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September 14, 2023
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April 27, 2021
“It’s About To Get Much Worse”: Supply Chains Implode As “Price Doesn’t Even Matter Anymore”
by Tyler DurdenTuesday, Apr 27, 2021 – 02:15 PM
By Greg Miller, of FreightWaves,
The number of container ships stuck at anchor off Los Angeles and Long Beach is down to around 20 per day, from 30 a few months ago. Does this mean the capacity crunch in the trans-Pacific market is finally easing? Absolutely not, warned Nerijus Poskus, vice president of global ocean at freight forwarder Flexport. “It’s not getting better. It’s getting worse,” he told American Shipper in an interview on Monday.
“What I’m seeing is unprecedented. We are seeing a tsunami of freight,” he reported.
“For the month of May, everything on the trans-Pacific is basically sold out. We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container. I couldn’t get it loaded — and we are a growing company that ships a lot of TEUs [twenty-foot equivalent units]. Price doesn’t always even matter anymore.”
Restocking driving volumes higher
Poskus said that trans-Pacific import volumes are still rising. He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”
With imports far outpacing retail sales growth, he attributed volumes to inventory restocking. “The restocking is actually affecting the trade even more than growth in demand. That tells me that this will last even longer. Let’s say U.S. consumer demand slows down in Q3 and Q4. That’s not expected, but even if it does, [capacity availability and rates] shouldn’t improve quickly, simply because of the huge restocking demand.”
Poskus also believes there is a growing export backlog piling up each day in Asia, awaiting available ship slots. If that backlog grows too big, he said, “I honestly don’t know what’s going to happen.” As a result of the backlog and restocking demand, he thinks “prices will remain high and shipping will probably remain difficult for the rest of this year. And then after that, you have the peak for Chinese New Year in 2022.”
About to get even worse
He said that the situation today is the worst he’s witnessed — and he believes it’s about to get even more severe.
“Buckle up. The month of May will be the worst people have ever seen,” he predicted. Because some shippers will have to wait in line behind the growing backlog in Asia, he expects “what’s going to happen soon is that some importers won’t even be able to get on the boat. For them, it will almost feel like trade is coming to a halt.”
Poskus’ comments mirror cargo bookings data. FreightWaves’ SONAR platform features a proprietary index of shippers’ ocean bookings (SONAR: IOTI.USA). Bookings to the U.S. are measured in TEUs on a 10-day-moving-average basis as of the scheduled date of overseas departure. As of Monday, the index was at a new all-time high and forward bookings data showed a continued rise ahead.
Spot premiums back with vengeance
As of Friday, the Freightos Baltic Daily Index assessed the Asia-West Coast spot rate (SONAR: FBXD.CNAW) at $4,797 per forty-foot equivalent unit (FEU) and the Asia-East Coast rate (SONAR: FBXD.CNAE) at $6,306 per FEU — both near all-time highs.
But that’s only part of the rate story. “Indexes are not bills. Premiums are not reflected in the indexes,” said Poskus. Earlier this year, some of the premium charges came down as container availability in Asia improved. That’s reversed, said Poskus, who noted that the Ever Given incident in the Suez Canal pulled container equipment from the market. “Container shortages in Asia are again very bad because of the Ever Given, and it will take another four to six weeks to come back to normal.”
The added premiums to get spot cargo loaded “are back and they’re higher than before,” he said. “They are $2,000-$3,000 above FAK [spot price] and that’s the best case.”
Spot cargo that was booked 21 days prior and was forecast within the shipper’s allocation is still getting FAK pricing on spot, he noted. However, “everything last minute is basically a free-for-all auction. You are basically offering as much money as you can and hoping somebody will take it. Many importers are now struggling. We’re seeing so many new customers approaching us asking for help because they can’t get loaded.”
Contract rates up sharply
A recent presentation by Xeneta, a company that collects contract data, showed Asia-West Coast contracts being negotiated this year at around 30%-50% higher levels than last year.
