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. This shows the price settings in the cable industry are hard to predict at the moment.

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 price settings in the cable industry, 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 discuss 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.

Covid-19 and the effect on feedstock prices and sea freight rates

feedstock prices and sea freight rates

Covid-19 and the effect on feedstock prices and sea freight rates

 

We are not only facing unusual times due to Covid-19, but also see that it starts to influence our business. In some feedstock indicators, such as non-ferrous metals or polymer, there is a strong increase due to market demand versus availability. One of the key factors is the strong rebound effect of the business in Asia exceeding 2019 figures by average 6-7%. We clearly see that covid-19 has a strong effect on feedstock prices and sea freight rates.

The last couple of months we see strong developments on (sea) freight notations due to a shortage on ship space and imbalance on equipment (containers). This lead to a strong increase at record breaking heights which hasn’t been seen for more than a decade.

In December, we expected the sea freight rates to ease by the end January. Because Asia would prepare for the celebration of the Chinese New Year. However, there still is an imbalance on equipment, failing synchronizing container demand versus availability. Supply chain system problems with ocean and/or feeder vessels are to be well connected. This results in delays in the delivery.

HEC-Holland is doing the very best to make sure the market demands cover your production requirements. Nevertheless, at this stage we cannot predict how prices and rates will develop in the future. It will certainly be a dynamic half year. We will stay in contact with you on how we can assist you in any way. At this moment we are unfortunately forced, due to the unstable market conditions, to call for a “Freight Adjustment Surcharge”. All depending on the type of product. We will do our best to minimize costs and prices for you.

More information?

For more information, please contact your account manager. They can tell you how we can secure our joint business and how it might effect the commercial conditions. Of course, we try to minimize costs. We do have to be realistic under the present circumstances which count for all parties.