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Everchem Updates
VOLUME XXI
September 14, 2023
Everchem’s exclusive Closers Only Club is reserved for only the highest caliber brass-baller salesmen in the chemical industry. Watch the hype video and be introduced to the top of the league: — read more
March 18, 2021
Soaring 11,000 yuan/ton! Chemical raw materials skyrocketed “breaking records”!
Echemi 2021-03-17
Recently, affected by factors such as limited supply and strong demand, the price of Bisphenol A (BPA) in Asia has soared to a historical high, and the current price has reached US$2,800 to US$3,000/ton. Since January this year, the price of bisphenol A has been rising. The current price has reached RMB 24,666/ton, which is an increase of RMB 11,441/ton, an increase of 86.51% compared to the price of RMB 13,225/ton on January 4. Market participants worry that under the current tight supply situation, the demand for bisphenol A will become tighter, which is likely to lead to high prices.
At the beginning of 2021, many industries such as chemicals, food, industrial products, etc. seem to have taken a stand, starting to increase prices across the board, and some even soared, setting a new high in the past 10 years, raising the average market price by a notch.
The prices of chemicals, food, industrial products and other industries hit new highs
PVC monthly increase of 26.5%, the highest since 2010
PVC (polyvinyl chloride) futures surged over 4.5%. The price of calcium carbide PVC in East China was 9,209 yuan/ton, and the price difference was 3915.25 yuan/ton. The current price is at the highest level since 2010, with a monthly increase of 22.9%; East China The price of ethylene-based PVC is 9,700 yuan/ton, and the price difference is 7353 yuan/ton. The current price is at the highest level since 2010, with a monthly increase of 26.5%. Previously, domestic PVC prices reached their highest point in the past ten years in December 2020.
Titanium dioxide hits a 3-year high
The average price of rutile titanium dioxide is 18,000 yuan/ton, and some companies’ quotations have reached 20,000 yuan/ton, which is the highest price in three years. In addition, under the current supply and demand conditions, there is still an upward trend.
BDO hits a 10-year high
The return of the Spring Festival in 2021 will be only five working days, and there will be 4 auctions, boosting the domestic BDO market from 18,500 yuan/ton to 29,500 yuan/ton, an average daily increase of 2,200 yuan/ton, and only an increase of 5,000 yuan/ton on the 23rd Tons, a new historical high point since 2010.
Acetic acid breaks through a 10-year high
The price of acetic acid rose to 6066.67 yuan/ton, an increase of 141.06% year-on-year. The price of acetic acid rose for six consecutive months, breaking a 10-year high.
DOTP hits a new high in 8-9 years
Since 2021, the DOTP market has shown an upward pattern as a whole, especially after the Spring Festival holiday, the price has hit a new high in 8-9 years. Taking the price in Zhejiang as a benchmark, the price of DOTP rose by as much as 3,700 yuan/ton in just 7 days after the holiday.
Asian PX prices hit 21-month high
The Asian PX price hit a 21-month high, reaching 895.83 US dollars/ton (CFR, China). Since the beginning of this month, the price has jumped by 172.66 US dollars/ton, an increase of 23.9%. The last price high occurred on May 27, 2019, at a price of US$896.25/ton.
Shanghai aluminum futures prices have reached a 9-year high
Since January, Shanghai Aluminum has rebounded from a low level again. By March 15th, Shanghai Aluminum’s main contract closed at 17,650 yuan/ton. The current price has reached a 9-year high.
DOP price breaks 9-year high
In 2021, the DOP price broke a 9-year high, with a quoted price of 14,167 yuan/ton, an increase of 20.91% month-on-month. The current price has hit a new high since 2012 and the fastest rate of increase in the past 10 years.
International and domestic prices of diammonium phosphate hit a new high in nearly 10 years
The FOB prices of DAP in the U.S. Gulf, Morocco and China are US$530/547.5/517.5/ton respectively, up by more than 35% year-to-date, up by more than 75% year-on-year; the current ex-factory price of DAP at Yuntianhua is 3,000 yuan/ton, up year-on-year 46%, up 25% year-to-date. The international and domestic prices of diammonium phosphate hit a new high in the past 10 years.
Adipic acid breaks through the nearly 3-year high
Entering March, in the first two working days, adipic acid has an unprecedented increase of 12.66%, and the national market has generally risen by more than 1,000 yuan. The current price is in the range of 10500-11000 yuan/ton, breaking through the high point in the past three years.