Poskus’ numbers are around double Xeneta’s. “We are seeing fixed-price increases of slightly over 100% on Asia-West Coast and about 75% on Asia-East Coast,” he said. “Also, almost every single contract rate is subject to peak season surcharges [PSSs], so the prices aren’t exactly fixed. I think the PSSs will reduce the gap between the spot and fixed market.”
Asked about shippers who have yet to conclude their annual contracts, he said, “If you want a fixed price in today’s market, the answer you’ll get from the carriers is that it’s too late. We advised many importers to sign early because the trans-Pacific contract season would close [early] because there’s more demand than supply. And that’s exactly what happened.”
There are exceptions, such as larger shippers with June-to-June contracts who began discussions with carriers earlier this year. “But if you are just a simple importer and you are yet to sign your fixed contract, you will be in the spot market,” said the Flexport vice president.
Advice to importers
Poskus offered several pieces of advice to importers scrambling to get container loads to the U.S.
He noted that carriers need reefers in the U.S. market for refrigerated exports to Asia. On the way back from Asia, these reefers are powered down and can be used as non-operating reefers (NORs) to transport dry cargo. “Believe it or not, carriers are still moving some NORs empty because importers don’t like them. This is a missed opportunity to move cargo in NORs. My advice is: Take that option. If you’re searching for the best solution in this market, you’re going to see even more delays.”
He also suggested moving cargo via less-than-container-load (LCL) shipments. “LCL is still moving. Of course, you cannot move thousands of containers LCL, but if you have something urgent, you can still get space for LCL on May sailings. Instead of waiting, break your some of your shipments down into LCL shipments and at least get some inventory,” he said.
Yet another option: Be creative with routings. For example, direct China-West Coast sailings may be sold out, but cargo can be routed from China through the Panama Canal to Cartagena, Colombia, then back through the canal to the West Coast. “It has a longer transit time but it can be loaded in the same week and it’s an option versus waiting a month and a half to get loaded [for the direct route],” he said.
“Just get your cargo to the continent of North America and from there you can get it to where it needs to go, whether it’s with NORs or LCL or transshipping [through hubs like Cartagena] or shipping it to Canada and then putting it on rail to Chicago and trucking it to New York. It will be expensive, but at least it will get there.
“You have to be flexible. Look for any routing and be creative. It’s a moving target. And don’t wait. If something opens up, act fast.”
April 27, 2021
“It’s About To Get Much Worse”: Supply Chains Implode As “Price Doesn’t Even Matter Anymore”
by Tyler DurdenTuesday, Apr 27, 2021 – 02:15 PM
By Greg Miller, of FreightWaves,
The number of container ships stuck at anchor off Los Angeles and Long Beach is down to around 20 per day, from 30 a few months ago. Does this mean the capacity crunch in the trans-Pacific market is finally easing? Absolutely not, warned Nerijus Poskus, vice president of global ocean at freight forwarder Flexport. “It’s not getting better. It’s getting worse,” he told American Shipper in an interview on Monday.
“What I’m seeing is unprecedented. We are seeing a tsunami of freight,” he reported.
“For the month of May, everything on the trans-Pacific is basically sold out. We had one client who needed something loaded in May that was extremely urgent and who was ready to pay $15,000 per container. I couldn’t get it loaded — and we are a growing company that ships a lot of TEUs [twenty-foot equivalent units]. Price doesn’t always even matter anymore.”
Restocking driving volumes higher
Poskus said that trans-Pacific import volumes are still rising. He noted that January trans-Pacific imports were up 10% versus 2019 (comparisons to 2020 numbers are skewed by COVID) and 13.5% in February, then jumped 51% in March. “So, we’re now at 1.5 times pre-pandemic levels.”
With imports far outpacing retail sales growth, he attributed volumes to inventory restocking. “The restocking is actually affecting the trade even more than growth in demand. That tells me that this will last even longer. Let’s say U.S. consumer demand slows down in Q3 and Q4. That’s not expected, but even if it does, [capacity availability and rates] shouldn’t improve quickly, simply because of the huge restocking demand.”
