The crisis in the Suez Canal has raised rates for steel transportation to Europe by 2.5 times

The crisis in the Suez Canal has led to a 150% increase in freight rates for steel going to Europe. This was reported by the Italian association Assofermet, which represents distributors of scrap, raw materials and steel products, Informare reports.

The average freight rate for container ships using the Red Sea has increased from $1200/TEU in December 2023 to almost $3000/TEU at the moment. The highest rate was recorded at the end of January – $5300/TEU. During February, the price was declining from the January peak.

According to Jean Pietro Alberti, member of the technical committee of Assofermet, the situation is still extremely unstable and unpredictable. According to him, freight rates continue to change unexpectedly, making it impossible to predict the dynamics of costs.

As a result, all major shipping companies are avoiding the Suez Canal, preferring to bypass the Cape of Good Hope. As freight prices rise, delivery times also increase. Before the crisis, delivery from non-EU countries through the Suez Canal took about 30 days, while now it takes 45 to 55 days.

Assofermet also recalled that most of the steel shipped to Italy and Europe passes through the Suez Canal. In 2023, as in previous years, India, China, Vietnam, Japan, Taiwan and South Korea were among the leaders in exporting steel products to the region, with steel traditionally shipped through the Red Sea. In total, in 2023, these countries exported 5.48 million tons of steel to Italy, or 73.8% of the total volume imported from third countries (7.42 million tons).

As GMK Center reported earlier, Chinese suppliers are planning to continue shipping steel through the Red Sea despite the attack on the True Confidence vessel on March 6, which was carrying more than 42,000 tons of steel from Tianjin, China, to Jeddah, Saudi Arabia. This was the first Houthi attack on Chinese steel exports and the first fatal attack in the Red Sea (three crew members were killed). Chinese traders expect freight and insurance costs on the route to rise.