Soaring 1000%! 'Wealth but no goods' is coming!

Since the beginning of 2021, the prices of various chemicals have continued to soar and the supply shortage has become more and more intense. The quotation of 40D, a raw material for textile chemicals, for spandex products has reached RMB 71,100 per ton, a cumulative increase of 130.1% during the year, and the three-time rise in a month also makes it difficult for downstream customers to digest it, which can be called the "dark horse" in the raw material industry. The soaring price of spandex is naturally inseparable from the stimulus brought by the popular parade. On the one hand, it has been in short supply as a raw material for important anti-epidemic material masks for a long time; on the other hand, affected by the epidemic, people’s demand for the comfort of clothing has further increased. As an important raw material for lightweight and comfortable elastic fabrics, the demand for spandex It has also been greatly stimulated.

The epidemic continues to spread in many countries, and export trade is almost suspended
The new round of mutant viruses has plunged overseas countries and regions such as India, Vietnam, and Malaysia into the "deep", with backlogs of orders, park closures, business closures, production interruptions... The export of a variety of products has been affected and even faced disruptions, which also means that there are many in our country. High-end chemical products imported from overseas have suffered a "supply cut crisis."

Affected by the epidemic, India's garment industry suffered heavy losses. 60% of India’s knitting managers are invested in Tirupur City in the southern state of Tamil Nadu. More than 17,500 garment factories in this area cannot carry out normal production and operation under the epidemic. The spread of the epidemic has caused local garment factories to exceed Two months can not meet customer order demand.

According to Japanese media reports, since February 2020, a total of 1,600 companies in Japan have closed down due to the epidemic. Recently, Japan stated that the Bank of Japan will extend its assistance to companies from the epidemic until March 2022 and will introduce new loan measures in 2021.

Malaysia's first phase of "total blockade" measures originally scheduled to end on June 14 was extended for another 14 days to end on June 28. The production and transportation of local furniture companies have been affected to varying degrees. The accumulation of inventory, the shortage of containers, and the surge in shipping freight have all caused delays in orders and extended delivery. It is reported that the logistics restrictions in the region may continue until the end of this month. Shipments in some industries will be delayed by 1-2 months or even longer.

The epidemic situation in Vietnam is severe. The epidemic has spread rapidly in the industrial areas of Bac Giang and Bac Ninh provinces with high worker density. As a result, production in the parks has almost ceased, and the chemical and industrial industrial chains are severely affected. At present, Bac Giang Province has temporarily closed 4 industrial parks in the province, 3 of which have Hon Hai factories, which are mainly Apple foundries.

Port suspension, frequent port blockage, port stagnation, and port hopping
According to Guangzhou Nansha Container Terminal, from 12:00 on June 23, all foreign trade export orders will be suspended. It is reported that this is a temporary measure after the terminal is over-saturated, and there is no notice when it will resume. However, the situation at Shenzhen Yantian Port was obviously more serious before.

Shenzhen Yantian International Container Terminal recently announced that due to increasingly serious delays in shipping schedules, the storage yard in the Yantian port area is extremely dense, which seriously affects the operation efficiency of the terminal and also causes traffic congestion around the port area. In order to improve the above problems, Yantian International decided: 1. During the period from 22:00 on May 25th to 23:59 on May 27th, no export heavy containers will be accepted; however, during this period, imported heavy containers and empty containers will be maintained. Normal operation. 2. From 00:00 on May 28th, the acceptance of heavy containers will resume, and only ETA-4 (that is, the export heavy containers within four days before the expected arrival date of the ship) will be accepted. This measure will be implemented from May 28 to June 3.

As the most important international port in South China and one of the world's largest single-handle container terminals, Yantian Port is responsible for more than one-third of Guangdong's foreign trade imports and exports, and one-fourth of the country's trade with the United States. The container throughput of Yantian Port in Shenzhen last year was nearly 50% higher than that of Los Angeles, the busiest container port in the United States. According to industry insiders, the decline in Yantian Port’s capacity has spawned another global shipping crisis, which may severely damage the global supply chain.

Since the emergence of confirmed cases in Yantian Port, various ports in southern China have produced a "butterfly effect", and the problems of port blockage and port detention have occurred frequently. At the same time, there are more and more delays, congestion and container availability problems abroad, and the global container logistics supply chain is seriously blocked. According to public data, 101 ports around the world have reported disruptions such as congestion, and 304 ships lined up for berths.

In order to minimize the interruption of scheduled flights, large liner companies such as Maersk and ONE have announced the suspension of calls to Yantian on multiple voyages.

...

Recently, the Shenzhen Municipal Government Information Office stated that the current daily throughput of Yantian Port has exceeded 27,000 TEUs. It is expected that normal production levels will basically resume on June 24, and Yantian Port will gradually restore production capacity. However, the impact of the epidemic is far from over so soon, the knock-on effect is still in effect, and it will take some time for it to be completely unblocked and resume as usual.

Soaring by 1000%, seaborne price hikes hit a record high!
Affected by the continuous bottleneck of Yantian Port, the number of queuing ships, jumping ports and stranded containers at the port has continued to increase. The CEO of Maersk imposed a port congestion surcharge (PCS) of $450/ton on cargo passing through Yantian Port. From July 1st, more and more shipping companies will join this "queue" for price increases.

Overseas, the container freight rate from Asia to the Nordic mainland rose by US$5,000/FEU to US$17,000/FEU, which was higher than the US$1,375/FEU a year ago, a 12-fold increase and a record high.

Recently, ocean freight rates have continued to increase, and they have risen many times over the same period last year. The FAK rate from Asia to Northern Europe is approaching US$20,000 per 40 feet-which is an increase of 1000% compared to the spot rate a year ago! Hapag-Lloyd, Mediterranean Shipping (MSC), COSCO Shipping, Matson, Kambara Steamship and other shipping companies have announced several rounds of fee increase notices. At present, the number of congested containers in Yantian Port has exceeded the number of containers congested in the Suez Canal three months ago. Congestion has also occurred in many ports in southern China. Superimposed on the arrival of the peak shipping season in the second half of the year, the situation is expected to be more severe.

The port suspension brought more than just the problem of delayed delivery of goods, and the rising ocean freight rates since the beginning of the year have also virtually increased the cost of foreign trade import and export enterprises. This part of the pressure will be transmitted step by step, and eventually products that are closely related to our food, clothing, housing and transportation will experience price increases. More and more companies will use price increases to offset and shift the multiple pressures on the cost side.

There are more cruel truths behind the price increases of products in many industries. Since 2021, international commodity prices have continued to rise. Industry insiders said that after the frequent occurrence of black swan events in 2020, the world seems to have opened a "Pandora's box", and more unexpected things have frequently appeared. As the country with the largest global demand for commodities, China is also a major importer. This means that the rise in commodity prices triggered by the US stimulus policy may push up my country’s import costs, while oil inventories continue to decline, geopolitical tensions in the Middle East, and global The economic policies of these countries have also become the driving force behind the increase in prices. my country should be alert to the crisis of "imported inflation".