Articles in Category: Logistics

Suez Canal

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including the Suez Canal blockage, the April 2021 MMO, Western European hot rolled coil prices and much more:

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Week of March 29-April 2 (Suez Canal retrospective, HRC in Western Europe, April MMO report and more)

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The weeklong blockage of the Suez Canal — coming as it does on top of a year of escalating ocean freight rates for the Asia-European trade, port congestion in both regions and shipping delays — has inevitably prompted debate about alternatives.

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Suez Canal, then and now

Suez Canal

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Not that you would imagine there were many other options. The Suez Canal was first dug in the late 1860s. The canal officially opened Nov. 17, 1869, at huge expense and effort. Because the alternative route around the Horn of Africa took so much longer, the canal was, in today’s parlance, a no-brainer.

Nevertheless, some vessels — those approaching the back of a very long queue in the Indian Ocean at the weekend — did set off south around Africa. However, they will probably add some two weeks to their voyage in the process. That means emissions of thousands of tons of CO2 and the cost of thousands of tons of bunker fuel.

But, like taking a detour to avoid a traffic jam, you at least feel like you are moving, even if you have to detour five times the distance.

Shipping alternatives

The alternatives, though, sound at first sight even more outlandish.

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Suez Canal

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As the days went by and the disruption from the blockage of the Suez Canal by the container vessel Ever Given increased, the implications became more and more severe.

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Not all of those 360 vessels backed up waiting for the vessels to be freed are containing washing machines and laptops.

Suez Canal disruption

Some have live cargoes on board. Others have have ripening fruit. Lost cargoes will be significant, but may be worse for manufacturers will be the ongoing disruption.

ShippingWatch estimates it will take a week or more to clear the vessels back up into the Red Sea and Mediterranean.

But the damage has already been done.

Due to the non-arrival of vessels in both Europe and Asia, there will be trips out of both regions that are already being canceled (so-called blank sailings), because the container ships do not reach the ports on time and cannot unload and get new cargoes on board.

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including coverage of the semiconductor shortage, the Midwest Premium and more.

A fire at a Japanese chip-making plant last week has slammed automotive operations. General Motors, Ford and many other automakers have announced idling of production as a result of the shortage.

Meanwhile, on the supply side, Intel announced plans to invest $20 billion to build two new Arizona plants. Furthermore, Intel said it aims to “serve the incredible global demand for semiconductor manufacturing.”

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Week of March 22-26 (semiconductor shortage, Midwest Premium and more)

semiconductor and automobile

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hot rolled steel

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, which this week includes coverage of steel capacity utilization, the latest OPEC ministerial meeting and much more.

Overall, most base metals seem to be retracing from a late February peak. LME copper and aluminum have both been declining since late February.

The tin price’s dive has been more stark. LME three-month tin has dropped over 13% since Feb. 25. However, in the long term, the outlook for tin remains promising, particularly given its application in electronics.

The MetalMiner team will be presenting a commodity forecast for copper, aluminum, stainless and carbon steel on Wednesday, March 24, at 10:00 a.m. CDT: https://zoom.us/webinar/register/WN_6J8wAyYySfihVk3ZUH9yMA. 

Week of March 1-5 (steel capacity, oil prices and more)

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supply chain chart

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When we first started reporting on global freight costs in Q4 last year, we expected that the pandemic bounce-back would probably be a relatively short-term effect, easing around the Chinese Lunar New Year. Around then, Chinese manufacturers closed down and the shipping industry had a chance to catch up on backlogs.

Unfortunately, in the meantime, the situation has not gotten better.

If anything, it has gotten worse.

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Supply chain woes

According to the Financial Times, the cost of shipping goods from China to Europe has more than quadrupled in the past eight weeks. Costs have hit record highs as a result of a shortage of empty containers disrupts global trade.

The post states the cost of shipping a 40-foot container from Asia to northern Europe has increased from about $2,000 in November to more than $9,000, quoting shippers and importers.

MetalMiner’s own research has found the worst increases are on the China to US West Coast and Northern Europe routes. Other origins, such as India, have doubled but not tripled since spring 2020, with the largest increase coming in the last 3-4 months.

The Chinese Lunar New Year closedowns barely happened this year. New COVID-19 outbreak containment measures in China encouraged Beijing to dissuade all but essential travel. As a result, a majority of workers in the cities were available to work over what would normally be a near two-week holiday period.

Product, therefore, continued to be delivered to the docks. Demand on shipping lines barely abated.

