Freight rates for coal cargoes from northern China ports to the south have been tumbling for over two weeks since reaching multi-year highs on December 15, showed data from sxcoal.com.
On December 15, freight rates on routes from Qinhuangdao to Guangzhou, Fuzhou, Ningbo, Shanghai and Zhangjiagang ports all hit record highs of 2017.
Freight of 40,000-50,000 DWT vessels from Qinhuangdao to Guangzhou peaked at 82.7 yuan/t on the same day. Since then, freight rates have been suddenly turning downside, and falling back rapidly below the 60 yuan/t at the end of the year. It was even lower than 63.2 yuan/t at the beginning of the month, where the price started to shoot up.
On December 2, the freight rate of 40,000-50,000 DWT vessels from Qinhuangdao to Shanghai port stood at 46.6 yuan/t; that of route of Qinhuangdao-Guangzhou for 50,000-60,000 DWT vessels at 57.6 yuan/t; Qinhuangdao-Ningbo on 15,000-20,000 DWT basis, 57.3 yuan/t.
On the same day, rate on route from Qinhuangdao to Fuzhou dropped to 58.5 yuan/t, on 30,000-40,000 DWT basis; while that for 20,000-30,000 DWT vessels to Zhangjiagang went down to 55.7 yuan/t.
Routes from other northern ports like Tianjin, Jingtang and Huanghua also showed the same trend. Freight rate of 30,000-40,000 DWT vessels from Huanghua to Shanghai stood at 49.4 yuan/t on December 2, sinking 25.7 yuan/t or 34.2% from December 15.
Some players analyzed the freight decline can be deemed as a reasonable drop-back from exorbitant levels, while some attributed it to increasing vessels waiting at northern ports.
Data of sxcoal.com showed the number of vessels anchoring off Qinhuangdao port was above 100 in December 19-31, and reached the year's high of 132 on December 26.
"The freight rate has close links with the number of vessel queue," one analyst said, adding the decline has slowed in the first days of the new year, when vessels queuing at Qinhuangdao port went down below 100.
A Hebei-based coal trader said traders at northern ports were reluctant to sell their cargoes with higher costs at the end of the year, as they had to pay high storage charges to ports.
"The decline has something to do with the lift on coal import curbs at southern ports," said a Guangzhou-based trader.
Huatai Futures reported the central government's decision to halt strict supervision methods for import coal, which lasts until February 15, is a way to moderate its domestic coal supply shortage, but didn't mention any details. "All import coal shall be only used for power generation," it added.
(Writing by Alex Guo Editing by Harry Huo)
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