Butyl acrylate surpasses 9-year high
The price of butyl acrylate was 19100 yuan/ton, an increase of 6466.67 yuan/ton, or 51.19%, compared with the price before the Spring Festival. In 2021, the domestic market price of butyl acrylate has surpassed the high price in the 9 years from 2012 to 2020, and has caught up with the high price in 2011 10 years ago.
Maleic anhydride hit a 4-year high
Maleic anhydride was quoted at RMB 12,750/ton, a 4-year high.
Spandex breaks through the 2011 price, the highest price in the past 10 years
Spandex broke the price in 2011, the highest price in the past 10 years. Since August last year, the domestic price of spandex has continued to soar. The average market price of 40D specification is 57,000 yuan/ton, which is an increase compared with the lowest price in August 2020. 84.47%.
EPDM rubber hits a new high in more than 5 years
The EPDM rubber reached 22,000 yuan/ton, a record high in more than five years; the average price increased by 7.18% month-on-month and 42.78% year-on-year.
Titanium concentrate hits a 3-year high
The price of Sichuan Panzhihua Iron and Steel’s titanium concentrate rose to 2,300 yuan/ton, and the highest price in the past 10 years was 2,400 yuan/ton. The price of titanium concentrate rose by more than 40% year-on-year, a three-year high.
DBP breaks through 3-year high
DBP rose to 12,500 yuan/ton, breaking through a 3-year high, with an average price of 9,890.38 yuan/ton, an increase of 38.68% year-on-year.
Propylene oxide hits a new high since 2008
The price of propylene oxide in Shandong and other major producing areas and major consumer areas in the East China market was 19,100-19,400 yuan/ton. The highest price has surpassed last year’s high and hit a new high since 2008. At present, the inventory of production enterprises is low, and the market spot is tight to further boost the upward trend.
The average price of welded pipe and galvanized pipe is at the highest level in the past 10 years
The national average price of 4-inch*3.75mm welded pipe is 5230 yuan/ton, up 522 yuan/ton month-on-month, and 1,214 yuan/ton year-on-year; the national average price of 4-inch*3.75mm galvanized pipe is 5823 yuan/ton, month-on-month In February, the price rose by 597 yuan/ton, which was a year-on-year increase of 1116 yuan/ton. At present, the average price of welded pipes and galvanized pipes in the country is at the highest level in the past 10 years. However, in March of previous years, the prices of welded pipes and galvanized pipes in the country rarely experienced sharp increases.
Billet prices hit 10-year highs 4 times
Since March, the domestic steel barometer Tangshan billet prices have hit a 10-year high four times. March 3 was 4410 yuan/ton, March 7 was 4410 yuan/ton, March 12 was 4430 yuan/ton, and March 15 was 4440 yuan/ton. Although terminal profits have been compressed and purchasing capabilities have declined, manufacturers are still dominated by optimism, and prices still have a certain degree of support. From the perspective of historical prices, since 2008, the highest point of billet prices was RMB 5,600/ton in 2008, and the second highest point was RMB 4,530/ton in 2011.
Iron ore prices hit a new high since 2011
Iron ore prices soared on the first trading day after the Spring Festival, reaching the highest level since September 2011. The benchmark 62% iron powder (CFR Qingdao) imported from northern China changed hands at a price of US$175.05 per ton, a 9% increase from the beginning of the year. Iron ore 65% Fe Brazil daily index rose 4.2% to $198 per ton, a record high.
Copper prices rose by 10%, hitting a 9-year high
Since February this year, copper prices have risen rapidly. The main force of Shanghai copper has risen to 70,000 yuan/ton, a 9-year high. It has recently corrected slightly but still remains at a high level of more than 60,000 yuan/ton, with a cumulative increase of more than 10%.
Sales of electrical appliances increased, and panel prices hit a 1-year high
Domestic mobile phone shipments in January increased by 92.8% year-on-year and 50.85% month-on-month to 40.12 million units. In January, notebook panel shipments increased by 51% year-on-year, and LCD TV panel shipments increased slightly by 1%. In February, the prices of small-size panels (tablets, mobile phones, and notebooks) all hit new highs since 2020, up 3.4%, 0%, and 5.7% from January, reaching 30.7, 13.5, and 35.1 US dollars per piece, respectively.
Cherries hit a new high in recent years, and the overall price is about 10% more expensive than in previous years
At the moment, greenhouse cherries in Dalian, Liaoning, have been matured one after another, and their prices have hit a new high in recent years. The first fruit began to mature in late February and sold for 120 yuan per catty. The market is the best year in recent years. The price was already lowered at this time last year, and there is no price lower this year. The overall price is about 10% higher than in previous years.