Poskus also believes there is a growing export backlog piling up each day in Asia, awaiting available ship slots. If that backlog grows too big, he said, “I honestly don’t know what’s going to happen.” As a result of the backlog and restocking demand, he thinks “prices will remain high and shipping will probably remain difficult for the rest of this year. And then after that, you have the peak for Chinese New Year in 2022.”
About to get even worse
He said that the situation today is the worst he’s witnessed — and he believes it’s about to get even more severe.
“Buckle up. The month of May will be the worst people have ever seen,” he predicted. Because some shippers will have to wait in line behind the growing backlog in Asia, he expects “what’s going to happen soon is that some importers won’t even be able to get on the boat. For them, it will almost feel like trade is coming to a halt.”
Poskus’ comments mirror cargo bookings data. FreightWaves’ SONAR platform features a proprietary index of shippers’ ocean bookings (SONAR: IOTI.USA). Bookings to the U.S. are measured in TEUs on a 10-day-moving-average basis as of the scheduled date of overseas departure. As of Monday, the index was at a new all-time high and forward bookings data showed a continued rise ahead.
Spot premiums back with vengeance
As of Friday, the Freightos Baltic Daily Index assessed the Asia-West Coast spot rate (SONAR: FBXD.CNAW) at $4,797 per forty-foot equivalent unit (FEU) and the Asia-East Coast rate (SONAR: FBXD.CNAE) at $6,306 per FEU — both near all-time highs.
But that’s only part of the rate story. “Indexes are not bills. Premiums are not reflected in the indexes,” said Poskus. Earlier this year, some of the premium charges came down as container availability in Asia improved. That’s reversed, said Poskus, who noted that the Ever Given incident in the Suez Canal pulled container equipment from the market. “Container shortages in Asia are again very bad because of the Ever Given, and it will take another four to six weeks to come back to normal.”
The added premiums to get spot cargo loaded “are back and they’re higher than before,” he said. “They are $2,000-$3,000 above FAK [spot price] and that’s the best case.”
Spot cargo that was booked 21 days prior and was forecast within the shipper’s allocation is still getting FAK pricing on spot, he noted. However, “everything last minute is basically a free-for-all auction. You are basically offering as much money as you can and hoping somebody will take it. Many importers are now struggling. We’re seeing so many new customers approaching us asking for help because they can’t get loaded.”
Contract rates up sharply
A recent presentation by Xeneta, a company that collects contract data, showed Asia-West Coast contracts being negotiated this year at around 30%-50% higher levels than last year.
Poskus’ numbers are around double Xeneta’s. “We are seeing fixed-price increases of slightly over 100% on Asia-West Coast and about 75% on Asia-East Coast,” he said. “Also, almost every single contract rate is subject to peak season surcharges [PSSs], so the prices aren’t exactly fixed. I think the PSSs will reduce the gap between the spot and fixed market.”
Asked about shippers who have yet to conclude their annual contracts, he said, “If you want a fixed price in today’s market, the answer you’ll get from the carriers is that it’s too late. We advised many importers to sign early because the trans-Pacific contract season would close [early] because there’s more demand than supply. And that’s exactly what happened.”
There are exceptions, such as larger shippers with June-to-June contracts who began discussions with carriers earlier this year. “But if you are just a simple importer and you are yet to sign your fixed contract, you will be in the spot market,” said the Flexport vice president.
Advice to importers
Poskus offered several pieces of advice to importers scrambling to get container loads to the U.S.
He noted that carriers need reefers in the U.S. market for refrigerated exports to Asia. On the way back from Asia, these reefers are powered down and can be used as non-operating reefers (NORs) to transport dry cargo. “Believe it or not, carriers are still moving some NORs empty because importers don’t like them. This is a missed opportunity to move cargo in NORs. My advice is: Take that option. If you’re searching for the best solution in this market, you’re going to see even more delays.”
He also suggested moving cargo via less-than-container-load (LCL) shipments. “LCL is still moving. Of course, you cannot move thousands of containers LCL, but if you have something urgent, you can still get space for LCL on May sailings. Instead of waiting, break your some of your shipments down into LCL shipments and at least get some inventory,” he said.
