Posted on 10/03/2021 5:43:50 AM PDT by blam
This year, spot ocean container rates have reached record highs and could be at a crucial inflection point this week. News of 40-foot container rates on the world’s most important shipping lane, that is, China and the U.S., plunged amid a power crunch shutting down factories across multiple Chinese provinces leading speculators to sell their shipping spots, according to Chinese media outlet Caixin Global.
Caixin spoke with an executive at a Shanghai freight company Thursday who said 40-foot container rates from China to the U.S. West Coast sank this week, plummeting from $15,000 to just $8,000. For the same container, the spot rate for China to the U.S. East Coast dropped from $20,000 to around $15,000.
The decline in international shipping costs is primarily due to at least 20 Chinese provinces and regions making up more than 66% of the country’s GDP have announced some form of power cuts in recent weeks, which has shuttered energy-intensive manufacturing industries and so their need for containerized shipping has diminished.
We have noted Foxconn, the world’s biggest iPhone assembler and a key supplier of Apple and Tesla, halted production earlier this week. Another Apple supplier, Unimicron Technologies, suspended operations. There are countless reports of other energy-intensive companies that suspended operations.
An analyst at Tianfeng Securities Co. Ltd. said the decline in shipping rates was primarily caused by the imminent off-season and a reduction in manufacturing due to China’s power crunch. The analyst said rates should decline as export growth in China will decrease in the fourth quarter, and seasonally ocean freight slows down.
A report by CSC Financial Co. Ltd. outlined rates will stay stubbornly high for the next two weeks as port congestion remains a problem in China and the U.S. But after that, rates may stall on slow growth from China.
We so far understand China’s power crunch is having a sizeable impact on economic growth and has resulted in a slump for containerized shipping demand. What comes next is either shipping rates continue a downward spiral or bounce back as China will ultimately restart its manufacturing base near term.
Local coal is low grade and LNG mostly imported
Sucks to be running a factory in China.
The Christmas shipping should be about over. But it should take a while to clear out the backlog at the west coast ports.
A chunk of the problem is caused by the California war against the Hispanic truck drivers by banning them from working as independent contractors. Add in failure to modernize ports. Both problems, of course, are driven by the unions.
I think the US might have some high quality coal for sale. It’s a tough situation for the regime to be in, bailout China with the adverse effect of bailing out the US coal industry? I don’t know which is more important to our regime, helping the CCP or killing American energy production.
Its not really the choice. Other large economies, like India, are short of thermal coal as well. The US could enter the market, and these world market could also be supplied with product from Indonesia, Russia and elsewhere.
To me, the whole global energy shortage seems to speak to the bureaucratic power of the green-global warming movement
—— making up more than 66% of the country’s GDP have announced some form of power cuts in recent weeks,-—
It was announced that President Xi announced cuts in coal fired power generation to comply with strong requests to comply with the climate change urgings of the Euros and the Americans
“I think the US might have some high quality coal for sale. “
Montana exports 36% of it’s coal to Western Canada which, in turn, exports it to ‘Asia.’
Isn’t it a great world where you can speculate and make money off the misery of a shortage of shipping options? If it is happening anyway, just sayin’.
“Sucks to be running a factory in China. “
Also sucks to be buying half our goods from China. Maybe we’ll learn a lesson...maybe?
“I think the US might have some high quality coal for sale. It’s a tough situation for the regime to be in, bailout China with the adverse effect of bailing out the US coal industry? I don’t know which is more important to our regime, helping the CCP or killing American energy production.”
I think killing off US Coal production has to prevail with the junta in DC.
“It was announced that President Xi announced cuts in coal fired power generation to comply with strong requests to comply with the climate change urgings of the Euros and the Americans”
Sorry, I don’t buy that for a minute. But I have been watching events in Australia, China’s largest supplier of coal, and China is pissed as hell at Australia, first for stating the obvious on the virus (China caused it) and recently for buying the nuke subs. So, China has been ‘punishing’ Australia by no longer buying their coal (or buying far less, not sure)...and they can’t seem to find anywhere in the world to make up the difference.
“ and they can’t seem to find anywhere in the world to make up the difference.”
Try the Riyadhi family in Indonesia. Bill Clinton helped them out with the coal problem back in the day.
L
The problem is China has stopped buying coal from Australia, a major supplier to them. The energy crunch in China has more to do with China's self-inflicted wound here along with another wave of their bio-engineered virus ravaging parts of the country (as I've read here on FR) than anything else.
As far as I'm concerned, EFF CHINA and bring manufacturing home here to the USA. Dump Biden & the Xi Democrats and re-gain our energy independence in 2022 & 2024. Built in America means no more CHINESE JUNK and a stronger America.
BTW: end all Welfare here in the US too and make the fat, lazy bastards get jobs. Including many here on FR who refuse to go back to work.
Yep. But it makes a good story and a superb way to get the people ti rise up against climate change whining of the Euros
What you say is true.
Work is such an ugly word isn’t it?
Oh my!
How can they still be loafing around? I thought the enhanced unemployment had ended?
It did, end of September. The lazy bastards on here must not be feeling the impact of zero income yet or are waiting for the Democrats $3.5T “infrastructure” (read that: welfare) bill to pass so they can stay home and not work some more.
“Try the Riyadhi family in Indonesia. Bill Clinton helped them out with the coal problem back in the day.”
But if true, then why don’t they simply buy what they need?
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