In March, although it was the off-season for coal consumption, the resumption of work and production in various regions after the Lantern Festival promoted downstream restocking. Coupled with the deep inversion of imported coal prices, procurement demand shifted to domestic trade. Under the circumstance that international oil prices continued to rise and pushed up shipping costs, shipowners had a strong willingness to support prices, and the coastal bulk cargo composite index rose sharply.
On March 27, the coastal (bulk cargo) comprehensive freight index released by the Shanghai Shipping Exchange closed at 1258.5 points, up 28.2% from the end of last month. The monthly average was 1112.76 points, a month-on-month increase of 15.0%.
1. Coal Transportation
In terms of market demand, affected by regional cold air and rainy, snowy and cloudy weather, temperatures in many northern regions have remained low. The electricity load for residents' heating has rebounded periodically, driving the daily coal consumption of the eight coastal provinces to fluctuate and rise to 2.096 million tons, and the available days of coal inventory remained unchanged.
Regarding coal prices, coal mines in major producing areas have resumed normal production, and the overall coal supply is loose. The rigid demand restocking of downstream enterprises after resuming work has supported the improvement in coal mine sales. Driven by the transmission of price hikes in producing areas and the shift of import coal shortages to domestic trade, coupled with the upcoming centralized spring maintenance of the Daqin Railway, the coal transportation channels have abundant capacity, the upstream has a high enthusiasm for shipping, the port market sentiment is positive, and the volume of goods arriving at ports has increased significantly. Supported by factors such as fluctuations in international oil and gas prices, rising port and purchased coal prices, hoarding by traders and rigid terminal demand, coal prices have remained firm.
In terms of freight rate trends, the escalation of geopolitical conflicts in the Middle East has pushed up international oil and gas prices and shipping costs. Amid concerns over energy supply, demand has shifted to coal, leading to a sharp rise in international coal prices and exacerbating the inversion of imported coal prices. Coupled with the contraction of Indonesian coal supply, the pace of domestic procurement and demand for shipping capacity have rebounded. Against the backdrop of both increased transportation costs and shipping capacity demand, coastal coal freight rates have shown a continuous and substantial upward trend.
On March 27, the coal freight rate index released by the Shanghai Shipping Exchange closed at 1322.53 points, up 37.0% from the end of last month, with a monthly average of 1136.36 points, a month-on-month increase of 20.9%. On March 31, in the China Coastal Coal Freight Index (CBCFI) released by the Shanghai Shipping Exchange, the market freight rate for the route from Qinhuangdao Port to Zhangjiagang (40,000-50,000 dwt) was 43.7 yuan per ton, an increase of 20.6 yuan per ton from the end of last month, with a monthly average of 36.1 yuan per ton, a month-on-month increase of 14.7 yuan per ton; for the South China route, the market freight rate for the route from Qinhuangdao Port to Guangzhou (60,000-70,000 dwt) was 60.8 yuan per ton, an increase of 23.7 yuan per ton from the end of last month, with a monthly average of 51.3 yuan per ton, a month-on-month increase of 22.4 yuan per ton.
2. Metal Ore Transportation
This month, electric arc furnaces resumed production intensively, leading to a sharp rise in rebar output. Meanwhile, driven by the concentrated resumption of work by downstream sectors, the terminal market has gradually entered the peak consumption season. Rebuffer demand soared, inventories shifted from growth to decline, and both mill inventories and social inventories saw a slight destocking simultaneously. On the supply side, global shipments remained generally tight in terms of supply; arrivals at ports rebounded from a low level, and port unloading volume picked up, with port inventories edging up. In the transportation market, high oil prices pushed up ship fuel costs. Coupled with the increase in iron ore cargo panels and the improved activity of port unloading, coastal metal ore freight rates continued to strengthen.
On March 27, the freight index of metal ore cargoes closed at 1186.61 points, an increase of 21.7% from the end of the previous month, and the monthly average was 1060.73 points, an increase of 8.5% from the previous month.
3. Grain Transportation
This month, on the supply side, temperatures in major domestic producing areas have gradually risen, making it more difficult for grassroots grain stocks to be stored. As domestic corn prices have climbed to high levels, grain growers and grain holders have shown a growing willingness to sell grain for cash to prepare for spring ploughing. Grain sources have shifted more to the trade link, with the sales progress accelerating phase by phase, and grassroots grain stocks in major producing areas continuing to decline. At the same time, after the consumption since the Spring Festival holiday, downstream inventories are lower than the same period last year, enterprises have a strong willingness to restock, and the State Reserve Grain Administration's purchase of corn for rotation has also increased significantly. Coupled with the recovery of deep-processing profits and the improvement of enterprise operating rates, it has also provided support for grain prices. In terms of the transportation market, the accelerated shipment pace of producers' traders has led to a rise in the volume of goods gathered at northern ports, with port inventories showing a seasonal increase. Producer price hikes have driven up the cost of gathering at ports, and the high costs at northern ports, coupled with rising oil prices, have pushed up freight rates, jointly supporting the mentality of port traders to support prices, and coastal grain freight rates have risen sharply.
On March 27, the freight index of grain cargoes closed at 1325.44 points, an increase of 54.7% over the end of the previous month, and the monthly average was 1110.84 points, an increase of 35.3% compared with the previous month.
4. Crude Oil and Product Transportation
International crude oil prices rose sharply this month, and domestic refined oil product prices followed suit. In terms of gasoline, the concentrated demand after the holiday has ended, residents' travel has returned to daily life, and there is a lack of new consumption stimulus points, resulting in lackluster gasoline demand. For diesel, with the rise in temperature, the successive advancement of spring ploughing and the active start of large-scale projects such as outdoor infrastructure, diesel demand has gradually recovered. On the supply side, affected by geopolitical conflicts, international oil prices rose sharply and then fluctuated in a wide range. The raw material cost side has put pressure on refining profits. In the short term, the operating rate of Shandong independent refineries remains weak and volatile, while the operating rate of main refineries shows a downward trend, and domestic resource supply has tightened. As gasoline and diesel prices rose rapidly to high levels, market participants' resistance increased, most maintained a cautious observation of the market, limited restocking in the market, a lackluster transaction atmosphere, and coastal refined oil freight rates operated weakly.
On March 27th, the bulk freight tariff index for refined oil products released by the Shanghai Shipping Exchange stood at 1383.91 points, an increase of 0.3% compared with the end of last month; the bulk freight tariff index for crude oil was 1629.15 points, a decrease of 0.3% compared with the end of last month.
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