Container freight rates on China-India routes dip sharply, Asian PVC markets respond

Freight rates in China-India routes, which experienced sharp increases in late June due to severe congestion in Asian ports, have started to ease recently.

According to market sources, spot rates for 40ft container bookings from North China (Tianjin) to West India (Nhava Sheva or Mundra) surged past $5,000 in late June. However, recent data shows a significant decline in average spot rates from major Chinese load ports to West India. Rates have dropped between $800 to $1,200 per 40 ft container week over week, based on information collected by the Journal of Commerce.

Current booking prices from Shanghai to Nhava Sheva or Mundra for mid-July sailings have plummeted to $3,350 per 40 ft container, reflecting a massive decrease of nearly $1500 per 40 ft container compared to the end of June rates.

Reflections on Asian markets

Eyes are now on how this recent slump will be mirrored on Asian markets as earlier sharp increases resulted in price hikes for many polymers. Despite the ease in polymer supplies due to the restart of plants in the Middle East and Asia and the worsening demand situations during the low season, freight rates managed to keep import markets at high levels.

This has particularly stood out in PVC markets, as Asian PVC markets have witnessed a pressure of Chinese origins at the low ends of price ranges this week.

“Current prices for Chinese PVC K67 imports to India are around $900/ton CIF, with recent declines in freight rates to about $130/ton for shipments to India,” explained a trader in Mumbai. He added, “While Chinese prices have softened, uncertainty persists over whether we’ve reached a stabilization in freight markets.”

Is the global freight rally losing momentum?

This recent slide has also raised questions of whether the rally will falter in routes from China to Europe and the US, as the price gains have notably slowed down this week in the Drewry’s latest index revealed on July 11, Thursday.

Nevertheless, players don’t expect a major downfall in container freight rates as the congestion proceeds in major Asian ports. Drewry also expects freight rates to remain high until the end of the peak season while industry sources reiterate that the rally is likely to extend to the second half of the year. Besides, despite the latest slide, current rates are still more than double the levels seen in April. Therefore, players expect the support provided by the freight rates to polymer markets to continue during the rest of the year, limiting the potential decreases in prices.