Some Chinese ports have made stricter checks or have imposed extra fees on iron ore cargoes from India recently, the better to prevent the spread of the Covid-19 pandemic, market sources have told Fastmarkets.
The Group of Rizhao Port in eastern China published a notice early this week that it would charge a port fee of 5 yuan ($0.77) per tonne on India-origin iron ore from May 12, for the purposes of Covid-19 pandemic prevention, at Rizhao port and Lanshan port.
Lanqiao port also added an extra port fee on Indian iron ore in vessels of 160,000-200,000 tonnes, based on negotiation, at a level around 4-5 yuan per tonne, market sources said.
“The extra port fee is likely to be used for stricter quarantine inspections of cargoes from India, where Covid-19 is spreading widely. Less demand for Indian iron is expected because of the extra fees,” a buyer source from north China said.
There were no specific measures or notices for Indian iron ore unloading at China’s other ports, and cargoes were still flowing from India to China, including iron ore pellets and low-grade iron ore fines. But the unloading rate for Indian iron ore has slowed down recently with the stricter checks, a few market participants said.
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“If the Covid-19 virus is not contained properly [in India], we might see the Chinese government impose even stricter checks [on Indian cargoes],” a Hong Kong-based trader said.
A few market participants said that the extra port fees for Covid-19 checks or quarantine costs were acceptable and could help the cargoes to flow in, while other ports may come out with solutions later, based on local Covid-19 prevention regulations and market demand.
“I heard that some ships with Indian iron ore are waiting extra days to be unloaded at Caofeidian port [in north China], and have not been given clear unloading instructions,” a Shanxi-based mill source said. “[The suppliers] may lose more money if [the vessels] keep waiting at ports.”
Some market participants said that most end-users would prefer to use high-grade iron ore products to sustain steel production with the decent steel margins recently, and because of the limited operational rates under China’s production curbing policy.
“The port inventory of Indian iron ore in China is relatively high, so the extra port fees could depress buying activity,” a trading source in Shanghai said. “However, steel demand seems to have cooled down a bit, and if steel margins decrease later, then Indian iron ore could attract buyers again.”
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