Jingtang and Caofeidian ports in north China's Tangshan steel production hub have prevented trucks not meeting stricter fuel emissions standards from transporting goods over 22-29 July, adding to supply disruptions.
The transport restrictions follow stricter production restrictions announced last weekend that most steel mills in Tangshan will have to shut blast furnaces and shut down sintering operations during 26-28 July to curb heavy air pollution.
Portside transactions were muted after Caofeidian port suspended operations yesterday and prices edged lower. PB fines sold at 890 yuan/wet metric tonne (wmt), or a seaborne equivalent of $120.25/dry metric tonne, in the morning and down by Yn7/wmt from yesterday. Iron ore transactions were active in the main north China ports except Jingtang and Caofeidian as a result of the truck restrictions.
Steel mills that had urgent requirements emerged to stock up when the market gradually stabilised after a downward correction.
"The port closure hindered transactions. We have not sold any cargo in the two ports today," said a trader at a large-size international trading firm.
The port restrictions have had more of an impact on sentiment, adding to expectations for slower iron ore demand during the period of tighter output restrictions, a Xiamen-based trader said. But some major trading firms were active selling portside ore today, the trader said.
Any downwards pressure on prices may be limited as trading firms are unwilling to cut prices with the short-term demand outlook for iron ore generally bullish, said a Tangshan-based mill buyer. Tight stocks of mainstream ores at Tangshan ports could support prices in the short term.
Steel mills' iron ore inventories are ample at the moment because of the slowdown in operations and off-season demand.
"We have been under production restrictions and demand for portside iron ore is limited. Iron ore inventories in factories are enough for us to maintain current production," said the manager of a Tangshan-based steel mill.
Another mill buyer in Tangshan said "we have reduced more than 70pc production now, so demand for iron ore dropped sharply."
The highest temperatures of the summer are also factoring into slower demand. "Today is called the Great Heat. Demand on steel is weak and steel sales are slowing down from last week. The hot weather might last another 20-30 days," a Hebei trader said.
