Suez Canal Authority (SCA) announced earlier this week that it will increase transit fees by 5-15 percent from January 15, 2024. This development is expected to have a definite impact on the raw material and steel sector since the cost of the transportation will rise substantially and will be reflected in the delivered prices. In January this year, SCA increased transit fees by 15 percent for all vessels and by 10 percent for dry bulk and cruise ships.
According to the official statement, the 15 percent increase in the normal SCA transit fees will be applied to crude oil tankers, petroleum product tankers, liquefied petroleum and natural gas carriers, containerships, vehicle carriers, cruise ships and special floating units. The five percent rise in fees will in its turn be applied to dry bulk and general cargo vessels and RO/RO ships. SCA will exclude from the increase the container vessels “directly coming from ports in North-West Europe and directly heading to the ports in the Far East.”
Steel and raw material market players foresee the SCA increase in fees will push up freight charges for vessels passing through the canal, which will add a further challenge to the already volatile cost of transportation. “Based on this, our cargoes will be mostly subject to a five percent increase and for container shipments it will be 15 percent. The extra cost paid to the authority is around $8-10/mt,” a trader told SteelOrbis. “It is hard to tell the new fee level since it is based on many factors such as vessel size, cargo weight, type of vessel, etc.,” an Egyptian producer said.
According to steel market players, the freight rates in the Mediterranean Sea lately have increased substantially due to the effect of the Israeli-Hamas conflict. “It is pushing oil prices, fuel is going up, insurance costs as well, and there are few ships that want to be in the Suez Canal and Mediterranean Sea,” a North African large producer stated. “[Freights] for capesize went up from $8.95/mt to $16/mt and for baby cape from $13/mt to $25/mt,” he added.