North China's Omicron outbreak impacts truck transport

Posted on 15 January 2022

The transportation of steel and steelmaking raw materials via trucks in North China's municipality of Tianjin is under pressure as the government there reacts to the emergence of locally transmitted Omicron COVID cases, according to market sources on Wednesday. However, for now the impact on steelmakers' production in the city and nearby areas is relatively limited and within control, they stressed.

The first two confirmed cases of local transmission of the virulent Omicron strain were confirmed last Saturday morning, said the municipal headquarters for COVID-19 prevention and control. The day after, the municipality of 13.9 million people that neighbors Beijing launched city-wide Nucleic Acid Amplification Testing (NAAT) which identified another 77 positive samples, and by noon on Tuesday, the number of people tested positive had climbed to 97.

A city's government notice on Wednesday said that a second round of mass testing would start that afternoon.

On the latest available data, during 2020 Tianjin, an important production base for galvanised sheets and coils as well as steel pipes, produced 21.72 million tonnes of crude steel, accounting for 2% of the nation's total volume that year, Mysteel Global notes.

To curb the spread of COVID-19, the city has taken several measures including advising people not to leave the city unless necessary, and those who must are required to have green health codes, a negative NAAT result no older than 48 hours and travel approval from their employers or communities. Other cities are also advising its citizens to avoid going to Tianjin.

Under these circumstances, the transportation of steel and steelmaking raw materials by truck has slowed considerably in the Tianjin area and local authorities rush to contain the spread, Mysteel Global noted.

"Steel deliveries and stock-building have been seriously impacted as many commercial warehouses require negative COVID certificates to enter," a steel trader based in Tianjin observed. "We have products at hand and at current prices, we can earn handsome profits, but we just could not deliver the products," he said.

Steel production among Tianjin mills, on the other hand, has yet to experience any notable disruption from the city's tough response to the virus's reemergence though the steelmakers too are struggling to deliver their steel to the market, according to him.

An official with a Hebei-based steelmaker outside Tianjin agreed that truck transportation in Tianjin has slowed due to the new virus cases. "We have temporarily suspended hauling iron ore via trucks from Tianjin port, as it is rather complicated to arrange," he said.

"Drivers must have a negative NAAT result no older than 48 hours, and in fact, transportation into and out of Tianjin has already had some constraints," he added.

However, in the case of his mill, the overall impact on iron ore supply is limited for now as the company also use trains to transport iron ore, and rail transport has yet to be impacted. "We can also buy and haul iron ore from other ports, such as ports in Tangshan and Huanghua port (in Hebei), as well as ports in Shandong," he said.

An iron ore procurement official with another steel producer in Shijiazhuang, Hebei, also confirmed that use of trucks to carry iron ore from Tianjin port has been disrupted.

Road haulage rates have increased too over the past several days because of the reduction in the number of trucks being able to operate. However, the Shijiazhuang mill official noted that because his works receives about 80% of its iron ore requirement via rail, the impact on its production is within control limits. "And we have turned to source iron ore from (Hebei province's) Huanghua port," he added.

Not that his business is not being disrupted. He admitted to Mysteel Global that because he had just returned from Tianjin port last week, in line with his local government's requirement, as of Wednesday he was still in 14-day quarantine in a special hotel. "But the quarantine has no impact on my work. With phone and laptop, I can do procurement as per normal," he said.

Apart from iron ore, coking coal transportation via trucks in Tianjin has also been partially impacted by the pandemic control measures, according to a Shanxi-based market watcher, but he maintained that the impact on general coal sales is limited for now.

Source : Mysteel Global