The main soybean futures contract rose by 50% year-on-year, setting a new record high
Affected by the increase in the purchase price of domestic soybeans, the main contract of Bean One Futures continued to rise, reaching a maximum of 6,375 yuan per ton during the session, which continued to set a record high. Bean One Futures mainly refers to domestic non-GMO soybeans, which are generally used in the processing and production of various soybean products. This data has increased by 50% compared with the same period last year.
Supply and demand imbalances and financial factors have jointly pushed up prices in multiple industries
Recently, it seems that many industrial chains have joined the queue of price increases. Whether it is multiple categories of chemical products, bulk industrial products, and industries closely related to people’s food, clothing, housing, and transportation, they have shown a hot trend. This is related to the imbalance of supply and demand and financial factors. And many other factors. The global new crown pneumonia epidemic has slowed down, and terminal industry demand has been significantly boosted, but the supply side cannot meet the downstream demand for various reasons, which has caused an imbalance of supply and demand. The US$1.9 trillion fiscal stimulus policy and its inflation expectations have stimulated financial enthusiasm for investment in the commodity market. Crude oil futures prices have fluctuated sharply, boosting market risk sentiment, and multiple industrial chains have shown upward trends. Based on the current situation, industry insiders said that from a horizontal perspective, the prosperity of many industries such as chemical industry may continue to rise, and it is difficult to see a decline in the short term.
March 18, 2021
Soaring 11,000 yuan/ton! Chemical raw materials skyrocketed “breaking records”!
Echemi 2021-03-17
Recently, affected by factors such as limited supply and strong demand, the price of Bisphenol A (BPA) in Asia has soared to a historical high, and the current price has reached US$2,800 to US$3,000/ton. Since January this year, the price of bisphenol A has been rising. The current price has reached RMB 24,666/ton, which is an increase of RMB 11,441/ton, an increase of 86.51% compared to the price of RMB 13,225/ton on January 4. Market participants worry that under the current tight supply situation, the demand for bisphenol A will become tighter, which is likely to lead to high prices.
At the beginning of 2021, many industries such as chemicals, food, industrial products, etc. seem to have taken a stand, starting to increase prices across the board, and some even soared, setting a new high in the past 10 years, raising the average market price by a notch.
The prices of chemicals, food, industrial products and other industries hit new highs
PVC monthly increase of 26.5%, the highest since 2010
PVC (polyvinyl chloride) futures surged over 4.5%. The price of calcium carbide PVC in East China was 9,209 yuan/ton, and the price difference was 3915.25 yuan/ton. The current price is at the highest level since 2010, with a monthly increase of 22.9%; East China The price of ethylene-based PVC is 9,700 yuan/ton, and the price difference is 7353 yuan/ton. The current price is at the highest level since 2010, with a monthly increase of 26.5%. Previously, domestic PVC prices reached their highest point in the past ten years in December 2020.
Titanium dioxide hits a 3-year high
The average price of rutile titanium dioxide is 18,000 yuan/ton, and some companies’ quotations have reached 20,000 yuan/ton, which is the highest price in three years. In addition, under the current supply and demand conditions, there is still an upward trend.
BDO hits a 10-year high
The return of the Spring Festival in 2021 will be only five working days, and there will be 4 auctions, boosting the domestic BDO market from 18,500 yuan/ton to 29,500 yuan/ton, an average daily increase of 2,200 yuan/ton, and only an increase of 5,000 yuan/ton on the 23rd Tons, a new historical high point since 2010.
Acetic acid breaks through a 10-year high
The price of acetic acid rose to 6066.67 yuan/ton, an increase of 141.06% year-on-year. The price of acetic acid rose for six consecutive months, breaking a 10-year high.
DOTP hits a new high in 8-9 years
Since 2021, the DOTP market has shown an upward pattern as a whole, especially after the Spring Festival holiday, the price has hit a new high in 8-9 years. Taking the price in Zhejiang as a benchmark, the price of DOTP rose by as much as 3,700 yuan/ton in just 7 days after the holiday.
Asian PX prices hit 21-month high
The Asian PX price hit a 21-month high, reaching 895.83 US dollars/ton (CFR, China). Since the beginning of this month, the price has jumped by 172.66 US dollars/ton, an increase of 23.9%. The last price high occurred on May 27, 2019, at a price of US$896.25/ton.
Shanghai aluminum futures prices have reached a 9-year high
Since January, Shanghai Aluminum has rebounded from a low level again. By March 15th, Shanghai Aluminum’s main contract closed at 17,650 yuan/ton. The current price has reached a 9-year high.