Yet another option: Be creative with routings. For example, direct China-West Coast sailings may be sold out, but cargo can be routed from China through the Panama Canal to Cartagena, Colombia, then back through the canal to the West Coast. “It has a longer transit time but it can be loaded in the same week and it’s an option versus waiting a month and a half to get loaded [for the direct route],” he said.
“Just get your cargo to the continent of North America and from there you can get it to where it needs to go, whether it’s with NORs or LCL or transshipping [through hubs like Cartagena] or shipping it to Canada and then putting it on rail to Chicago and trucking it to New York. It will be expensive, but at least it will get there.
“You have to be flexible. Look for any routing and be creative. It’s a moving target. And don’t wait. If something opens up, act fast.”
April 27, 2021
Recticel trading update 1st quarter 2021
Regulated information, Brussels, 27/04/2021 — 06:58 CET, 27.04.2021
- Net sales: from EUR 221.5 million to EUR 256.7 million (+15.9%), including a -0.4% currency effect
- Net financial debt (including FoamPartner) : EUR 238.6 million, including IFRS 16 lease liabilities
Olivier Chapelle (CEO): “The positive top-line trend observed during 2H2020 has continued to develop with a solid 15.9% y-o-y growth. Good volumes in our Insulation and Engineered Foams business lines, combined with substantial price increases, have offset the sales decline in the Bedding business line, caused by shopping restrictions in several markets due to the COVID-19 pandemic.
The chemical raw materials supply remains constrained due to renewed ‘force majeure’ events and planned maintenance at the premises of our suppliers. This creates continued supply shortages of polyols and isocyanates, that our suppliers use to implement price increases at a historically high pace, leading to new all-time highs. In response to this, we mitigate these cost increases through corresponding selling price increases. The situation is not expected to normalize before 4Q2021.
During the quarter, we completed the FoamPartner acquisition in Engineered Foams, and the integration process has now started. We also signed preliminary agreements to acquire Gór-Stal’s insulation board business, and are currently performing the confirmatory due diligence while preparing its integration in the Insulation business line. At the same time we initiated the divestment process of our Bedding business line. These three strategic initiatives are currently all progressing according to plan.”
OUTLOOK
Our underlying end-use markets remain difficult to predict in the context of the COVID-19 pandemic. Regardless of these uncertainties, our Group confirms its expectation to realise in 2021 a substantial increase in sales, and at least a 30% increase of its Adjusted EBITDA, not taking into account the contribution from the FoamPartner and the Gór-Stal acquisitions, nor the related synergies. The Group will provide guidance adapted to the new perimeter, including the acquired operations of FoamPartner and Gór-Stal, at the occasion of the publication of its first half-year 2021 results.
https://www.recticel.com/recticel-trading-update-1st-quarter-2021.html
April 27, 2021
Recticel trading update 1st quarter 2021
Regulated information, Brussels, 27/04/2021 — 06:58 CET, 27.04.2021
- Net sales: from EUR 221.5 million to EUR 256.7 million (+15.9%), including a -0.4% currency effect
- Net financial debt (including FoamPartner) : EUR 238.6 million, including IFRS 16 lease liabilities
Olivier Chapelle (CEO): “The positive top-line trend observed during 2H2020 has continued to develop with a solid 15.9% y-o-y growth. Good volumes in our Insulation and Engineered Foams business lines, combined with substantial price increases, have offset the sales decline in the Bedding business line, caused by shopping restrictions in several markets due to the COVID-19 pandemic.
The chemical raw materials supply remains constrained due to renewed ‘force majeure’ events and planned maintenance at the premises of our suppliers. This creates continued supply shortages of polyols and isocyanates, that our suppliers use to implement price increases at a historically high pace, leading to new all-time highs. In response to this, we mitigate these cost increases through corresponding selling price increases. The situation is not expected to normalize before 4Q2021.
During the quarter, we completed the FoamPartner acquisition in Engineered Foams, and the integration process has now started. We also signed preliminary agreements to acquire Gór-Stal’s insulation board business, and are currently performing the confirmatory due diligence while preparing its integration in the Insulation business line. At the same time we initiated the divestment process of our Bedding business line. These three strategic initiatives are currently all progressing according to plan.”
