Snowstorm in Chile, Drought in Panama... El Niño Disrupts Supply Chains

Global Average Sea Surface Temperature Hits Record 21.1°C

Reduced Rainfall at Panama Canal Leads to Fewer Ship Transits

Heavy Snowfall at Chilean Mines... "Serious Economic Repercussions"

One of the largest El Niño events in history is shaking global supply chains.

Amid the ongoing El Niño climate conditions, Woodhead Reservoir in Manchester, United Kingdom, is drying up. Photo to aid understanding of the article. Photo by AP Yonhap News Agency

On August 29 (local time), The Wall Street Journal (WSJ) in the U.S. reported that "El Niño is disrupting industries ranging from shipping to copper and fishmeal." El Niño refers to a phenomenon in which the sea surface temperature in the equatorial eastern Pacific remains more than 0.5 degrees Celsius higher than average. The heat accumulated in the Pacific spreads to various continents, causing both droughts and floods.

According to Copernicus Climate Change Service under the European Centre for Medium-Range Weather Forecasts, the global average sea surface temperature reached 21.1 degrees Celsius on July 22. This is the highest level since satellite observations began in 1979. The previous record was 21.09 degrees in March 2024. Samantha Burgess, head of the climate division at the European Centre for Medium-Range Weather Forecasts, stated, "There is a clear signal that the ocean is under increasing pressure," adding, "El Niño is adding heat, but this is on top of decades of human-induced warming."

The Climate Prediction Center of the National Oceanic and Atmospheric Administration (NOAA) in the U.S. indicated in a monthly diagnostic report on August 13 that there is over a 90% chance of a very strong El Niño forming this fall and winter. This percentage has risen from 63% in June to 81% in July and now above 90%. There is a 69% probability that the event occurring between October and December will surpass all previous El Niño events observed since 1950.

"New Water Source Needed"... Panama Canal Cuts Daily Allowance for Ships

The Panama Canal, connecting the Pacific and Atlantic Oceans, is experiencing the greatest disruption. The canal operates by opening and closing locks to adjust water levels and lift ships. Each ship that crosses requires the release of 50 million gallons (about 190 million liters) of fresh water, which is replenished by the main reservoir, Lake Gatún. However, from May to August, rainfall in Panama was 34% below the historical average due to El Niño.

On the 27th (local time), a vessel is passing through the Panama locks in the Panama Canal, where water levels have dropped due to a precipitation deficit related to El Niño. Photo by Reuters Yonhap News

The Panama Canal Authority has decided to reduce the maximum number of ships allowed to transit daily from 36 to 32 by mid-September. The average auction price for ships using the largest lock has soared from the usual 800,000 dollars (about 1.1 billion won) to 2.5 million dollars (about 3.4 billion won) over the past several weeks. This is the result of congestion in the canal after the Strait of Hormuz was essentially blocked following the war in Iran in February, with drought further compounding the situation. Ricaurte Vásquez Morales, administrator of the Panama Canal Authority, said, "We're facing a climate crisis at the very point when we've reached maximum capacity, and we need to secure a new water source."

There are also places where excessive rainfall is causing problems. Chilean copper producer Antofagasta suspended operations at the Los Pelambres mine in July after 5 million cubic meters of snow fell at the site. An "atmospheric river," which inundated much of Chile, passed over the mine. Meteorologists explained this is a rare phenomenon consistent with a strengthening El Niño. The company has lowered its annual copper production forecast from 650,000–700,000 tons to 625,000–655,000 tons. With prices reaching new highs due to surging demand for electrification and data center construction, the supply is tightening even further.

"Rice Is the Biggest Issue"... Drought Triggers Inflation in Southeast Asia

On July 31st, in a village in Cirebon, West Java, Indonesia, drought caused by El Niño occurred. Photo by Reuters Yonhap News

This has also led to inflationary pressures. Andrew Watkins, a climate scientist at Monash University in Australia, stated, "Rice in South Asia and Southeast Asia is the biggest problem." Even in 2023, as El Niño reduced harvests, India partially suspended rice exports, causing international prices to spike. According to research by Bloomberg Economics, after an El Niño-induced drought, consumer prices in Indonesia and the Philippines rise by almost 2 percentage points.

Christopher Callahan, a climate scientist at Indiana University in the U.S., commented, "The signals point to an event of a once-in-a-generation intensity, and the economic impact will be just as severe." His research suggests that El Niño can cause trillions of dollars in income loss, especially in tropical regions. El Niño is expected to persist until 2027, with that year likely to become the hottest on record.

This content was produced with the assistance of AI translation services.