Input Cost Monitoring: May 2020

English Podcast: Input Cost Monitoring – May 2020


❖ International and domestic price trends for selected fertilisers

From April 2019 to April 2020, the international price (Rand terms) of Urea and Di-Ammonium Phosphate (DAP) increased by 22.6% (from R3 256.80/ton to R3 992.55/ton) and 4.9% (from R5 451.60/ton to R5 719.56/ton), respectively, while Muriate of Potash (MOP) decreased by 1.5% (from R3 922.32/ton to R3 862.56/ton). During the same period the R/$ exchange rate depreciated by 31.1% (from R/$14.16 to R/$18.57).

From April 2019 to April 2020, the domestic price index of Urea and Potassium Chloride (KCL) increased by 14.9% (from 97.9 to 112.5) and 7.4% (from 96.2 to 103.4), respectively, whilst MonoAmmonium Phosphate (MAP) decreased by 2.3% (from 94.5 to 92.3).

❖ Fuel prices & Illuminated paraffin

From May 2019 to May 2020, the price of diesel decreased by 25.5% (from R14.88/litre to R11.80/litre) and petrol by 24.9% from R16.67/litre to R12.52/litre. The price of crude oil (US$ terms) decreased by 49.5% from US$71.51/barrel to US$36.1/barrel, with a 26.2% (from R/$14.08 to R/$17.77)
depreciation of the Rand. The slowdown in the global economy due to Covid-19 has resulted in lower demand. OPEC and Russia initially agreed to reduce oil production, it did not happen. Saudi Arabia further announced to increase production. Therefore, the two major reasons are constant supply and a lower demand.

Between May 2019 and May 2020, the price of illuminated paraffin in both Coastal and Gauteng regions decreased by 59% (from R8.98/litre to R3.68/litre) and 53.5% (from R9.66/litre to R4.49/litre), respectively. On the backdrop of the international oil prices, the performance of the Rand vs the US dollar during April 2020 contributed to the drop of local illuminated paraffin. In May 2020, the price of illuminated paraffin in Gauteng reached R4.49/litre compared to the Coastal regions’ price of R3.68/litre.

❖ Freight Indices

From May 2019 to May 2020, the Baltic Dry Index (BDI) and the Grain and Oilseeds Freight Index (GOFI) decreased by 52.6% (from 1 028 to 487) and 37.9% (from 116 to 72), respectively. The impact of COVID-19 is already impacting the shipping industry as many freight operations were grounded or restricted. In May 2020, the BDI reached 487 index points and the GOFI, 72 index points.

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