Shipping faces consequences as China’s post-COVID rebound subsides.

In recent years, exports have become even more important to the Chinese economy, as COVID slowed domestic consumption and the credit crunch restricted real estate development. Now Western demand for Chinese exports has slowed just as the post-COVID-19 rebound in Chinese domestic spending is on the wane.

Chinese stimulus is still believed to come, but there is a simmering sentiment that it will not be commodity-intensive enough to boost commodity shipping rates.

As for exports on the China West Coast and North America route, it set spot rates at just $1,190 per forty-foot equivalent unit last Tuesday. This being 17% less than on June 6.

For his part, Serafino Capoferri, Associate Director of Asset Manager at Marine Money Week said, “Very often in this shipping industry we think it’s all about real estate development, but in reality, the share of manufacturing in total demand for Steel has grown, really driven by this export boom that we have seen since 2020. China is clearly still the factory of the world, and the goods exported contain a lot of raw materials and a lot of steel.”

The shipping rate optimism is based on stimulus in the property and infrastructure sectors that would increase demand for steel and thus demand for imported volumes of iron ore and metallurgical coal, the same materials that are primarily used for the manufacture of automobiles (said that exports have tripled since 2020).

Added Duncan Wringley, chief China economist at Pantheon Macroeconomics “Demand is slowing, and where is that demand slowing? Number one, on the external side of things. Manufacturing is cooling off, obviously.”

In addition, Wringley mentioned the rebound in exports in March that later fell, this is attributed to the recovery of pending orders that accumulated during the Zero Covid policy and the waves of infections after eliminating the same policy. He stressed that the slowdown in demand is a global phenomenon, as an example are other countries like Korea whose exports have plummeted.