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U.S. trade

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This morning in metals news: the US international goods trade deficit moved up slightly from December to January; meanwhile, MetalMiner sister site SpendMatters took to LinkedIn for feedback on President Joe Biden’s executive order on supply chains; and, lastly, Sweden will be home to what will reportedly be the world’s largest “green hydrogen plant.”

US trade deficit rises in January

The US trade deficit in January reached $83.7 billion, the Census Bureau reported.

The trade deficit increased from $83.2 billion in December.

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Spend Matters analyst looks at Biden administration’s supply chain executive order

Speaking of the trade deficit and trade in general, in light of President Joe Biden signing an executive order to address US supply chain problems for semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceuticals, Spend Matters analyst Pierre Mitchell took to LinkedIn to get a conversation started.

“Hey, if a 78-year-old guy from Scranton gets it, maybe more C-level execs will finally now get serious about supply chain risk management,” Mitchell writes. “Actually, most do, especially after the pandemic, but it’s still depressing when so many wait until they get a major disruption. Is this finally a sea change … or ‘C-change’?”

MetalMiner’s Stuart Burns recently outlined the geopolitical chess game taking place over rare earth materials.

To be a part of the conversation, engage with Mitchell’s post on LinkedIn to voice your opinions.

World’s largest ‘green hydrogen plant’

Steelmaking is a traditionally high-polluting industry. But, slowly but surely, steelmakers around the world are touting newfound green bona fides.

CNBC reported yesterday that Sweden could soon be home to the “world’s largest green hydrogen plant.”

The firm, H2 Green Steel, will aim to provide the European market with steel made with a “fossil-free manufacturing process,” CNBC reported.

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President Joe Biden’s latest executive order seeks to secure a variety of important supply chains.

For example, in one higher-profile case, General Motors recently announced it would extend downtimes at several plants as a result of a semiconductor shortage.

As we’ve noted in our Rare Earths Monthly Metals Index (MMI) series, rare earths supply has long been a point of concern for the US, particularly the Pentagon. (Recently, MetalMiner’s Stuart Burns delved into China’s overwhelming control of the rare earths processing market and indications Beijing is considering tighter rare earths export regulations.)

In that vein, the president’s latest executive order — his 33rd in just over a month in office, which the White House said he would sign Wednesday — aims to secure those critical supply chains.

The White House said the order focuses on six key areas:

  • the defense industrial base
  • the public health and biological preparedness industrial base
  • the information and communications technology (ICT) industrial base
  • the energy sector industrial base
  • the transportation industrial base
  • supply chains for agricultural commodities and food production

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joint venture puzzle pieces

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This morning in metals news: officials held a groundbreaking ceremony at the AM/NS Calvert mill earlier this month; President Joe Biden is expected to sign an executive order that calls for assessments of several critical supply chains; and US housing starts fell in January.

AM/NS Calvert officials hail expansion project

Officials celebrated the imminent expansion project at the AM/NS Calvert mill in Alabama with a groundbreaking ceremony earlier this month, al.com reported.

The Alabama mill is a 50/50 joint venture of ArcelorMittal and Nippon Steel. In December, ArcelorMittal completed the sale of most of its North American assets to Cleveland-Cliffs.

However, the AM/NS Calvert mill is one of the few assets not included in the sale.

Last August, ArcelorMittal announced its intention to build an electric arc furnace at the mill.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Biden to sign executive order for supply chain assessments

President Joe Biden will sign an executive order calling for assessments of various US supply chains, Yahoo News reported.

The order will call for assessments of supply chains for semiconductors, medical supplies, rare earths and electric car batteries.

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Shipping

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Shipping lines have understandably come in for a huge amount of criticism over a doubling of ocean freights — in many cases, much more — over the last 12 months and a host of knock-on issues around container availability and vessel space.

Shipments have been delayed both at origin in Asia and at destination in Europe and ports on the US’s West Coast, like Long Beach and Los Angeles where vessels cannot get in to discharge because of port congestion.

While some of the criticism is justified, last year lines certainly idled ships and blanked services (made already scheduled sailings unavailable), sometimes at short notice.

As the months have gone by, we can see the current situation has more to do with red-hot demand than it does the machinations of the shipping line alliances.

Find more insight on MetalMiner’s LinkedIn.

Lockdowns put pressure on shipping capacity

As first China went into lockdown and then Europe and, intermittently, the US followed, H1 2020 production and shipments were pushed back into H2. As a result, that created unprecedented pressure on shipping capacity. In addition, equally unprecedented demand for PPE equipment, which soaked up already scant container space.

Combine those factors and you have a recipe for disaster.

Once containers arrived in Europe there weren’t the cargoes to rapidly turn them around for return. Containers built up and ports became more and more congested.

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