DOP price breaks 9-year high
In 2021, the DOP price broke a 9-year high, with a quoted price of 14,167 yuan/ton, an increase of 20.91% month-on-month. The current price has hit a new high since 2012 and the fastest rate of increase in the past 10 years.
International and domestic prices of diammonium phosphate hit a new high in nearly 10 years
The FOB prices of DAP in the U.S. Gulf, Morocco and China are US$530/547.5/517.5/ton respectively, up by more than 35% year-to-date, up by more than 75% year-on-year; the current ex-factory price of DAP at Yuntianhua is 3,000 yuan/ton, up year-on-year 46%, up 25% year-to-date. The international and domestic prices of diammonium phosphate hit a new high in the past 10 years.
Adipic acid breaks through the nearly 3-year high
Entering March, in the first two working days, adipic acid has an unprecedented increase of 12.66%, and the national market has generally risen by more than 1,000 yuan. The current price is in the range of 10500-11000 yuan/ton, breaking through the high point in the past three years.
Butyl acrylate surpasses 9-year high
The price of butyl acrylate was 19100 yuan/ton, an increase of 6466.67 yuan/ton, or 51.19%, compared with the price before the Spring Festival. In 2021, the domestic market price of butyl acrylate has surpassed the high price in the 9 years from 2012 to 2020, and has caught up with the high price in 2011 10 years ago.
Maleic anhydride hit a 4-year high
Maleic anhydride was quoted at RMB 12,750/ton, a 4-year high.
Spandex breaks through the 2011 price, the highest price in the past 10 years
Spandex broke the price in 2011, the highest price in the past 10 years. Since August last year, the domestic price of spandex has continued to soar. The average market price of 40D specification is 57,000 yuan/ton, which is an increase compared with the lowest price in August 2020. 84.47%.
EPDM rubber hits a new high in more than 5 years
The EPDM rubber reached 22,000 yuan/ton, a record high in more than five years; the average price increased by 7.18% month-on-month and 42.78% year-on-year.
Titanium concentrate hits a 3-year high
The price of Sichuan Panzhihua Iron and Steel’s titanium concentrate rose to 2,300 yuan/ton, and the highest price in the past 10 years was 2,400 yuan/ton. The price of titanium concentrate rose by more than 40% year-on-year, a three-year high.
DBP breaks through 3-year high
DBP rose to 12,500 yuan/ton, breaking through a 3-year high, with an average price of 9,890.38 yuan/ton, an increase of 38.68% year-on-year.
Propylene oxide hits a new high since 2008
The price of propylene oxide in Shandong and other major producing areas and major consumer areas in the East China market was 19,100-19,400 yuan/ton. The highest price has surpassed last year’s high and hit a new high since 2008. At present, the inventory of production enterprises is low, and the market spot is tight to further boost the upward trend.
The average price of welded pipe and galvanized pipe is at the highest level in the past 10 years
The national average price of 4-inch*3.75mm welded pipe is 5230 yuan/ton, up 522 yuan/ton month-on-month, and 1,214 yuan/ton year-on-year; the national average price of 4-inch*3.75mm galvanized pipe is 5823 yuan/ton, month-on-month In February, the price rose by 597 yuan/ton, which was a year-on-year increase of 1116 yuan/ton. At present, the average price of welded pipes and galvanized pipes in the country is at the highest level in the past 10 years. However, in March of previous years, the prices of welded pipes and galvanized pipes in the country rarely experienced sharp increases.
Billet prices hit 10-year highs 4 times
Since March, the domestic steel barometer Tangshan billet prices have hit a 10-year high four times. March 3 was 4410 yuan/ton, March 7 was 4410 yuan/ton, March 12 was 4430 yuan/ton, and March 15 was 4440 yuan/ton. Although terminal profits have been compressed and purchasing capabilities have declined, manufacturers are still dominated by optimism, and prices still have a certain degree of support. From the perspective of historical prices, since 2008, the highest point of billet prices was RMB 5,600/ton in 2008, and the second highest point was RMB 4,530/ton in 2011.
Iron ore prices hit a new high since 2011
Iron ore prices soared on the first trading day after the Spring Festival, reaching the highest level since September 2011. The benchmark 62% iron powder (CFR Qingdao) imported from northern China changed hands at a price of US$175.05 per ton, a 9% increase from the beginning of the year. Iron ore 65% Fe Brazil daily index rose 4.2% to $198 per ton, a record high.
Copper prices rose by 10%, hitting a 9-year high
Since February this year, copper prices have risen rapidly. The main force of Shanghai copper has risen to 70,000 yuan/ton, a 9-year high. It has recently corrected slightly but still remains at a high level of more than 60,000 yuan/ton, with a cumulative increase of more than 10%.
