‘Extreme’ trucking tightness in Europe underpins elevated base metals premiums
Availability and the costs of trucking are now starting to significantly impact the flow of material in continental Europe, putting pressures on supply chains and keeping base metals premiums elevated, participants have told Fastmarkets
Participants across base metal markets within Europe noted increased challenges, further compounding the tight supply situation in the region.
“Trucking is getting worse and worse; the situation is so difficult. I can’t get any trucks to move units out of Rotterdam over the next week,” a multi-metal trader in the region told Fastmarkets.
“Logistics issues are taking away my ability to do my job; the whole reason I am here is to be able to service people that want short-term access to metal. But I can’t give them that,” a second trader said.
Traders specifically noted that there is “extreme trucking tightness,” which was directly impacting nickel, copper, aluminium, and zinc in particular.
Traders in the zinc market said that the cost of trucking material from Rotterdam to northern Italy was now above $1,500 per truck, with a similar situation arising in Northern Europe.
“Logistic issues are really bad in the north [of Europe], especially Rotterdam and Antwerp, France [and] Germany,” a third trader said.
“Demand is rising but material is not flowing,” a fourth trader noted.
The additional costs involved differ depending on location, but participants estimated additional costs of $25 per tonne for trucking, further adding to what are already record-high premium levels in many of the base metals.
“Premiums must remain high while the current logistics issues persist,” a fifth trader said.
Nickel is currently trading at its highest premium level across all refined products, including nickel briquettes in-whs Rotterdam, which Fastmarkets most recently assessed at $2,000-2,500 per tonne on Tuesday, May 10.
Similarly in aluminium, duty paid premiums continue to hold at record levels as a result of continuing challenges in both logistics and supply. Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam, at $600-630 per tonne on Tuesday.
The trucking issues are also compounded by logistics problems at the Port of Rotterdam which are making it difficult to bring metal into the region.
“There has always been issues at the load destination for months but now there are also issues when you get into Europe, it is taking forever to unload metal,” a sixth trader said.
Labour shortages are causing significant wait times and it is delaying the delivery of many base metals across the supply chain, adding to very immediate spot tightness and keeping premiums at near all-time highs in Europe.
Further to additional costs, the logistical challenges were also affecting contract terms. Traders across base metal markets reported no longer being able to offer guaranteed delivery dates for their consumers.
While some in the market noted that trucking has always been challenging in Europe, there was a consensus that the present situation is worsening.
“We are just fighting fires all day long,” a seventh trader told Fastmarkets.
Issues exacerbated by Russia-Ukraine conflict
The logistical issues which have developed in Europe have been exacerbated by the continuing conflict in Ukraine following the invasion by Russia.
Market participants in the nickel market have raised growing concerns that deliveries of material produced in Russia could soon cease, forcing some in the market to alter their approach in order to guard against risk.
Participants noted that the conflict is directly impacting the availability of trucks within the region.
“There has been a definite decrease in the availability of trucks and drivers,” a market source said, adding that “it’s important to remember that we are not just competing with other metals for space, but other industries too.”
Outside of competition from other industries, participants noted that many trucks were now being used in order to support the Ukrainian war effort.
“Trucks are being used for Europe and Ukraine, not even weapons, but also for helping people with supplies and goods, there’s a high number of trucks used on these routes,” the third trader said.