Explosions at Tianjin port delay some iron ore deliveries to steel mills

admin publish 2015/8/15 14:47:15

Massive explosions late Wednesday at north China's Tianjin port have closed main roads connected to two iron ore loading areas at the port, resulting in delays in iron ore deliveries to some steel mills, industry sources said Thursday. 

There were two blasts at the main explosion site, a container stockyard for chemical or hazardous goods. Following the two major explosions, there were also a series of smaller blasts around the site. 

The Nanjing and Beijiang port areas are the two main iron ore facilities in the massive Tianjin port, from where material is loaded onto trucks for deliveries to steel mills around that area. 

Tianjin itself is one of the main iron ore ports in China -- the world's largest importer of the steelmaking raw material. 

Both Nanjing and Beijiang have halted delivery operations for the day, and vessel discharging has also been halved. 

"It is the first time we are seeing roads leading to both port areas being closed, and this will affect our iron ore supply, especially since we have been keeping very lean inventories of only 10 days [supply] at our premises," said a Tianjin-based state-owned steelmaker source. 

The source said the company usually sends trucks to the Nanjing and Beijiang port areas and then transports the collected iron ore to the plant which is less than 100 km away from the city. 

The steelmaker may consider buying iron ore from the ports of Jingtang and Caofeidian in Tangshan city if the road closures continue, even though the transport costs will be higher, the source added. 

"Our contractual shipment will arrive at Tianjin after this week, but we may buy iron ore from other nearby ports if the roads to the port area are not opened by then," the source said. 

MIXED VIEWS 

Chinese steelmakers, wary of poor steel margins, have kept low iron ore stocks since last year. 

Platts IODEX 62% Fe physical iron ore assessment slumped to an all-time low of $44.50/dmt CFR Qingdao on July 8 due to a supply glut, before recovering to $56.25/dry mt CFR Qingdao Wednesday. 

But some other steelmakers who rely on iron ore supplies from Tianjin port said the road closure would have minimal impact on their steel production as they don't expect it to last for more than a week. 

A mill source in Tangshan, who buys iron ore from Tianjin, said he will not consider buying iron ore from other ports as transportation costs are too high. 

Some market sources also noted that the road closures to and from Tianjin port will have minimal impact on the seaborne iron ore market. 

"Those mills affected by the road closure at Tianjin port can always seek alternatives at other nearby ports such as Jingtang or Caofeidian, which may push up port stock prices by Yuan 10/mt at the most," said another steelmaker source in Tianjin. "The impact on seaborne iron ore prices will be negligible." 

Australian iron ore mining giant BHP Billiton said Thursday there was "no damage to the iron ore discharging berths following the explosion." 

A Melbourne-based spokeswoman for the miner said in an emailed statement, however, that "shipments and port operations have been disrupted as a result and we are working with our customers to minimize any potential impact. We will continue to monitor the situation closely." 

BHP Billiton's nearest iron ore discharge berth is about 20 kilometers (12 miles) away from the blast site. 

The spokeswoman also said in the statement that "the 15 steel mills ... who source cargoes from Tianjin port have average inventory of around one week [and] no significant impact on steel mills' production is expected in short term", although this would also be dependent on when the "pollution caused by the hazardous chemicals will be cleared".

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