Steel transport costs still 150% higher due to Suez crisis: Italian steel body

The cost of shipping steel is still more than 150% higher than before the security crisis in the Red Sea forced ships to bypass the Suez Canal, Assofermet, the Italian association of metal stockholders and importers, said.

For steel that traditionally passed through the Red Sea, the average price of transport by container ships has gone from $1,200 per twenty-foot equivalent unit in December to around $3,000/TEU, with all major container shipping companies continuing to shun the Suez route.

The cost had steadily decreased through February from its peak of $5,300/TEU in late January, but “the situation continues to be highly volatile and unpredictable, because freight prices change suddenly and make it impossible to hypothesize the evolution of costs from one day to the next,” Gian Pietro Alberti, Member of the Technical Committee of Assofermet Acciai, said.

The container freight rate for shipping from North Asia to the Mediterranean rose from $1,600/FEU Dec. 1 to $7,000/FEU Jan. 10, then a 16-month high, before easing to $4,000/FEU March 11, according to assessments by Platts, part of S&P Global Commodity Insights. One forty-foot equivalent unit (FEU) is equivalent to 2 TEU.

The Red Sea crisis has also driven up lead time — to transport steel to Europe from countries in the Far East, it takes 15-25 days more than the 30 days it previously took.

Increasing freight rates along with concerns about the exhaustion of safeguard quotas made EU buyers hesitant about booking tonnages from Asia.

The EU has had safeguard measures in the form of tariff rate quotas for imported finished steel since 2018. Market participants have expressed concerns about having to pay compensation fees to affected exporters if the measures come to an end in mid-2024.

Platts assessed the price of imported hot-rolled coil in Northwest Europe at Eur640/mt ($699/mt) CIF Antwerp Dec. 1, rising to a high of Eur680/mt Jan. 12. By March 11, it had dropped to Eur614/mt.

In Southern Europe, the price of imported coil was assessed at Eur640/mt CIF Italy Dec. 1 and at a high of Eur680/mt Jan. 25. On March 11, the price had fallen to Eur590/mt.

On long steel products, Turkish rebar market sources said sales to some export destinations — including its top export markets, Israel and Yemen — had been hampered by the Red Sea security situation, after already being affected by the Israel-Hamas war. Demand is expected to remain slow until these situations are resolved, with further pressure on Turkish export rebar prices expected.

Platts assessed Turkish exported rebar at $587.50/mt FOB March 11, flat on the day.

Author Annalisa Villaannalisa.villa@spglobal.comRituparna Nathrituparna.nath@spglobal.comRabia