Sales of electrical appliances increased, and panel prices hit a 1-year high
Domestic mobile phone shipments in January increased by 92.8% year-on-year and 50.85% month-on-month to 40.12 million units. In January, notebook panel shipments increased by 51% year-on-year, and LCD TV panel shipments increased slightly by 1%. In February, the prices of small-size panels (tablets, mobile phones, and notebooks) all hit new highs since 2020, up 3.4%, 0%, and 5.7% from January, reaching 30.7, 13.5, and 35.1 US dollars per piece, respectively.
Cherries hit a new high in recent years, and the overall price is about 10% more expensive than in previous years
At the moment, greenhouse cherries in Dalian, Liaoning, have been matured one after another, and their prices have hit a new high in recent years. The first fruit began to mature in late February and sold for 120 yuan per catty. The market is the best year in recent years. The price was already lowered at this time last year, and there is no price lower this year. The overall price is about 10% higher than in previous years.
The main soybean futures contract rose by 50% year-on-year, setting a new record high
Affected by the increase in the purchase price of domestic soybeans, the main contract of Bean One Futures continued to rise, reaching a maximum of 6,375 yuan per ton during the session, which continued to set a record high. Bean One Futures mainly refers to domestic non-GMO soybeans, which are generally used in the processing and production of various soybean products. This data has increased by 50% compared with the same period last year.
Supply and demand imbalances and financial factors have jointly pushed up prices in multiple industries
Recently, it seems that many industrial chains have joined the queue of price increases. Whether it is multiple categories of chemical products, bulk industrial products, and industries closely related to people’s food, clothing, housing, and transportation, they have shown a hot trend. This is related to the imbalance of supply and demand and financial factors. And many other factors. The global new crown pneumonia epidemic has slowed down, and terminal industry demand has been significantly boosted, but the supply side cannot meet the downstream demand for various reasons, which has caused an imbalance of supply and demand. The US$1.9 trillion fiscal stimulus policy and its inflation expectations have stimulated financial enthusiasm for investment in the commodity market. Crude oil futures prices have fluctuated sharply, boosting market risk sentiment, and multiple industrial chains have shown upward trends. Based on the current situation, industry insiders said that from a horizontal perspective, the prosperity of many industries such as chemical industry may continue to rise, and it is difficult to see a decline in the short term.
March 18, 2021
Bargain hunters beware: No time to shop for airfreight deals
Finding cargo space on air freighters is a challenge from Johannesburg to Japan
Eric Kulisch, Air Cargo Editor Follow on Twitter Thursday, March 18, 20210 325 6 minutes read
Businesses requiring air transport to move goods are putting on their big boy pants as they accept the harsh reality of the air cargo market in 2021: If you want to play, you have to pay.
Volatility and uncertainty are the watchwords for the air cargo sector, but analysts and logistics professionals say extremely tight capacity and elevated freight rates are here to stay for the rest of the year, with none of the usual doldrums until the fall holiday rush. And finding aircraft with cargo slots is a big challenge all over the world, not just on the major trade lanes connecting China, North America and Europe.
High retail and industrial demand for shipping is putting pressure on the international airfreight sector, which is still about 20% below normal capacity because passenger jet traffic is heavily restricted.
Air cargo carriers are prioritizing customers willing to pay a premium for faster service. At the head of the line are e-commerce shippers, automakers that need components to keep assembly lines running, pharmaceutical manufacturers and retailers like Peloton (NASDAQ: PTON) with disgruntled customers waiting weeks for high-value products on backorder.
Reserving cargo slots with an airline resembles trying to buy tickets to a Beyonce concert before it sells out or trying to buy a home in a hot seller’s market. To beat the competition, you have to move fast and pay top dollar.
“There are not that many lane-pairs these days that are easy to get freight on because the capacity is just not there,” said Benno Forster, head of airfreight operations and procurement Americas for logistics giant DB Schenker. “If you get an offer for a freighter and don’t grab it now, in two hours it’s gone. That happens sometimes in peak seasons, but now it’s kind of daily business.”
Chinese factory production slowed coming out of the Lunar New Year holiday, but the price dip and slight capacity influx appear to be temporary. Logistics providers say rates are starting to climb again out of Shanghai and Shenzhen and likely will trend up the rest of the month. Short-term market softness belies the fact that rates are still two to three times higher than historical standards and transport supply is very low.
In the past two weeks, global airfreight volume increased 14% and capacity eroded about 3.5%, according to World ACD, which compiles market data from airlines. On a global basis, year-over-year, rates are 84% higher than a year ago, it said.
