I wanted to reach out to each of our partners and provide some insight into what ANSAC and many of you are experiencing in the marketplace.
The global economic recovery from the COVID-19 lows of 2020 has been faster than predicted, with stronger than anticipated demand. As a result, demand has outstripped supply and worldwide supply chains have not been able to keep up. Not surprisingly this has caused a dramatic increase in the costs to transport products, as ocean freight costs (bulk vessel, containers and fuel) have all increased substantially. All signs indicate that the higher cost environment will stay with us for the foreseeable future, as has been reported by many of the banks and economists.
We therefore have no choice but to pass through a Vessel Fuel Surcharge on all sales to destinations served by ocean vessel freight (i.e., it will not apply to Mexico). The Vessel Fuel Surcharge will apply when the monthly average price for LSFO 0.5% in Singapore (“Singapore Average Price”) as reported by Platts Marine Fuel Bunker 0.5% (Ticker: MFSPD03) exceeds $US 380.00 per MT and will be effective as of July 1, 2021.
The Vessel Fuel Surcharge of $US 0.15/metric ton of soda ash will be applied for every $5.00/metric ton increase in the Singapore average price above $US 380.00/MT and will be added to all invoices for vessel shipments of soda ash dated on or after the 1st day of the second calendar month thereafter pursuant to the calculated Singapore average price.
For example, the Vessel Fuel Surcharge to be applied beginning July 1st would be based on the May Singapore average price. The May Singapore average was $490.17/MT, the July Vessel Fuel Surcharge added to the invoice would be $US 3.45/MT of soda ash. If Platts ceases reporting of the monthly average price of 0.5% LSFO available in Singapore, ANSAC will adopt a suitable replacement source of price and/or measure.
If you have any questions about this program, please contact your local ANSAC sales representative.
Thank you and best regards,
Jeffrey S. Jacobson