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Containerized scrap supply to Asia tightens as freight from USWC surges

The containerized ferrous scrap market in Asia saw tighter supplies and offers coming from western origins, amid bulging shipping space constrains and surging freight rates, sources said.

“Just slightly more than a month back, freight to Taiwan was only at $10 per feet of container, and now it’s $40 per feet of container for March,” a US supply source said. “Freight is massive.”

Other sources, meanwhile, cited 40 feet container prices in a $1000-1,600/mt range to Asia.

Translating to a per metric ton of cargo cost for comparison, the midpoint $1,300 price tag for March shipments would equate to $48.10/mt, versus only $14.80/mt in early January, assuming an average load of 27 mt per 40 feet container.

Another US-based ferrous scrap trader added that freight forwarders have told shippers that some carriers were literally “out of space.”

Sources attributed the surging freight rates to several issues, over the COVID-19 pandemic duration. Overbearing port congestion at USWC containerized ports, equipment imbalances led by service disruptions or cuts to both east and west-bound sailings, and surging bunker prices were all creating the “perfect storm” to prices.

“Just in time, we have received yet another announcement for hikes…they dubbed it General Rate Increase (GRI)…they are just tossing around fancy names,” a US-based scrap trader said. “Warning that equipment and space shortages were expect until the end of March.”

While on the buyers’ side, regional mills were citing far fewer offers coming in from the west since entering February, adding that wider shipment dates were also being asked in contracts due to sell side’s diminished ability to predict shipping queues.

“The contract states a shipping out period in March and April inclusive…it seems the situation there is impossible to pin down a narrower time frame,” a steelmaker in Taiwan said.

As reported previously by S&P Global Platts, go premium or go home was also the new motto within the container markets, with shippers struggling to get hold of ships and carriers assuring availability only when customers pay a premium over the Freight All Kind, or FAK.

The concept of premium payment has become a necessity to get space on the container to a level where one pays it as a ticket to get into the queue.

“Main line operators made what they lost in the past 10 years within Q3 and Q4 last year, and more into Q1 this year,” a containerized vessel operator said. “If you think east-bound shippers are suffering from prices, west bound ones are having it worse. Main liners have found a silver lining during COVID-19.”

West-bound sailings for instance from Asia to North America have seen prices risen nearly three-fold over the last six months to a record high of $5,300/FEU on Feb. 8.

Meanwhile, marine fuel prices were none the more supportive either, as prices were surging since Q2 2019. The Platts Marine Fuel 0.5% Bunker delivered to Japan assessment saw prices surging to $520.25/mt Feb. 18, pushing higher since its last bottom in May 2020, where prices were only marking $200/mt.
Source: Platts

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