Hebei ferrous market braces itself for new COVID cases

Posted on 08 January 2021

A rise in the number of confirmed cases of the coronavirus recorded in North China’s Hebei province over the past few days is making steel producers, traders and raw materials suppliers in the province anxious, especially when the local authorities have quickly imposed restrictions on trucking in parts of the province – disrupting the transportation of both steel and raw materials – but the tangible impact on mill operations has been limited so far, market sources confirmed on Thursday.

On January 6, another 51 people tested positive for COVID-19 in Hebei, 50 of whom were in Shijiazhuang City and the other in the neighbouring Xingtai City, and Hebei, thus, accounted for most of the 63 newly-identified infections nationwide on Wednesday. Hebei is by far the largest steel-producing hub among China’s 34 provinces, autonomous regions, municipalities and special administrative regions,  accounting for 24.3% of the country’s total crude steel output in 2019, Mysteel Global notes. 

The spike in Hebei virus cases has led many regions elsewhere in China to decide to decline entry to vehicles bearing Hebei licence plates, interrupting the flow of steelmaking raw materials there. For instance, in North China's Shanxi, the country's top coke and coking coal production base, special testing stations have been set up at the entrances of highways connecting the province to Hebei. 

According to updates from the Shanxi Department of Transportation, vehicles from Hebei are barred from highways entering Shanxi, though as of late Thursday no restrictions had been placed on vehicles leaving Shanxi for Hebei.

"Vehicles are being stopped at the entrance of highways connecting Xingtai to Shijiazhuang, and all citizens in our city are required to have a virus test," said a source in Xingtai, a major coking base in Hebei.

Some coal miners in Shanxi have introduced virus-containment measures too. Mysteel has learned that one coal mining enterprise has notified truck drivers from some Hebei cities that they need to present negative COVID-19 test results and carry similar documentations to be allowed to enter the mine operations.

An iron ore procurement official from a Shijiazhuang-based steel mill said that truck deliveries of iron ore have been affected by the strict limits imposed on transportation into and out of the city, but that currently, train transportation has not been disrupted. “AS of now, our production has not been affected in general, as our iron ore stocks are relatively sufficient,” he explained. 

An iron ore trader in Tangshan, Hebei’s largest steel-production base, confirmed on early Thursday morning that so far, local iron ore truck transportation has not been affected by the latest virus outbreaks.

Despite their inevitable concerns about the potential impact on raw materials transportation, local steel mills in Tangshan are being little inconvenienced in terms of production. “The pandemic spread in Tangshan is not that bad, and local steel mills’ production remains normal,” the Tangshan trader remarked.

Another Tangshan-based source confirmed. “Most mills are maintaining production as their raw materials stocks are generally sufficient to last them for 10-15 days’ use and (steel) sales in Tangshan are going smoothly. Steel deliveries in Xingtai are being affected by road transportation controls but the impact of this on the ferrous market is limited as many steel products made there are consumed locally (within Hebei),” she added.

An official from HBIS Group Shisteel Co in Shijiazhuang, the epicentre of the virus resurgence, said the outbreak was having no impact on production or sales. “Thanks to our sufficient stocks of raw materials, our production is as per normal. Also, our steel products are transported by rail, so everything has been going well amid the spike of infections,” he told Mysteel Global.

“And I guess the strict curtailment of movement for people in Shijiazhuang will not last long. Virus testing of all residents is expected to be completed within about three days (and) afterwards, all transportation should be back to normal,” he added. The city’s population is estimated at 11 million, Mysteel Global notes.

Another Hebei-based market observer, however, noted that all the ongoing construction projects in Shijiazhaung have already been suspended and that trading of steel in the city has been at a standstill.

Source : Mysteel Global