OUTLOOK
Our underlying end-use markets remain difficult to predict in the context of the COVID-19 pandemic. Regardless of these uncertainties, our Group confirms its expectation to realise in 2021 a substantial increase in sales, and at least a 30% increase of its Adjusted EBITDA, not taking into account the contribution from the FoamPartner and the Gór-Stal acquisitions, nor the related synergies. The Group will provide guidance adapted to the new perimeter, including the acquired operations of FoamPartner and Gór-Stal, at the occasion of the publication of its first half-year 2021 results.
https://www.recticel.com/recticel-trading-update-1st-quarter-2021.html
April 27, 2021
Americas petrochemicals outlook, w/c April 26
- Author
- Mary Hogan Staff
- Editor
- Manish Parashar
US polypropylene
US polypropylene exports are expected to continue to trend downward in the short term amid improved availability, sources said.
The homopolymer assessment fell 13.5 cents/lb in the week ended April 24 amid talks of railcars available much lower for the period. S&P Global Platts assessed the homopolymer injection at $2,249-$2,271/mt April 23 on a FAS Houston basis. Ramp-ups by suppliers recovering from the February cold weather disruptions that hit the US Gulf Coast were expected to continue through the end of the month. Talks of normal production were expected to resume in June, sources said. Many buyers were still buying on allocations by producers. Despite the drop, participants deemed pricing too high to export to traditional import markets like Latin America amid competitive pricing from key global sellers. Still, there was talk that pricing would continue to dip on expected decreases in feedstock propylene contract price. Domestic market participants were eying a potential decrease as downstream contract settlements typically follow a monomer plus formula.
US olefins
US spot polymer-grade propylene is expected to continue rising in the week started April 25 on strong downstream polypropylene demand, sources said. April domestic PGP contracts are expected to settle in the week started April 25 between 10 and 16 cents lower.
US spot ethylene is expected to fall amid steam cracker restarts.
US vinyls
US spot export polyvinyl chloride prices were expected to remain at an all-time high of $1,800/mt FAS Houston in the week started April 25 as producers assess whether they will be able to offer volumes for May export. While all plants that shut amid sustained subfreezing temperatures in mid February have since restarted, turnarounds that were slightly delayed by the freeze shutdowns and more slated for May has kept output tight. Market participants do not expect output to resume normal levels until June. Upstream, caustic soda prices could inch up on growing demand in the pulp and paper industry as offices slowly reopen to workers, particularly in the US, with COVID-19 vaccinations becoming more available.
US aromatics
Benzene prices are expected to continue falling from the almost seven-year high of 503 cents/gal DDP USG reached April 20. While some sources said the decline in prices in the latter half of the week ended April 24 was simply a correction, the week of April 25 started with even lower spot ranges, including May benzene bid and offered at 410-485 cents/gal DDP HTC. May benzene had closed April 23 at 460 cents/gal DDP USG, up 35 cents on the week. Price movements through April 28 may prove influential in the settlement of the May CP, expected by the end of the week. May spot prices in recent weeks show the settlement should be sharply higher than the April CP of 301 cents/gal. Downstream, US styrene prices may see support from producers raising offers to account for higher feedstock prices as CP estimates clarify margins, as well as demand from Europe amid skyrocketing benzene costs in that region. May styrene closed April 23 at $1,520/mt FOB USG, up $50/mt on the week.
Stability is expected in the lower liquidity US aromatics markets of toluene and xylenes. While no spot trading was reported in the week of April 19-23, one market participant said the final days of April could usher in offers from producers who have otherwise been uncharacteristically quiet in the spot market since the mid-February Texas freeze derailed refining operations and supply chains. Sharp increases in benzene prices have improved economics for toluene disproportionation, allowing operators to increase STDP unit run rates, one trader said. Prompt nitration-grade toluene closed April 23 at 273 cents/gal FOB USG, up 3 cents week on week, while mixed xylenes gained 1 cent on the week at 249 cents/gal FOB USG.
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