Congestion at Chinese ports has delayed deliveries from iron ore to electronics, forcing companies to rely more on inventories, Bloomberg reported.
Shipowners allege that due to the Chinese government’s tightening of vessel quarantine requirements and reduced manpower at ports, it took a week to 10 days longer to deliver iron ore to China than during previous pandemics. The situation was exacerbated by the outbreak in Hong Kong, which used tougher measures to stem the spread of Omicron, further delaying shipments of electronics and petrochemicals through the port.
Data from logistics intelligence firm Project44 showed that an average of 23 container ships were waiting to berth in Hong Kong every day in January, up from 18 in December, and the situation is likely to worsen as the Hong Kong government tries to screen the entire population.
In addition, now is a sensitive period for iron ore. China is stepping up plans to cool the rising prices. Coupled with port congestion and delays in delivery, the government has asked top commodity trading companies to reduce inventories and cooperate with Investigate stockpiling.
The activity caused the price of steelmaking raw materials to plunge 15% this week.
With port inventories at their highest level since 2018, the impact of shipping delays on prices may be slowed, but amid an uncertain demand outlook, Chinese authorities have called on some traders to release “excessive inventories”, which could add some volatility to iron ore.