Chinese ports ramp up anti-virus efforts, move sparks worry over commodity imports

As part of a nationwide campaign to stem new outbreaks of COVID-19, many major Chinese ports have strengthened anti-virus measures, including quarantine requirements for workers, which has delayed commodity imports that are crucial to China’s manufacturing, according to some industry insiders and media reports on Thursday.

China has been taking various measures to cool elevating commodity prices, and some have raised concern that potential disruptions to imports may add to pressure on prices. But Chinese industry practitioners and analysts said that although there will be some impact on certain businesses, and overseas risks remain, the overall trend for stability remains intact, given the solid domestic market and firm policy support.

Following recent outbreaks of the Delta variant in many places across China, officials have also tightened anti-virus measures at coastal sea ports and airports to stem the spread of the virus from imports.

The Ministry of Transport on Monday issued guidelines for anti-epidemic measures for port and other frontline workers, including frequent testing and other strict preventive measures for those who handle import goods.

At Lianyungang port in East China’s Jiangsu Province, where the most serious outbreaks have taken place, loading workers have been required to undergo the 14-day quarantine after work, which has caused delays of up to one week for ships to be unloaded, a staff member at Chalco Qingdao International Trading Co said on Thursday.

“But this won’t last. It’s temporary. Once the epidemic is under control, [operations] would return to normal very fast,” the staff member told the Global Times, noting that the company imports aluminum ore from countries such as Indonesia and Australia, and it’s the epidemic situation in some of those countries that affect the company’s domestic sales and supply.

“So far, we don’t see a huge impact from the domestic outbreaks.”

At the Qingdao Port in East China’s Shandong Province, cotton imports have been required to undergo a disinfection process, which has led to long delays and higher fees, a cotton importer surnamed Chen told the Global Times on Thursday. “There are disputes over the extra costs and foreign firms won’t pay them. Costs for every ton have increased between 10 percent,” the importer said.

Another commodity import that has been affected is coal. Some localities have required ships that carry imported coal to wait 14 days since departure from an overseas port before entering a Chinese port, according to media reports. The move has led to delays in unloading imported coal and sparked concerns of short supply in certain areas, where domestic coal may have to step up, media reports said.

“In the short term, coal supply may be tight and prices may surge,” Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Thursday, citing the impact of the overseas epidemic and souring China-Australia ties.

However, Lin noted that China’s domestic coal supply should be sufficient to cope with potential shortages. “The reason for China to import [coal] from Australia was because the transport fee was cheap,” he said, suggesting that domestic coal will fill the gap.

China was already reducing coal imports, as part of an effort to cope with runaway commodity prices that have severely affected Chinese manufacturing companies. In the first six months of the year, China’s coal imports dropped by nearly 20 percent year-on-year to 140 million tons, while domestic coal output rose by 6.4 percent year-on-year to 1.95 billion tons, according to media reports.

The new viral outbreaks across China have also posed logistics issues for other raw materials and base metals, such as copper, sparking concerns over supply issues and surging prices. However, industry insiders said that the impact of the new outbreaks remains limited.

Liu Wensheng, deputy director of the ferrous metal department at First Futures, said that the new anti-epidemic measures may reduce efficiency, but the impact will “not be too big” because some shipping lines usually take at least 10 days.

Other factors, including the overseas epidemic situation and severe domestic weather, also pose risks for commodity imports and prices, insiders said.

Due to weather factors such as flooding in Zhengzhou, Central China’s Henan Province, steel sales “were not very good,” an owner of a steel mill in Tangshan, North China’s Hebei Province, told the Global Times on Thursday, adding that the new outbreaks may further delay construction projects, which in turn would reduce demand.

The epidemic situation in several countries may also add to already-rising shipping costs, which would lift costs for commodity imports, industry insiders said.

“With the epidemic situation worsening again, I’m afraid that shipping rates will continue to rise,” said the staff member at Chalco Qingdao.

Reining in surging commodity prices remains a top priority for Chinese policymakers in the second half of the year. A meeting of the Political Bureau of the Communist Party of China Central Committee on July 30, which focused on economic work in the second half of 2021, stressed the need to better ensure commodity supply and stabilize prices.

Analysts said that given China’s massive market and growing influence on global commodity prices as well as the government’s determination to reduce costs for businesses, more effective measures will be taken to ensure steady supply and prices in the second half to ensure stable economic development.

China’s economic growth prospects for the rest of the year are unlikely to be affected by the tightening of anti-epidemic efforts, said Yao Jingyuan, a researcher at the Counselor’s Office of the State Council, China’s cabinet, noting that the measures have been “adequate.”

“For the whole year, there is no problem for us to achieve all [targets] set in the beginning of the year,” Yao told the Global Times on Tuesday.