Whatever the cargo, China’s ports are getting clogged up thanks to the coronavirus. Splash reported today on the huge number of containers stuck at Chinese terminals. On the dry bulk front, the country’s steel stockpiles have also hit record highs with inventories more than doubling since mid-January.
According to the China Iron and Steel Industry Association (CISA), the outbreak of coronavirus has triggered a serious imbalance in the the supply and demand scenario for the steel industry with limited production and transport restrictions. The association said it has been coordinating with the Ministry of Transport for possible solutions.
Statistics from the association show China’s total steel stockpile of five main steel products currently stands at around 34.28m tons, surpassing the historic high level of 25.3m tons seen in March 2018. CISA expects the stockpile will remain at high levels in the near future.
Luo Tiejun, vice director of CISA, said in an online conference this week that the steel mills are also facing challenges to ship out all their export orders in March.
The swelling steel inventories could also add downward pressure on iron ore prices as China is the largest iron ore importer in the world, accounting for around 65% of the global imports and currently most steel mills in China have taken measures to reduce production. As of last Friday, fixtures of iron ore imports to China stood at just 38 cargoes in February – a stark contrast to the 62 spot cargoes fixed in the same period last year, according to data collated by BIMCO.