With the rapid increase of sea freight and procurement costs, ferrous metal buyers are facing the problem of limited spot supply of steel and its raw materials.

  Market participants said that due to the tight supply of ships, after the Spring Festival holiday, the freight of hot rolled coil (HRC) from China to Vietnam and South Korea has jumped from US $10-12 / ton to US $13-20 / ton. The freight of steel bars from China to Singapore increased from US $20 / T to US $25-30 / T. In the same period, the steel freight from China to Peru doubled to about $50 / T.

  Vietnamese market participants said that the steel freight from India to Vietnam also increased by 8-10 US dollars / ton to more than 45 US dollars / ton.

  Traders novel coronavirus pneumonia attributed to the increase in freight prices, the rise in oil prices, the increase in ship leasing  costs and the increase in global shipping orders.

  "Now we live in a world of cheap money, and commodity prices are rising," said one Vietnamese trader With the rise of global steel prices, consumers now have to accept the rise in steel costs.

  The steel price premium in America and Europe is large enough to absorb higher freight rates. The price of hot rolled coil in the Midwest of the United States is equivalent to the ex factory price of 1366 US dollars / ton, which is almost twice the FOB Tianjin hot rolled coil index of 693 US dollars / ton yesterday. The ex factory price of hot rolled coil in northwest Europe was 896.69 US dollars per ton yesterday, nearly 200 US dollars per ton higher than 51500 rupees per ton (702 US dollars per ton) in western India.

  China's surging demand for agricultural products, coal and metals, increased transportation of grains and soybeans from the Americas, severe ice conditions at Baltic ports, and continued demand for scrap and other dry bulk transport have pushed freight rates to multi-year highs.

  After the Spring Festival holiday, freight increases, coupled with the rise in FOB prices for basic steel, pushed up the delivery price. As of March 2, the ASEAN Human Rights Council index rose 82 US dollars per ton from the pre Festival level to 734 US dollars per ton for cost and freight in Vietnam.

  Due to tight supply, shipowners have stopped providing steel freight from China to South America. An exporter of a steel mill in northern China said this made it impossible for some Chinese mills to offer a basic cost and freight quotation for hot rolled coils. Compared with other countries, South American buyers can accept higher prices. Brazil is the main destination for spot sales in the region, with relatively low steel inventories, especially as steel manufacturer Gerdau has stopped the operation of Ouro Branco, the country's largest comprehensive steel plant, in Minas Gerais for three weeks of unscheduled maintenance.

  The lack of freight options could limit Chinese exporters from profiting from Brazil's growing steel shortage.

  People in the Asia Pacific market said that tight supply and rising freight rates may stimulate maritime buyers to place orders faster than expected, because they may not be able to guarantee enough goods for normal operation, and there is no sign that prices will fall in the short term.

  Rising shipping prices and freight rates have led Vietnam's Hefa group, a steel producer, to cancel its export offer for hot rolled coils from April to early may in order to save costs through internal use of steel.

  Some steel shippers blame the shortage of containers on the driver of higher bulk freight rates. Before the Chinese New Year holiday in February, container freight rates rose sharply, and bulk freight rates were not affected. But steel market participants said that as more and more shippers began to choose bulk carriers over containers, bulk freight rates were pushed up.

  Container freight rate hit a new high in nine years

  Due to the shortage of supplies in Asia, it is difficult for us scrap iron exporters to obtain containers for booking. Since the end of 2020, Asian shipping companies have tended to move empty containers out of US ports to speed up their return to Asia, rather than loading scrap iron.

  Since late November, container scrap freight from Los Angeles to Taiwan has almost quadrupled, from $11 / T to $40 / T, a nine-year high. Higher freight rates did not significantly inhibit spot trade, but strongly supported Taiwan's container waste index, which rose by $115 / T to $430 / T (cost and freight) in the same period.

  Container shippers also have to face port congestion and fewer free days after arriving in Pakistan and India.

  The soaring freight rate of bulk waste transportation can not be alleviated.

  Japan, the largest waste exporter in Asia, has increased its short shipment freight rate by US $5 / T, compared with us $39-40 / T in      Vietnam and US $29-30 / T in Taiwan, adding another obstacle for traders to reach an export agreement.

  In the past month, deep sea bulk freight from different sources to Turkey, the world's largest waste importer, has increased by US $6-8 per ton.

  From this year to February, the price of bulk scrap iron in the United States mostly hovered around $25 / T. In 2020, the average price will be $19 per ton. Us bulk waste exporters have been able to pass on higher freight rates to buyers, but if US domestic waste prices rise sharply in March, this may be short-lived.

  Freight rates are expected to rise further in mid March.

  Iron ore freight for small ships rising

  Freight rates are falling for Capesize and Panamax ships, which, together with vale ships, handle most of the ocean iron ore transport. But rates for small iron ore ships are rising.

  The freight of 50000 tons of super large goods from India to China increased from US $12-15 / ton in mid January to US $20-25 / ton. Chartering contracts are tight as Indian producers try to sell more goods before the rainy season begins. Iron ore market insiders said that the demand in the Chinese market is still strong, so freight increased rapidly after the Spring Festival holiday.

  As of March 2, the freight of 170000 DWT Cape of good hope tanker from tubaro, Brazil to Qingdao, China dropped to US $15.75/t from the peak of US $21 / T in 2021 in mid January. In 2019, the price of the route will rise to $28.75/ton.