Recently, superposition of multiple factors including blocked navigation in the Strait of Hormuz, violent fluctuations in crude oil prices and the continuous surge in shipping risk premiums has led to a new round of skyrocketing international ocean freight. This change is profoundly impacting China's steel export chain – CIF prices are pushed up, order performance is blocked, default risks rise, and export competition has shifted comprehensively from the past "price competition" that purely relied on FOB price advantages to a "supply chain resilience competition" centered on logistics controllability, delivery stability and risk resistance. Among steel pipe varieties with high external dependence, seamless pipes are particularly subject to logistics shocks due to their higher dependence on the Persian Gulf market; while welded pipes are relatively less affected due to scattered application fields and flexible routes. This article systematically sorts out the core transmission path of rising ocean freight, and deeply analyzes its multi-dimensional impact on China's steel exports.
I. Core Transmission Path of Rising Ocean Freight
The direct driver of rising ocean freight is the simultaneous surge in crude oil prices and shipping risk premiums. The Strait of Hormuz carries about 20%-30% of the world's seaborne crude oil trade. Once navigation is blocked, the global oil supply will face a daily gap of 14 million to 18 million barrels, and rising oil prices will quickly transmit to the maritime logistics sector.
Currently, mainstream shipping giants have suspended related routes, and ships are forced to reroute via the Cape of Good Hope, which significantly extends the voyage on routes from Asia to Europe and the Middle East. The superposition of basic shipping costs, war risk surcharges and bunker adjustment factors has greatly increased the logistics cost of China's steel exports. LNG vessel rents have soared by more than 600%, the daily charter rate of very large crude carriers (VLCC) has surged above $280,000, and maritime war insurance rates have doubled – the resonance of multiple costs makes the transportation end the core variable of short-term pricing. The 2607 main contract of the container freight index (Europe route) futures has risen for seven consecutive weeks since late April, with a cumulative increase of 60.78%.
II. Soaring CIF Weakens the Price Advantage of Steel Exports
The export price of steel is jointly determined by the FOB price and ocean freight. Even if the FOB quotation of domestic steel mills remains unchanged, as long as ocean freight fluctuates sharply due to out-of-control oil prices, the CIF price actually borne by overseas buyers will rise significantly.
This means that the long-standing price competitive advantage of Chinese steel is constantly eroded by high freight. In particular, customers on long-haul routes such as the Middle East and Europe not only face rising procurement costs, but also bear additional uncertainty caused by shipping delays. when the price of marine low-sulfur fuel oil soared by 30%-35% in a single week, and the price at Singapore's bunkering hub exceeded $1,100/ton, the pulling effect of freight on CIF has far exceeded the controllable range of steel mills.
III. Rising Order Performance Pressure and Default Risk
The impact of shipping uncertainty on exports is not only reflected in new orders, but also directly impacts signed contracts.
New orders: Some small and medium-sized traders have suspended taking orders due to shipping instability, which suppresses short-term export volume growth
Orders in transit: Previously signed export orders may face performance difficulties due to shipping delays and rising freight
Default risk: Uncertainty in shipping schedules superimposed with soaring costs may trigger default clauses in some contracts
Profit space: Uncertainty in shipping schedules superimposed with soaring costs erodes profit margins of export enterprises
The operating pressure of export enterprises is shifting from pure price competition to competition in performance capacity and risk control capability.
This round of ocean freight increase is the result of the superposition of multiple factors: geopolitical conflicts, fuel costs, navigation channel crisis, capacity regulation and surcharge increases. For steel export enterprises, this is not only a severe challenge, but also an industry reshuffle – enterprises that can establish a stable supply chain, lock in high-quality capacity and improve performance capability in the turbulence will stand out in the new round of international competition; while enterprises that over-rely on price advantages and ignore logistics risk management may be forced out in the wave of freight swallowing profits. In the future, the key to winning China's steel exports lies not in the steel mill workshop, but in every node of ocean routes and supply chains.
