Freight rates soar as Russia-Ukraine tensions threaten manganese...

Freight rates soar as Russia-Ukraine tensions
threaten manganese miners’ margins
The increase in political tensions between Russia and Ukraine has
driven up fuel prices, which has resulted in a jump in quotes for the
shipment of manganese ore from South Africa to China, and this will
probably be passed on to ore producers needing to ship material,
sources told Fastmarkets on Wednesday February 23.
Shipping lines have been quick to raise their rates for the Port
Elizabeth to Tianjin route, which is used by manganese ore
producers, in response to escalating tensions between Russia and
Ukraine that have resulted in Western sanctions on a number of
Russian banks and high-net-worth individuals.
The tensions have been pushing up prices for various commodities
amid uncertainty around factors including supply, logistics and the
ability to do business with Russian entities.
“[The situation] is now affecting freight significantly while bunkers
increase and uncertainty builds,” one market participant said.
Participants in the manganese ore market reported that rates for
Port Elizabeth to Tianjin had already been ratcheted up to around
$55 per tonne on February 23, from around $45 per tonne on
February 18.
Freight rates had previously been on a downward trend since
October 2021, when they were around $60 per tonne.
Ore producers in South Africa will attempt to pass on the
increased costs to ore consumers in China, who usually buy on a cif
Tianjin basis, sources said.
But ore buyers in China have been reluctant in the past to accept
increasing freight rates, preferring miners to shoulder the cost,
according to ore producer sources.
If miners do accept the jump in freight rates but cannot pass on
the cost, it will squeeze their profit margins at a time when logistics
expenses have already been rising due to higher trucking costs.
“This is going to financially hurt,” the market participant said.