Participants in the global feed additive markets have identified growing concerns and increased activity following the escalation of the conflict in the Middle East, noting that the event is likely to drive up sea freight costs and increase shipping times.
“We expect a significant increase in freight costs; higher crude oil prices will add additional pressure through bunker surcharges. Energy-intensive products will face upward pressure as well, with rising crude prices. Uncertainty and psychological effects will also result in a firmer stance on nearly all products – freight-sensitive items will show the first clear reaction,” commented a European trader.
A second European trader echoed these concerns, confirming an increase in freight costs. “People are worried. There is more activity,” they said.
According to the latest Drewry’s report from February 26, spot rates on Asia–Europe trade routes continued to decline, with Shanghai–Rotterdam rates falling 1% to $2,094 per 40ft container and Shanghai–Genoa rates dropping 2% to $2,826. While volumes typically rebound in March as Asian factories reopen, rates are expected to remain under pressure due to rising capacity. We therefore expect spot rates on these routes to soften in the coming weeks.
A feed-grade vitamins producer highlighted the already tight supply for key vitamins, including vitamins A, E and B3, particularly of EU origin, and its significant impact on logistics.
“The supply-demand situation remains very tight globally. Although some markets are already partially covered for Q2, mainly in Europe…this creates uncertainty regarding future availability. Tightness in EU-origin material is driving price differences based on origin. These developments are occurring against the backdrop of ongoing military actions in the Middle East, which are directly impacting sea freight and are expected to further increase shipping times,” the producer commented.
Another producer acknowledged uncertainty. “We are checking the situation carefully as well – Indeed it could have an effect on availability since now all vessels need to be sent to Europe via Africa, Oil prices may increase and it is rather unclear whether the conflict will only last 4 weeks,” said the source.
The majority of global feed additives used in animal nutrition are imported from China and other regions into the Americas and Europe, which means that any logistic disruption is considered a key price driver for these markets. Prices for deliveries in Europe have been steady to slightly firmer over the past two weeks, amid muted activity with China’s nNew yYear holidays. The markets are expected to be more active from this week onwards.
According to Dow Jones, oil prices are expected to remain elevated in the coming days as the conflict escalates in the Middle East. They are assessing the impact on supplies, particularly flows through the Strait of Hormuz, a conduit for more than 20% of global oil.
Crude futures surged more than 8% on Monday to multi-month highs following U.S. and Israeli attacks on Iran that killed Supreme Leader Ali Khamenei, with Tehran striking back against Israel and at least seven other countries.
Written by Karolina Zagrodna
