Logistics within China recover after Covid-19

By Carrie Shi, Sybil Pan
Published: Tuesday, 12 May 2020

China’s domestic logistics are returning to normal, but overseas demand has been curbed by the Covid-19 virus.

Trucking and depot businesses are returning to normal in China following some patchy recovery in the middle of February after the extension of the Chinese New Year. The national holiday was extended due to the Covid-19 virus pandemic. At the same time, overseas demand has been curbed due to the spread of the virus globally.

Through the beginning of February, the coronavirus outbreak in China severely disrupted logistics in the country, creating a shortage of lorry drivers and rail freight cars.

The seaborne market showed initial improvement in port cities – including Qingdao, one of the production hubs for graphite – after February 10, whereas land transport was limited in interior provinces due to border closures and a lack of trucks and drivers.

China’s authorities implemented measures to try to allow people to resume work while at the same time preventing the spread of the coronavirus. Logistics started to recover from late February, and with fewer Covid-19 cases in China, most market participants are reporting more normal transport conditions.

"Material shipment within China has improved a lot. The main problem for us now is that there are very few export orders for shipment," a trader of refractory-grade bauxite told Fastmarkets. "We have no closed deals after the middle of March. