Ball & Doggett says shipping reliability is improving but several key drivers are placing further upward pressure on prices, including souring energy costs, pulp shortages and currency volatility. “Congestion is forecast to remain at key ports until the first half of next year.”
In its Supply Chain Update September 2022, Australia’s largest distributor of printable materials and consumables says Australian businesses continue to face many challenges, with rising prices, labour concerns and supply chain issues being the top concerns.
“There are four main elements to the sustained higher price environment we continue to find ourselves in. These are energy, container availability, pulp and currency fluctuations. All of these are in demand globally and therefore prices are continuing to rise.”
B&D’s September Update notes:
“According to JP Morgan’s Business Leaders Outlook, Australian business leaders expect the war in Ukraine to impact their business and those anticipated impacts span a number of problems including energy."
Natural Gas
- Gazprom announced technical problems with Nord Stream I pipeline; gas flows via this pipeline were reduced by 60%. A political motive to reduce supply to Europe is likely, as the flow via alternative routes has not been increased.
- Germany, Czech Republic, Austria, Slovakia, and Italy report 50% lower natural gas deliveries from Russia following the Nord Stream I announcement. Russian deliveries to France were stopped due to the outage.
- Natural gas prices for delivery in the next months increased by 50-60% due to fears of a very tight supply market.
- Reduction decreases current European imports by 8-9%, refill speed of storages is expected to decrease. Storages across Europe are currently back to 52% inventory level on average, after only 25% at the end of March.
- US LNG export terminal Freeport is shut down following a fire. US LNG exports will decrease by around 15-20% until the end of this year.
Electricity
- An increase in natural gas prices also significantly impacted power futures, while spot prices can, on some days, be lower depending on renewables production.
Crude Oil
- Oil prices are trending lower on growing fears of an economic downturn.
Coal
- Countries in Europe are considering reopening already mothballed coal-fired power plants. Increased coal demand from Europe could further tighten the thermal coal market.
International Shipping
“International shipping container prices will fall slowly over the coming year but are unlikely to return to pre-pandemic levels, and normal ocean freight conditions are not expected before 2024, according to analysis by Rabobank," the report said.
"Although inflation and record-low consumer confidence were exerting downward pressure on ocean rates, container rates remained high because imbalanced global trade was hindering cost-effective repositioning of empty containers, RaboResearch global supply chain analyst Viet Nguyen said on a podcast.
"Rabobank expects schedule reliability for containers to also recover, albeit slowly. Congestion is forecast to remain at key ports until the first half of next year.
"The bank’s analysts said reliability of ocean container freight schedules had dropped from almost 80 per cent pre-pandemic to about 30 per cent. Continued port congestion and the slow addition of new shipping capacity were contributing to uncertain reliability."
Click here to view the full report.
https://www.ballanddoggett.com.au
