Carbonyl Iron Prices Surge in June 2024 Amid Global Supply Chain Disruptions

In a significant market development, the prices of Carbonyl Iron, a highly pure form of elemental iron prized for its fine particle size and high surface area, have seen a marked increase throughout June 2024. This price surge has been observed across major importing and exporting nations, with ripple effects felt throughout various industries that rely on this versatile material.

Carbonyl Iron, produced through the unique carbonyl process involving the reaction of iron pentacarbonyl with hydrogen gas at high temperatures, is a crucial component in sectors ranging from electronics and telecommunications to powder metallurgy, medical applications, and automotive manufacturing. The importance of Carbonyl Iron in the pharmaceutical industry, particularly in iron supplements for treating iron deficiency anemia, underscores the far-reaching implications of this price hike.

The primary drivers behind this Carbonyl Iron price escalation are multifaceted, encompassing issues from raw material costs to global logistics challenges. A key factor has been the persistently high prices of iron ore, the primary raw material for Carbonyl Iron production. May 2024 saw robust demand for steel both within and outside China, leading to increased utilization of local steel mills. China's steel production in May surged by 8.1% month-on-month and 2.7% year-on-year, reaching 92.86 million tons – the highest monthly figure since March 2023. Concurrently, steel exports rose by approximately 4% month-on-month providing strong cost support for Carbonyl Iron prices.

The global shipping industry's ongoing turmoil has significantly exacerbated the situation for Carbonyl Iron manufacturers and traders. An unprecedented surge in freight costs, coupled with a severe shortage of cargo containers and extended lead times for overseas manufacturing, has created formidable challenges. The average cost of a standard 40-foot cargo container from East Asia to the North American West Coast skyrocketed by 69% between April 19 and June 24, 2024. The sharp rise is due to several reasons: militant attacks in the Red Sea forcing longer shipping paths, inaccurate forecasts causing capacity shortages, and delays in container pickups due to increased demand ahead of tariff changes in the US and Latin America.

China, a key exporter of Carbonyl Iron, has been particularly affected by these supply chain disruptions. The container shortage in northern China has reached crisis levels, with many manufacturers forced to turn away orders due to the inability to secure sufficient containers for export. Major ports like Shanghai have experienced severe congestion, with vessel waiting times extending from three to 14 days.

The repercussions of these disruptions have been felt globally in the Carbonyl Iron market. The United States, as the world's largest importer of Carbonyl Iron, has faced substantial shipping delays and port overcrowding due to increased import volumes and haulage shortages. Similarly, Asian countries heavily reliant on the Red Sea route, such as India, Sri Lanka, and Bangladesh, have encountered significant challenges in Carbonyl Iron imports, including escalated shipping costs, delayed shipments, and prolonged clearance processes.

Looking ahead, market analysts at ChemAnalyst project that Carbonyl Iron prices may stabilize and potentially decline in the coming months. This forecast is based on expectations of increased supplies coupled with a seasonal decline in steel demand, which is anticipated to exert downward pressure on the iron ore market and subsequently on Carbonyl Iron. The uncertainty surrounding proposed restrictions, combined with the onset of the low steel demand season, has already led to a slight reduction in iron ore prices in early June. Reduced consumption of raw materials has resulted in increased supply and port stocks, further contributing to the potential downward pressure on Carbonyl Iron prices.