US based trading house, Osirius Group, produces a performance bond after two months delay to supply the badly needed political commodity, sugar, in the nick of time.
In the bid opened early November last year, the company which is relatively new to the Ethiopian market was selected to supply 200,000 metric tons of sugar owing to its lowest bid offer compared to other two bidders.
For the past several weeks, the Ethiopian Sugar Industry Group, the commodity client, laid in patient wait for the firm to produce its performance bond to open the letter of credit (LC).
According to the information Capital obtained from Reta Demeke, spokesperson of the Group, it has been revealed that the company has come up with the performance bond.
“The precondition that was supposed to be finalized locally has been fully concluded and the LC has already been opened to harmonize the import,” he said, adding, “the only thing that remains is for the company to finish the process that it has with its bank abroad.”
In the bid documents, the Group expressed its desire for the commodity to be transported up to Djibouti through eight shipments at 25,000 metric tons each. However it stated that the first batch was expected to reach on the third week of November and the last one at the end of January 2023.
Owing to the delay, the dispatching period has been revised explained the spokesperson, “The sweat will be transported in four rounds at 50,000 metric tons each.” Meanwhile he did not provide details when the first batch will arrive at Djibouti since the company is expected to conclude the process with its foreign bank, “we hope the company will settle the process in the coming few days and start the shipment soon.”
On the FOB price offer, Osirius stated that it will supply the commodity on a letter of credit (LC) at sight at USD 545 per ton, USD 522 on 12 months on differed LC and 18 months differed LC. The bid winner cited that the loading port will be Brazil.
The Singaporean company, Agrocorp, which won the last sugar bid opened a year and half ago, offered USD 549.95 for payment at sight and USD 608.75 for 12 months differed LC.
ED and F Man, a British commodity firm, offered USD 850, USD 900 and USD 1,100 per ton for payment at sight, 12 months and 18 differed LC respectively.
The Group, a public enterprise, has accepted Osirius’s offer to supply the sweat with 12 months differed LC scheme with the total cost of the 200,000 metric tons of sugar at USD 11.4 million.
In the 2021/22 budget year, the Group floated several international bids, but was unable to buy the commodity in the year, except the 100,000 metric tons that was supplied early in the year.
Currently, four of the eight sugar mills are in operation, while the market is filed by the commodity currently supplied through francovaluta. For instance, about a month ago, a vessel called Pegasus 01 arrived in Djibouti with 16,000 metric tons of sugar.
Osirius Group comes in clutch to deliver much needed sugar
ECX inks agreement with Ethiopian Artificial Intelligence Institute to launch online trading
The electronic trading platform, Ethiopian Commodity Exchange (ECX), signs an agreement with Ethiopian Artificial Intelligence Institute (EAII) which will enable the trading platform to embark on an online trading scheme besides the existing electronic trade that is carried out at the head quarter and regional branches.
The online integrated commodity exchange trading system will also provide other services that are currently provided at the center, remotely.
As per the agreement, EAII will develop the technological infrastructure that is expected to be finalized before the end of the current budget year.
Import inputs shortage paralyzes leather industry output
Shortage of import inputs renders 10 out of 28 leather factories /tanneries to halt production as the remaining 18 work under minimal capacities, the Ethiopian Leather Industries Associations (ELIA) reveals.
“The sector is challenging to operate since almost 99 percent of inputs like chemical, accessories and others are imported for factories,” said Solomon Getu, secretary of ELIA, adding, “The industry is mostly dependent on foreign currency to import inputs from the existing 28 leather producing industries, 10 of which have fully stopped their production. From the remaining 18, only 8 are working at 40-50 percent production capacity while the rest ten are working with less than 15 percent of their capacity.”
It is to be recalled that a few months back the association had requested the relevant government bodies, Ministry of Industry and National Bank of Ethiopia (NBE) to re-amend the forex retention for factories to access more foreign currencies they earned from their export earnings to import inputs.
The association expressed that the leather industry aught at least to access 40 percent of the foreign currency earned for the purpose of import inputs.
The retention and utilization of export earnings and inward remittances directives no. FXD/79/2022 that was amended and became effective on January 6 on its article 4.1 stated that banks are required to surrender 70 percent of the foreign currency earnings from export of goods and services, private-transfer and NGO’s transfer to the NBE.
However, as Solomon indicates, no response has been given by the relevant bodies.
With the leather tanneries and leather product manufacturing industries being related; the impact on leather tanneries is said to have a ripple effect on the producers.
In the 2021/22 budget year, the leather and leather goods export generated only 40 million dollars. As Solomon manifested for the current budget year it will be difficult even to generate 30 million dollars from exporting leather products if the situation continues with the way it is now.
In the past three years, the export earnings from the sector have declined in relation to internal and external factors like COVID 19.
In the 2017/18 and 2018/19 budget year the sector contributed USD 130 million and USD 120 million respectively that reduced to USD 75 million in the 2019/20 budget year.
Meanwhile, the export earnings have eroded compared with the preceding year. Nonetheless, the local market has been boosted in the budget year as per the explanation of Solomon.
As he indicates, the Ministry of Industry and the Development Bank of Ethiopia are working to facilitate forex access to SMEs including the leather industry which they expect could be an option to solve the problem.
The association in collaboration with the Ministry of Industry and the Ministry of Trade and Regional Integration and United Nations Industrial Development Organization /UNIDO/ has organized the 13th all African leather fair to be held from February 16-18, 2023 at the Millennium hall.
As indicated, more than 250 local and international tanners, footwear and leather goods manufacturers, leather garment producers, machinery and input suppliers and technology logistics and financial institutions and companies and more than 17,000 visitors are expected on the occasion.
“The upcoming event will play a great role to initiate the leather industry and reverse the downturn of the leather sector after math of the pandemic and international market failure,” remarked Remedan Bedada, president of the association, whilst expressing hope for a positive turn for the industry.
Cement price caps come in to effect in Addis
Regions, Zones said to follow suit
The Ministry of Trade and Regional Integration (MoTRI) and Cement Manufacturers’ Board (CMB) announce retail price caps on cement.
The price implementations are said to be effective starting from January 30, 2023 with prices varying in for regions and city administrations but well within or less than the 1200 birr per quintal point.
Since the highest demand is in Addis Ababa, the board has set different retail prices for various cement brands. For instance, Dangote Cement – Birr 1,106.85 per quintal; Derba Cement – 1,067.33 per quintal; Capital Cement – 1,052.25 per quintal; and Kuyu Cement – 1,065.25 per quintal. Cement prices for Regional States and Zones are said to be made public in the near future.
In its most recent effort to reduce the cost for end users, MOTRI disclosed that it will regulate cement gate prices set from December 22, 2022, for the next six months. This most recent attempt at market stabilization follows actions like establishing fixed consumer pricing, restricting individual purchaser sales quantities, and requesting producers to eliminate wholesalers from the supply chain.
MOTRI admitted that recent control measures had made the situation worse and increased the number of illegal traders instead. The government now intends to reduce its interaction in the cement market.
A couple of weeks back, it can be recalled that on December 22, 2022, the ministry had issued a factory gate price which brought the price of one quintal of cement from 750 birr to 795 birr.
The country has suffered from a cement shortage since 2020 due to low domestic production levels. This has been exacerbated by security issues, a lack of raw materials and a shortage of foreign currency. Expansions of existing factories, coming new companies in the sector is expected to stabilize the market, according to the Board .As indicated on the press conference, Government projects are getting 30 percent of production from every factory and real-estate developers can also get cement directly from factories.
