SHANGHAI, Oct. 11 (SMM) – Road/truck transportation fees have been rising since September in many regions in China, and the introduction of new transportation regulations is the main culprit, in addition to season and holiday factors. 
China released new Regulations of Highway Administration for Overload Vehicles, effect on Sep. 21. Before the new regulations, road/truck transportation charges had rose in some regions. 
Many truck drivers increased transportation charges as they worried that they may not arrive at the destination before the new regulations for long distance. The rise in Xinjiang was obvious in particular, with fees up by 200-300 yuan per tonne to the Port of Tianjin. Besides, some truck drivers took a wait-and-see attitude before the new regulations, and so highway transportation capacity tightened, resulting in price gouging, especially for those who were in hurry to transport goods.   
Rising transportation fees have increased production costs at domestic silicon metal producers, SMM learns. One chemical-grade silicon metal producer in Sichuan estimated that production costs grew by more than 410 yuan per tonne after higher transportation charges. The rises in transportation charges, though not excluding the factor that pushed up the fees, were much higher than silicon metal price gains. 
One trader told SMM that they had added transportation term in contracts signed with silicon metal producers before transportation fees rose, which required buyers to compensate for the price difference. However, it was rare to see the price compensation. Some downstream producers said they could accept higher silicon metal prices brought by rising freight charges. But, those downstream producers also added that the increase in freight charges should be shared by silicon metal producers, logistics firms and downstream producers. 
Many downstream producers will start a new round of stockpiling, and silicon metal producers will suspend production amid the sluggish market if cost pressures from rising transportation fees are not be shared properly. To secure supply, downstream producers, on the other hand, will not push for lower purchase prices. 
Hence, SMM expects it is reasonable to see small increases in silicon metal prices in the short term, but silicon metal price will be finally subject to fundamental factor, excluding objective one. 
In other news, one logistics firm said the inflated transportation fees in some regions have dropped slightly after the new transportation regulations came into effect on Sep. 21. Taking transportation fees from Kunming to Guangzhou as an example, offers, which were 300 yuan per tonne before the rise, were 400 yuan per tonne (including tax) before Sep. 21, and fell to 380 yuan per tonne (including tax) on Sep. 22. The firm also added that transportation fees will remain high for the foreseeable future.   
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