It’s easy to focus on export trade from the world’s manufacturing epicenter, China, to North America and Europe, but industry experts say the shortage of airlift combined with soaring rates is being felt in nearly all trade lanes.
In Asia, demand and rates are especially strong from Taiwan, Singapore, Vietnam, Korea, Japan and Thailand. San Francisco-based freight forwarder Flexport said in a customer update that the yield difference between those markets and China is approaching $4 to $5 per kilogram.
Logistics service providers increasingly are taking more risk to secure space for customers by chartering full planeloads but are confident they will be filled. Flexport, for example, said it has inaugurated a twice-weekly dedicated freighter service from Taipei, Taiwan, to Los Angeles and six weekly controlled freighter flights from Seoul, South Korea, to Los Angeles.
“There has been a huge spike in demand and air rates from both Japan and Korea, and I assume much of that is automotive-related,” said Brady Borycki, executive vice president for global business development at Wen-Parker Logistics.
The highest rates in air cargo at the moment are for shipments originating in South Korea, with demand for COVID-19 diagnostic kits and sea/air transfers contributing factors, World ACD said. Some companies report the rate from Tokyo to John F. Kennedy Airport in New York is as much as $8 per kilogram on some airlines.
Forster added that the capacity squeeze is also significant for Australia and South Africa.
Qantas is operating freighters, but most of its passenger fleet is grounded. Many all-cargo operators are reluctant to offer charters to Australia now because of limited backhaul cargo, the need for multiple crews and tight COVID restrictions, he noted. The Australian government has tried to alleviate the situation for domestic exporters by subsidizing airfreight service with several carriers and logistics companies.
Passenger service to Johannesburg is mostly shut down and the few freighters that fly there are completely full.
Logistics providers and carriers report supply challenges for air transport from the U.S. to Asia, Europe and Latin America, with very high load factors and bookings being made five to seven days ahead of desired transit to secure slots. Flexport said that shipments face rolling backlogs to destinations such as Chile, Brazil and Argentina, and constrained airlift to Central America.
Forster said shipment volumes from the U.S. to Asia — a trade lane that typically has a 70% imbalance that favors inbound freight — has jumped in the past couple months. He attributed the big change to the need for automotive supplies in China.
Air export rates from Europe to Asia, and North and South America, are double what they were in recent months with limited capacity. Carriers report high load factors from major hubs in Europe, mainly due to shipments of automotive, industrial and pharmaceutical products, logistics providers say. The time from booking to uplift is up to 10 days, unless shippers upgrade to express service. Demand out of Europe has increased by more than 30% since the start of the year, with searches for bookings at their highest level since April 2020, according to digital market WebCargo.
Nonstop demand
Record retail sales and unusually high cross-border trade since last summer have been fueled by several pandemic trends: a shift in consumer spending to goods people need, or can enjoy, at home as they shun services and experiences, such as going to the movies; companies still trying to replenish depleted inventories resulting from closed factories and urban lockdowns at the start of the COVID outbreak; and difficulty maintaining stock levels to feed the e-commerce beast, which grew more than 40% in the U.S. last year.
Hot products include sports equipment, digital devices, hot tubs, outdoor firepits, patio equipment, digital devices and office chairs — anything that can be used at home or outdoors for work and leisure.
And demand drivers seem to be gaining momentum.
The U.S. government has begun disbursing $1,400 checks (more for families) as part of its COVID emergency aid plan, which puts money in people’s pockets that can go to more e-commerce orders. Pharmaceutical companies are producing more doses of COVID-19 vaccines, many of which will be shipped by air.
Ocean shipping capacity is so tight that it is taking shippers weeks to reserve a container to move their goods, and many ports are so crowded that vessels have to wait at anchor a week or more for a berth. Container shipping rates are setting records and are up more than 200% from a year ago from China to the U.S. West Coast. Some shippers report paying $6,000, or more, for a forty-foot box, while rates to Europe are in the $10,000 range. Last week, the National Retail Federation raised its forecast for U.S. container imports to 23.3% year-over-year for the first half of 2021.
Expensive and unreliable ocean shipping is forcing many companies to switch to air where possible, especially for goods that have a short shelf life or will decrease in value over time. Logistics providers, such as Kuehne + Nagel, say there is renewed interest in sea-air services, which involve an ocean voyage to a transshipment hub like Dubai, deconsolidation and transfer to the airport for onward transit by air.
