Quarantines, Freight Hikes Prolong Metals Supply Woes

Soaring freight rates amid a container shortage, logistical challenges and quarantine measures are still disrupting supply chains, pushing up metals prices.

Deliveries of some minor metals products to Europe and the US from Asia-Pacific and Africa have been impacted since November. Spot prices were quick to react, with notable gains for manganese flake, antimony, tungsten, ferro-silicon and ferro-vanadium.

One market participant said buyers are anxious to secure material from China and India because of the container shortage, and noted that split shipping and cancellations are becoming more common.

The Europe component of the Shanghai containerised freight index (SCFI) — which represents sea freight rates for imports from China worldwide — rose to $4,452/TEU last week, quadrupling on the year.

One trader was quoted $15,000/container to ship antimony trioxide grade material from Singapore to Baltimore in the US, equating to an additional $200/t in cost for the metal. Last week, the container challenge combined with increased European demand and low inventories to push prices for minimum 99.65pc antimony trioxide above $7,000/t duty unpaid Rotterdam for the first time since May 2019. US antimony prices ended last week at a 19-month high of $3.30-3.57/lb cif US warehouse.

Meanwhile, the cost of shipping manganese flake from China to Europe has risen five-fold to $5,000 this month, adding over $200/t in costs for suppliers. Since the start of 2021, European prices for 99.7pc manganese flake have already risen to $2,385-2,455/t from $2,150-2,250/t duty unpaid Rotterdam, against an average of $2,050/t in December.

Quarantine hits seaborne, inland logistics

China’s introduction of quarantine rules at southern ports and additional Covid-19 checks on South African arrivals is disrupting shipment to inland ports and onward truck deliveries to the interior, market participants said. And a trader said Asian truckers are staggering their holidays around the Chinese lunar new year in early February — a move likely to further disrupt inland movements.

Elsewhere, adverse weather in Los Angeles has halted titanium scrap shipments to Europe, exacerbating the shortage that has impacted Europe’s ferro-titanium market. A January scrap cargo was delayed until at least mid-February, one trader said.

And last year’s changes to Nigeria’s export licence regime have caused congestion at the port of Lagos. One trader was unable to ship minimum 50pc niobium columbite ore from west Africa after October loadings were delayed until at least late December. Hold-ups were still being reported as 2021 began.

Weak demand threatens price rally

Some buyers say the sharp price rises for certain metals might be unsustainable, noting sluggish demand outside China.

Some consumers are willing to restock now, wary of further prices gains and tighter supply, with the yuan’s appreciation against the US dollar also supporting certain metals. But others see potential for downward corrections and are sitting on the sidelines. Several traders view China’s lunar new year holiday as a turning point, saying the lull could allow logistical bottlenecks, including the container shortage, to ease.