In a press release published on March 11, Assofermet, the association representing Italian distributors of scrap, raw materials, and steel products, reported that the freight rates for steel going to Europe through the Suez Canal have risen by 150 percent since the beginning of the current crisis in the region.
The average cost of freight for container ships that used the Red Sea as their favorite route has risen from $1,200/TEU in December 2023 to almost $3,000/TEU. The highest rate was recorded at the end of January at €5,300/TEU.
In this regard, Gian Pietro Alberti, a member of Assofermet Acciai’s technical committee, declared, “The situation is still highly volatile and unpredictable, because the freight rates keep changing all of a sudden, making it impossible to foresee the evolution in price changes.” As a consequence, all the main shipping companies are avoiding the Suez Canal, preferring to circumnavigate the Cape of Good Hope. Along with freight rates rising, delivery times are also increasing. If the shipping from non-EU countries via the Suez Canal required around 30 days before the crisis, now it takes between 45 and 55 days.
This situation has a significant impact on exports of steel from non-EU countries to Italy and Europe, because most of the exports normally passed through the Suez Canal. In 2023 73.8 percent of the steel imported into Italy (7.42 million mt) came from China, Vietnam, Japan, Taiwan and South Korea, and all these six countries’ routes involved the Red Sea. The same applies to the European Union in general. Of the 29.3 million mt of steel imported, 16.14 million came from the above-mentioned countries. In 2023, the main steel supplier to Italy was India, with 1.3 million mt, followed by China, with 1.1 million mt.
In the light of this, it is clear that the Red Sea crisis is also affecting the Italian and European manufacturing sectors.
1 TEU = 25 mt of steel