Market intelligence firm International Data Corp. is forecasting smartphone shipments will grow 13.9% year-over-year in the first quarter and 5.5% for the full year, pushed by pent-up demand and interest in 5G devices. It also estimates that strong demand for PCs is expected to carry forward into 2021, with shipments growing 18.2% to 357.4 million units and a stronger-than-normal compound annual growth rate of 2.5% for the 2020-2025 period. Manufacturers tend to ship a huge share of both products by air.
The Logistics Managers’ Index shows the cost of freight transportation, warehousing and inventory are all projected to keep growing, even if some incremental ocean and air capacity enters the market.
Meanwhile, Goldman Sachs recently upgraded its estimate for U.S. GDP growth to 7% for 2021, and the Organization for Economic Development doubled its global growth forecast to 6.5%.
“Looking out over the next few months, we see a scenario where capacity could get even tighter and spot pricing could continue to accelerate,” Bruce Chan, vice president of global logistics at investment bank Stifel, said in the March 5 Baltic Air Freight Index newsletter. “Assuming that consumer, and especially e-commerce driven activity persists, and that the industrial recovery continues, more brick and mortar activity and more produce and seafood demand could further tighten capacity as vaccination efforts march forward and life gets back to normal.”
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
March 18, 2021
Bargain hunters beware: No time to shop for airfreight deals
Finding cargo space on air freighters is a challenge from Johannesburg to Japan
Eric Kulisch, Air Cargo Editor Follow on Twitter Thursday, March 18, 20210 325 6 minutes read
Businesses requiring air transport to move goods are putting on their big boy pants as they accept the harsh reality of the air cargo market in 2021: If you want to play, you have to pay.
Volatility and uncertainty are the watchwords for the air cargo sector, but analysts and logistics professionals say extremely tight capacity and elevated freight rates are here to stay for the rest of the year, with none of the usual doldrums until the fall holiday rush. And finding aircraft with cargo slots is a big challenge all over the world, not just on the major trade lanes connecting China, North America and Europe.
High retail and industrial demand for shipping is putting pressure on the international airfreight sector, which is still about 20% below normal capacity because passenger jet traffic is heavily restricted.
Air cargo carriers are prioritizing customers willing to pay a premium for faster service. At the head of the line are e-commerce shippers, automakers that need components to keep assembly lines running, pharmaceutical manufacturers and retailers like Peloton (NASDAQ: PTON) with disgruntled customers waiting weeks for high-value products on backorder.
Reserving cargo slots with an airline resembles trying to buy tickets to a Beyonce concert before it sells out or trying to buy a home in a hot seller’s market. To beat the competition, you have to move fast and pay top dollar.
“There are not that many lane-pairs these days that are easy to get freight on because the capacity is just not there,” said Benno Forster, head of airfreight operations and procurement Americas for logistics giant DB Schenker. “If you get an offer for a freighter and don’t grab it now, in two hours it’s gone. That happens sometimes in peak seasons, but now it’s kind of daily business.”
Chinese factory production slowed coming out of the Lunar New Year holiday, but the price dip and slight capacity influx appear to be temporary. Logistics providers say rates are starting to climb again out of Shanghai and Shenzhen and likely will trend up the rest of the month. Short-term market softness belies the fact that rates are still two to three times higher than historical standards and transport supply is very low.
In the past two weeks, global airfreight volume increased 14% and capacity eroded about 3.5%, according to World ACD, which compiles market data from airlines. On a global basis, year-over-year, rates are 84% higher than a year ago, it said.
It’s easy to focus on export trade from the world’s manufacturing epicenter, China, to North America and Europe, but industry experts say the shortage of airlift combined with soaring rates is being felt in nearly all trade lanes.
In Asia, demand and rates are especially strong from Taiwan, Singapore, Vietnam, Korea, Japan and Thailand. San Francisco-based freight forwarder Flexport said in a customer update that the yield difference between those markets and China is approaching $4 to $5 per kilogram.
Logistics service providers increasingly are taking more risk to secure space for customers by chartering full planeloads but are confident they will be filled. Flexport, for example, said it has inaugurated a twice-weekly dedicated freighter service from Taipei, Taiwan, to Los Angeles and six weekly controlled freighter flights from Seoul, South Korea, to Los Angeles.
“There has been a huge spike in demand and air rates from both Japan and Korea, and I assume much of that is automotive-related,” said Brady Borycki, executive vice president for global business development at Wen-Parker Logistics.
The highest rates in air cargo at the moment are for shipments originating in South Korea, with demand for COVID-19 diagnostic kits and sea/air transfers contributing factors, World ACD said. Some companies report the rate from Tokyo to John F. Kennedy Airport in New York is as much as $8 per kilogram on some airlines.
Forster added that the capacity squeeze is also significant for Australia and South Africa.
