Chinese logistics grind to a halt on coronavirus fallout

By Carrie Shi, William Clarke, Sybil Pan
Published: Friday, 07 February 2020

The coronavirus outbreak in China has severely disrupted logistics in the country, creating a shortage of available lorry drivers and rail freight cars, with transport between provinces severely disrupted.

"We haven’t delivered any materials for the moment because transportation has been delayed due to the coronavirus [situation]," a magnesia producer told Fastmarkets on Friday February 7.

"Currently, most logistic companies haven’t come back to work [since the extended break for the lunar new year holiday], which [means that there are] fewer freight cars to deliver materials and freight fees are higher than usual," a fluorspar producer said.

"We resumed part of our production recently, but we face difficulties in transporting materials to customers due to there being fewer freight cars for the moment," a lithium producer said. "As for delivering lithium hydroxide, even if freight fees double, it is still hard to find freight cars."

Most Chinese businesses closed on January 24 for the lunar new year holiday. This was scheduled to end on January 30 but has been successively extended to keep businesses closed in an attempt to slow the spread of the infection.

These closures, which were being implemented on a province-by-province basis, now looked likely to disrupt activity until the end of February.

In Henan, fused alumina producers said that companies were going to be closed until February 17.

Workers who return to the province from elsewhere after the extended holiday will not be allowed to return to their factories straight away. They will instead be monitored for symptoms for a further two weeks before they can go back to work.

This meant that many operations were not going to be able to resume production before the end of February.

Given production lead times and shipping distances, no new alumina was likely to arrive in Europe until the end of April.

An alumina and bauxite market source said that "prices are not rising now because [Chinese] people are not working. Once they come back and factories restart, you’ll see [price increases]."

But the disruptions could be exacerbated by the knock-on effects of the shutdown regime.

"If vessels don’t get cargoes right now, shipowners may move them elsewhere," a source said. "This could lead to a shortage of vessels once the situation improves and cargo can make it to ports."

As well as the disruptions within China, the attempts to control the disease have led to restrictions on shipments over land borders.

The northern province of Lang Son in Vietnam has closed its border with China, while another province, Lao Cai, has imposed restrictions on border crossings.

According to a trader, overland cargo to Russia was still being allowed through on trains, but there were no trucking companies available to move cargoes to and from the rail terminals.

 



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