China's coastal coal freight rates rose further in the week following the May Day holiday, particularly for vessels to Yangtze River ports, supported by relatively tight vessel availability as shipowners held firm on rates.

The China Coastal Coal Freight Composite index, which tracks rates for vessels carrying coal from northern China ports to ports in the east and south, increased 3.48% from pre-holiday levels to 1,279 points on May 8, according to the Shanghai Shipping Exchange. It climbed 26.28% compared to month-ago levels and soared 94.95% from a year ago.

Post-holiday increases in plant coal burns and elevated imported coal prices encouraged end users to purchase domestic cargoes. This, coupled with vessel queues waiting for loading at northern ports, further refreshed the number of anchored ships.

Meanwhile, a stronger international market and more shipowners deploying vessels overseas reduced capacity for coastal coal transport, pushing freight rates higher. Elevated global oil prices also provided firm cost support, enabling vessel owners to maintain high rates.

During the week, most shipping routes climbed 1.3-2.4 yuan/t compared to April 30, reaching multi-year highs. The freight rate for the 50,000-60,000 DWT vessels carrying coal from Qinhuangdao to Guangzhou port increased 1.6 yuan/t compared to pre-holiday levels to 75.4 yuan/t on May 8, while that for 60,000-70,000 DWT vessels on the same route rose 1.3 yuan/t to 73 yuan/t.

Internationally, the Baltic Dry Index (BDI), tracking rates for ships carrying dry bulk commodities, stood at 2,978 points on May 8, up 9.08% compared to 2,730 points a week ago.

The Asian thermal coal market remained active on rising demand and tight supply. Panamax vessels from Indonesia to China increased $0.6/t from pre-holiday levels to $11.64/t on May 8. Supramax freight rates on the route reached $13.31/t, ticking up $0.04/t, while Capesize vessels from Australia to China climbed $2.4/t to $22.81/t.

Looking ahead, freight rate gains are expected to narrow or even retreat, as continued stock buildups at northern ports and ample inventories at southern China ports are likely to curb end-user purchases.