Qantas is operating freighters, but most of its passenger fleet is grounded. Many all-cargo operators are reluctant to offer charters to Australia now because of limited backhaul cargo, the need for multiple crews and tight COVID restrictions, he noted. The Australian government has tried to alleviate the situation for domestic exporters by subsidizing airfreight service with several carriers and logistics companies.
Passenger service to Johannesburg is mostly shut down and the few freighters that fly there are completely full.
Logistics providers and carriers report supply challenges for air transport from the U.S. to Asia, Europe and Latin America, with very high load factors and bookings being made five to seven days ahead of desired transit to secure slots. Flexport said that shipments face rolling backlogs to destinations such as Chile, Brazil and Argentina, and constrained airlift to Central America.
Forster said shipment volumes from the U.S. to Asia — a trade lane that typically has a 70% imbalance that favors inbound freight — has jumped in the past couple months. He attributed the big change to the need for automotive supplies in China.
Air export rates from Europe to Asia, and North and South America, are double what they were in recent months with limited capacity. Carriers report high load factors from major hubs in Europe, mainly due to shipments of automotive, industrial and pharmaceutical products, logistics providers say. The time from booking to uplift is up to 10 days, unless shippers upgrade to express service. Demand out of Europe has increased by more than 30% since the start of the year, with searches for bookings at their highest level since April 2020, according to digital market WebCargo.
Nonstop demand
Record retail sales and unusually high cross-border trade since last summer have been fueled by several pandemic trends: a shift in consumer spending to goods people need, or can enjoy, at home as they shun services and experiences, such as going to the movies; companies still trying to replenish depleted inventories resulting from closed factories and urban lockdowns at the start of the COVID outbreak; and difficulty maintaining stock levels to feed the e-commerce beast, which grew more than 40% in the U.S. last year.
Hot products include sports equipment, digital devices, hot tubs, outdoor firepits, patio equipment, digital devices and office chairs — anything that can be used at home or outdoors for work and leisure.
And demand drivers seem to be gaining momentum.
The U.S. government has begun disbursing $1,400 checks (more for families) as part of its COVID emergency aid plan, which puts money in people’s pockets that can go to more e-commerce orders. Pharmaceutical companies are producing more doses of COVID-19 vaccines, many of which will be shipped by air.
Ocean shipping capacity is so tight that it is taking shippers weeks to reserve a container to move their goods, and many ports are so crowded that vessels have to wait at anchor a week or more for a berth. Container shipping rates are setting records and are up more than 200% from a year ago from China to the U.S. West Coast. Some shippers report paying $6,000, or more, for a forty-foot box, while rates to Europe are in the $10,000 range. Last week, the National Retail Federation raised its forecast for U.S. container imports to 23.3% year-over-year for the first half of 2021.
Expensive and unreliable ocean shipping is forcing many companies to switch to air where possible, especially for goods that have a short shelf life or will decrease in value over time. Logistics providers, such as Kuehne + Nagel, say there is renewed interest in sea-air services, which involve an ocean voyage to a transshipment hub like Dubai, deconsolidation and transfer to the airport for onward transit by air.
Market intelligence firm International Data Corp. is forecasting smartphone shipments will grow 13.9% year-over-year in the first quarter and 5.5% for the full year, pushed by pent-up demand and interest in 5G devices. It also estimates that strong demand for PCs is expected to carry forward into 2021, with shipments growing 18.2% to 357.4 million units and a stronger-than-normal compound annual growth rate of 2.5% for the 2020-2025 period. Manufacturers tend to ship a huge share of both products by air.
The Logistics Managers’ Index shows the cost of freight transportation, warehousing and inventory are all projected to keep growing, even if some incremental ocean and air capacity enters the market.
Meanwhile, Goldman Sachs recently upgraded its estimate for U.S. GDP growth to 7% for 2021, and the Organization for Economic Development doubled its global growth forecast to 6.5%.
“Looking out over the next few months, we see a scenario where capacity could get even tighter and spot pricing could continue to accelerate,” Bruce Chan, vice president of global logistics at investment bank Stifel, said in the March 5 Baltic Air Freight Index newsletter. “Assuming that consumer, and especially e-commerce driven activity persists, and that the industrial recovery continues, more brick and mortar activity and more produce and seafood demand could further tighten capacity as vaccination efforts march forward and life gets back to normal.”
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
March 18, 2021
BASF to increase prices for polyurethane systems products in North America
WYANDOTTE, MI, March 15, 2021 – BASF will increase prices for polyurethane systems
products in North America by $0.13/lb for orders shipping on or after March 30, 2021, or as
contracts allow.
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