By Paul Ploumis 14 Aug 2015 Last updated at 06:22:57 GMT
The series of explosions at Northern Chinese Tianjin ports have resulted in closure of roadways to major port areas in the region. This has led to delay in shipments of iron ore to some steel mills.
BEIJING (Scrap Monster): The series of explosions at Northern Chinese Tianjin ports have led to blockades of road leading to the ports. This has caused delay in iron ore deliveries to some steel mills. The blasts occurred late Wednesday at a container site for hazardous materials. As per media reports, at least 50 people died and more than 700 were injured, some critically, in the explosions.
Following the blasts, delivery operations at the region’s Nanjing and Beijiang ports were halted for the day. The ports had also cut the rate of vessel discharging operation. The steel mills in the region are feared to face shortage of steel making raw material as most mills are reportedly holding low ore inventory levels at their facilities. According to sources, major still mills in the region transports ore using trucks. The delivery operations are now badly affected due to closure of roads leading to the ports, the y noted. Taking delivery of ore from Jingtang and Caofeidian ports in Tangshan city is feared to result in high transportation costs.
The closure is unlikely to affect production at mills having more stocks of ore. The road closure is said to have minimal impact on seaborne iron ore market. Moreover, the road closure is unlikely to last long, they added.
Meantime, seaborne iron ore prices and steel futures prices gained on the back of supply concerns. However, the impact is likely to be short-lived. The Jan 2016 rebar contract on the Shanghai Futures Exchange closed up CNY 31 per tonne at CNY 2,092 per tonne ($330 per tonne), while the same Jan 2016 contract for hot rolled coil closed up CNY 25 per tonne at CNY 2,094 per tonne.
The devaluation of yuan is expected to boost steel shipments from the country, which in turn may boost the demand for iron ore in the immediate near term.