2million.

The commission alleged that Milingo Lungu, acting with others, engaged in theft involving 110.4-million Zambian kwachas and $250,000 between May 22, 2019 and August 15, 2021, he also obtained money by false pretences amounting to $2.2-million.

Lungu’s appointment at KCM in May 2019 triggered a legal battle with Vedanta Resources, KCM’s parent company.

Zambia’s president to meet IMF, Zambia’s president Hakainde Hichilema is due to meet officials at the International Monetary Fund and World Bank in Washington, as the southern African nation tries to secure a lending programme to help it emerge from a debt crisis.

Zambia became the first African country to default on its sovereign debt during the COVID-19 pandemic after failing to keep up with payments on nearly $13 billion of international debt where a quarter of this debt is held by China and Chinese entities via deals shrouded in secrecy clauses, complicating negotiations for IMF relief.

Finance minister Situmbeko Musokotwane said last month securing an IMF programme was critical to restoring creditor confidence and giving the government access to cheaper and longer financing.

Moz government needs $300 Million to rebuild, Mozambique needs $300 million to rebuild insurgency-hit Cabo Delgado Province, the country’s Prime Minister said earlier this week.

The funds will go towards footing the bill for an emergency plan for post-conflict recovery and restoring normalcy in recovered districts in the north of Cabo Delgado.

In July, SADC countries started deploying forces to assist the Mozambican Defence Forces to fight insurgency and terrorism in the northern region.

The joint force in Mozambique is made up of the country’s Security and Defence Forces, the SADC mission to Mozambique as well as a deployment of the contingent comprised of members of the Rwanda Defence Force and the Rwanda National Police.

Rwanda was the first to send 1,000 troops to Mozambique, followed by Botswana with 296 troops whilst South Africa deployed 1,500 soldiers. Zimbabwe also sent 304 military instructors to train Mozambican soldiers to fight insurgents.

“It doesn’t matter how slow you go as long as you don’t stop”

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 41

Fuel hikes continue to hammer the consumer, back-to-back fuel increases have begun to show its ugly face as manufacturing costs are starting to climb as well as the base price of PVC and HDPE has increased as they raw material is directly affected by fuel price changes.

Border updates, no current delays or issues have been reported at the various borders within Southern and Central Africa.

Potential steel strike on the cards! A dispute over salary increases for workers in SA’s engineering and steel industry has been declared by the National Union of Metalworkers of SA. The union is now threatening strike action in the industry, which could be disastrous for an economy that took a R50-billion hit due to the recent social unrest. 

A general strike in the public sector, which could have shut down state hospitals, schools, and police stations, has been averted but possible industrial action might be in the offing in SA’s engineering and steel industry. 

A strike in the engineering and steel industry, which contributes about 10% to SA’s overall economic activity, could further harm an economy that is still reeling from Covid-19 related lockdowns and the recent week of anarchy. 

The National Union of Metalworkers of SA (NUMSA), which claims to have more than 339,000 members, has trashed the government’s offer for public servants, calling it an “insult” because public sector unions were pushing for an increase of at least 8%. 

NUMSA is also seeing red in the engineering and steel industry as the union has threatened to go on a “mother of all strikes” for higher pay. NUMSA has demanded a salary increase of 8% for workers in the engineering and steel industry for one year with an adjustment of consumer inflation plus 2% for the following two years. This works out to salary increases of just over 6% because the SA Reserve Bank expects inflation to average 4.2% and 4.5% in 2022 and 2023 respectively. 

Employers in the engineering and steel industry are not entertaining NUMSA’s salary adjustment demands as they have tabled a 4.4% increase for 2021, an inflation plus 0.5% increase in 2022, and inflation plus 1% increase in 2023. Using the Reserve Bank’s inflation forecast, the offer of employers works out to salary increases of about 4.7% in 2022 and 5.5% in 2023.

The employers are represented by industry bodies including the Steel and Engineering Industries Federation of SA, the South African Engineers’ and Founders’ Association, and others. 

NUMSA has rejected the offer by the employers and declared a dispute on Thursday 29 July at the Metals and Engineering Industries Bargaining Council. NUMSA wants the employers to reconsider their salary adjustment offer, failing that, the union will “serve employers with a 48-hour notice for an indefinite national strike.”

The union has implored other workers in the automotive industry, component supplies, tyre sector, mining, aviation, and all ports to join the possible strike in solidarity. This would be a disaster for the economy, which suffered a R50-billion hit in its output due to the recent street violence and looting that also blocked key supply chains in the broader manufacturing industry from operating.

This past Monday, SEIFSA, who employ about 190,000 workers in the engineering and steel industry, declared a counter dispute against NUMSA at the bargaining council over the union’s refusal to accept the offer by employers. The counter dispute will ensure that employers have the right to implement a lockout of workers if they were to go on a strike. In other words, workers represented by NUMSA could be excluded from their workplaces until the dispute is resolved. 

It is noted that SEIFSA has approached the bargaining council and has scheduled a special meeting on Tuesday 10 August between all parties in order to decide on how best to progress the deadlock.

