Global trade was volatile in the first half of 2022, and manufacturers around the world faced challenges, including inflation concerns, geopolitical conflict and shipping constraints.
With the first seven months of 2022 behind us, we are now looking ahead to the remainder of 2022. At this time, I want to share with you some of the key market forces Leeco Trading will monitor in the coming months to gauge possible impacts on the international trading market and on our customers.
Slowing Economic Growth
According to several economists, we will see the global economy slow later this year and into 2023. As a result, several economic research bodies downgraded their economic outlooks for 2022.
World Bank, for example, downgraded their 2022 global growth projection to 2.9% from 4.1% in their June 2022 report. International Monetary Fund (IMF) also downgraded their 2022 world economic outlook to 3.6% from 4.4% in their April 2022 report.
The 2022 economic growth outlook for Latin America was also slightly downgraded in World Bank’s report, from 2.6% to 2.5%.

Image Courtesy of World Bank
A global economic slowdown impacts demand around the world and affects nearly every sector, including manufacturing. As companies seek to control costs during economic slowdowns, manufacturers may shift their procurement strategies. For example, a company may choose to import raw materials if they are more cost-effective versus purchasing materials domestically.
High Inflation
Inflation is elevated across the globe and, despite several countries entering monetary tightening cycles, is expected to remain elevated for the remainder of the year. A forecast from IHS Markit states that we should expect global consumer price inflation to average a rate of 7% this year.
Inflation in Latin America, one of our core regions, is expected to remain high through the remainder of the year. Brazil’s economic ministry set its 2022 inflation forecast to 7.2% in July 2022, which is well-above the country’s target inflation rate of 3.5%. Mexico, which has an inflation target of 3%, was at an inflation rate of 8.09% during June 2022.
High inflation is important for Leeco Trading to monitor because it impacts consumer purchasing decisions and, therefore, manufacturing production. If consumer demand falls due to high prices, manufacturers may reduce their available supply to meet lower demand. Inflation also impacts several commodity prices and may lead manufacturers in regions with particularly high inflation to consider international sources.
Geopolitical Conflict
Russia’s invasion of Ukraine disrupted markets around the world earlier this year, and as the conflict continues, we expect to continue seeing impacts on the global economy.
In their June 2022 Global Outlook Report, World Bank stated that the invasion worsened pre-existing global turmoil from the pandemic, such as supply chain constraints and inflation. Analysts say we can expect these ripple effects to continue through the remainder of the year. While some regions are more affected by the war – such as Europe – smaller economic impacts are still being felt in regions as far as Latin America.
We expect this conflict to continue impacting the availability of some raw materials, such as steel. Steel production in Ukraine is currently at a standstill, and it remains unclear when production will restart. Ukraine is the 13th largest producer of steel, meaning a sizable portion of steel products will not be in circulation this year, and supply will be tighter.
Several countries also stopped importing steel materials from Russia, or raised tariffs on these imports. Manufacturers in countries with these kinds of punitive tariffs have fewer supplier options.
The Leeco Trading team will keep a close eye on the events in Ukraine to see how raw material exports and supply chains will be impacted by the events that unfold.
Ocean Freight Rate Uncertainty
Beginning late last year, we saw ocean freight rates skyrocket amid container shortages, high demand for imports and port staffing shortages.
We are now, however, seeing ocean freight spot rates ease from the record-highs reached in Q3 and Q4 of 2021. Freight companies say this decline stems from falling demand, particularly in ocean freight from China. While freight rates are easing, they are still well-above pre-pandemic rates, which experts say could indicate a “new normal” of higher freight rates as compared to historical averages.
Commodities are primarily shipped internationally via barges, which is why it is important for our team to closely monitor trends in ocean freight rates to gauge cost implications for customers.
Easing Port Congestion
While the COVID lockdown in Shanghai created shipping bottlenecks earlier this year, we are starting to see congestion ease and shipping times return to normal.
In the first half of 2022, vessels took four to five months to berth in the Port of Sao Francisco do Sul, which receives more than 80% of Brazil’s steel imports, from China. However, as of July 2022, vessels arriving from China take just 30 days to berth in this port. While the port’s warehouses are still above-capacity, we expect backlogs to clear in the next couple of months.
The Port of Pecem and the Port of Manaus – two Brazilian ports that also receive a significant amount of steel imports – do not have any congestion problems and are not expected to for the remainder of the year.
Navigate Economic Uncertainty with a Trusted Supplier
With uncertain global economic outlooks, it is more important than ever to partner with a trusted international trading company that can help you navigate a challenging market and source the raw materials you need.
Leeco Trading has over 140 years of experience in moving commodities across the globe and offers several value-added services to streamline the import process, including:
- Extended credit to improve cash flow
- A strong network of high-quality suppliers, which provides customers with various cost-effective commodity solutions
- Strong partnerships with logistics carriers to get customers they materials they need, when they need them
Contact Leeco Trading today to request a quote or learn more about our services.