Is there hope for better price-settings in the cable industry?

As everyone in the cable industry might know, the C2 price has been showing an upward trend for about 1.5 years. This trend has continued during the first months of 2022. However, we see some stabilization but aren’t sure this will stay. The summertime is ahead but due to global market situation on crude oil and gas it would be a rough guess what the price of C2 will do. It is likely that it will increase within this or next month.

Material pricing

Polyolefins

The C2 price has, of course, a direct impact on our polyolefin prices. These prices have been rising every month in the last 1,5 year as well. Partly due to the C2 feedstock developments but also other key factors on logistics and availability versus the increasing market demand have an effect on the development of the price settings.

Raw materials

We as HEC-Holland have a wide range of raw materials. We have different types of tapes, wires, yarns, FRP rods and so on. In 2021, the price of these materials increased the most, but this year they continued to increase every month. It is hard to predict how long this will continue to rise. Or will the stabilizing C2 price directly affect these materials?

Logistical pricing

In addition to the product price increase, the logistical/transport prices have also been rising for the last few years. Before COVID-19, at the beginning of 2020, the price for a 40 feet sea container from Shanghai to Rotterdam was about $2,000. At the peak, at the beginning of 2022, this price went over the $15,000. Hereafter, the prices went down a bit, and now it’s stabilizing for months. The sea freight price for a 40 feet container is now about $11,000.

In contrast to the stabilizing sea freight prices, road transport has increased a lot lately. The main reason is the war between Russia and Ukraine. This war resulted in high fuel prices and a shortage of available drivers. Lastly, the workload has also increased since international traffic is constantly increasing.

Conclusion

To conclude, the prices of our products and the transport prices are still rising, but there is some hope for improvement. But, no one can predict the future. We recommend that you contact your account manager to discus what possibilities HEC-Holland is able to offer you, in order to secure your (future) production requirements. Furthermore, he or she is able to update you about the latest market developments and trends. This could be helpful to keep on track and think strategically ahead.

Suez Canal – Global supply chain impact

Evergreen Suez Canal

Global supply chain impact is caused by imbalance in available freight space and equipment.

The supply chain consequences of the Suez Canal blockade in March will be clearly felt in the coming months. In our operations this will mostly affect the operational activities and pricing for the coming period. Where there were hopes for more stability, prices in container shipping are still sky-high. Also the tariff levels may reach new record highs as of May 1. We continue to be confronted with limitations and delays due to blank sailings, equipment shortages and congested ports worldwide.

Partly because of the aforementioned congestion in the Suez Canal, we are also seeing extra pressure in the availability of containers and the spot market. The shortage of ship space and containers will largely persist this year, resulting in high transport rates and operational restrictions. This is predicted by a maritime research firm Drewry in its latest report about developments in the container market. The prospects also note that there will be considerably more orders for the construction of new ships. There are 1.77 million TEU across 166 ships ordered in Q1 only. However, whether this capacity expansion will eventually lead to the extremely low rates of few years ago seems unlikely, according to Drewry.

Our advices to prevent possible inconveniences in your supply chain 

We would like to advise you to pay attention to matters listed below in order to limit any nuisance and to anticipate the aforementioned market situation:

  • We recommend booking your shipments well in advance. This enables us to provide you with the best possible arrangements.
  • Prioritize the most critical shipments as capacity is scarce and we face constraints and delays.
  • Include longer lead times in your supply chain calculations. Keep in mind that the average delay is currently almost 7 days.

The aforementioned challenging and volatile market situation puts a lot of pressure on our operation. Therefore, we must continue to emphasize that the options are limited and ask you to continue to take into account possible delays in the coming period.

We are here for you

We at HEC-Holland do everything we can to continue to serve you optimally and to keep any inconvenience to a minimum. Please feel free to consult your account manager and ask for our possibilities and solutions. We will also keep you updated related to this theme and future developments. 

If any questions arise, please also get in contact with our team!

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