Transnet NAVIS system fully operational, Government has announced a breakthrough following Transnet’s IT security breach last week.

According to a statement from the Ministry of Public Enterprises, Transnet has managed to restore operations at the ports fully, which now enables the country’s supply chain and logistics system to resume normal operations.

The main system responsible for the container operations, the Navis N4 terminal operating system has been fully restored and customers are now able to access the customer links to facilitate imports and exports.

The shipping lines, accounting for 70% of the cargo moving across the ports, have given the assurance that South African ports will not be bypassed, and they will continue to work with Transnet during this recovery period.

Giant leaps with Manhize steel works in Zim, the recent US$1 billion investment into Zimbabwe’s new steel industry and surrounding sectors remain on course for production to start next year.

The ferrochrome smelters in Selous are ready to go, Hwange’s first coke battery is open with the second under construction and now the planning and layout work being done at Manhize where the iron ore will be mined and steel smelted and processed.

Manhize is situated in the south-west district of Chikomba, close to Chirumhanzu and Kadoma where all three areas are seeing the mines, steelworks as a hub for local development and job creation.

Although the giant Chinese investor is opening the mine, building the steel plant, and building the houses where its workers will live, it will not be running the shops, the service stations, the banks and all the other economic activity that the large workforces will require, so there is a lot of scope for Zimbabwean investors and businesses.

The huge investment has so many advantages, Zimbabwean industrialists get a primary raw material, a full range of steels and steel products on tap, while mature industrial nations might be talking about the post-industrial societies they are building, it is a fact that no country can move its industry forward without that heavy industrial base.

Manhize mills is planned to be the largest steel producer in Southern Africa, producing a wide range of steels and stainless steels. While the Zimbabwean mining sector, construction industry and others will be buying a share, much of the production will be exported. 

Chrome export banned in Zim, the exports of chrome ore have been banned with immediate effect and exports of chrome concentrates from July next year, as there are now enough smelters in the country to ensure that all exports are of ferrochrome ingots.

At the same time Cabinet has agreed to work with private investors to set up gold centres to assist small-scale miners produce more efficiently and will be welcoming a new investor in diamonds, Ashelroi Trading and Services, whose plans are to set up a cutting and polishing centre in Zimbabwe.

Gold centres are expected to be established in Makaha, Odzi, Mount Darwin, Shamva, Mazowe and Silobela

The three measures are all designed to boost production and the value of the products that are eventually exported.

The move on chrome, reversing a temporary policy of allowing ore exports, merges with the strategies outlined in the National Development Strategy 1 which wants mineral exports to be partially processed in Zimbabwe before export to add value.

Zimbabwe boasts the world’s second-largest chromium reserves after South Africa and the mineral is expected to boost the vision of attaining a US$12 billion mining industry by 2023.

Production at KCM plummets, Global copper prices have reached record highs in recent months trading at $10,460 per tonne at the end of May.

For a copper-based mining economy like Zambia this should be generating increased tax revenues, and subsequent social benefits, as companies maximise their production to take advantage of these high prices. Across the private sector this is happening, however at government-run mines this is unfortunately not the case.

Production at Konkola Copper Mines has collapsed since the government effectively took over control of the mine from Vedanta Resources in May 2019, with copper production falling by almost 70%. KCM was averaging 8,000 tonnes copper production per month, that figure has now plummeted to roughly 2,000 tonnes per month. Mine development has dropped significantly which is going to put thousands of jobs at risk and as well as the potential shutting down of the mining business.

In response the government has tried a number of desperate moves aimed at improving production rates and bolstering profit margins by slashing the 5% import duty on foreign concentrates as well as ordering ZESCO to supply electricity free of charge to allow KCM’s smelter to run.

Zambians are missing out on high copper prices, following a difficult period in 2020 when the commodity price crashed. Given that copper production is worth 10% of the country’s GDP, this is money that Zambians cannot afford to go without.

Vedanta, whom were previously in control of the mine, had been Zambia’s largest public employer and responsible for 1/5th of the country’s overall copper output.

Vedanta have promised an additional $1.5 billion in investment if the government hands them back control of the mine.

Botswana joins in sending troops to Mozambique, Botswana’s security cannot be attained without that of her neighbours, President Mokgweetsi Masisi last week Monday.

Speaking at a ceremony to send off members of the Botswana Defence Force to Mozambique as part of the Southern African Development Community’s standby force to help fight terrorism in Cabo Delgado, he said a deceptive enemy awaits them.

“As your commander in chief, I am alive to the fact that you will be facing a deceptive enemy which is likely to use asymmetric warfare, unconventional and underhand warfare tactics against yourselves and the population you will be protecting. As professionals, you stand for much more than they do and must avoid emulating them and sinking to their level,” he said.

The Botswana soldiers will join soldiers from South Africa as well as soldiers from Rwanda who were deployed early in July.

Upcoming Public Holidays:
9th August 2021 – National Women’s Day (RSA)
9th August 2021 – Heroes’ Day (Zimbabwe)
10th August 2021 – Defence Forces Day (Zimbabwe)

“When everything seems to be against you, remember that the airplane takes off against the wind, not with it”