China's coastal coal freight rates shifted to an upward trend again last week, setting a new record since the second half of April this year. The growth contracted later last week as the positive factors gradually diminished.

 

The China Coastal Coal Freight Composite index, tracking rates for vessels carrying coal from northern China ports to the east and south, climbed 5.79% from the previous week to 806.4 points on December 7, according to the Shanghai Shipping Exchange. It was 45.34% higher than the month-ago level but 8.23% lower than the previous year.

 

 

During the week, power plants maintained rigid coal demand for winter storage despite warmer temperatures. Low coal prices and new monthly transportation plans at plants stimulated cargo purchases, improving the shipping demand. These shored up the coastal coal freight rates to rebound.

 

Improved international market contributed to the outflow of vessels to international market, further reducing shipping capacity at the domestic market.

 

Additionally, the year-end demand for shipment from other bulk goods narrowed the shipping availability of coal, adding upbeat strength to the freight rates.

 

Looking at specific routes, all freight rates experienced rises last week, ranging 1.4-2.7 yuan/t compared to the previous week.

 

On December 7, the freight rates for the 50,000-60,000 DWT vessels carrying coal from Qinhuangdao to Guangzhou port increased 2.5 yuan/t week on week and 15.2 yuan/t month on month to 47.2 yuan/t, while the 60,000-70,000 DWT vessels on the same route rose 2.3 yuan/t from last week to 41.8 yuan/t, which was 14.1 yuan/t higher than the previous month.

 

 

The coastal coal shipping rates are likely to rise further in the short term, as a new round of cold air this week could potentially boost daily coal consumption at power plants and possible strong winds would also restricted the coastal transportation.

 

Internationally, the Baltic Dry Index, tracking rates for ships carrying dry bulk commodities, declined 709 points or 22.21% on the week to 2,483 points on December 8. The index snapped a four-week winning streak as rates declined across larger vessel segments.

 

The coal freight rate for Panamax vessels from Indonesia to China was $9.39/t on December 8, down $0.08/t from a week ago, while that for Supramax vessels from Indonesia to China at $10.82/t, a $0.10/t rise on the week. Furthermore, the rate of Capesize vessels from Australia to China decreased $1.92/t from the week prior to $17.07/t on the same day.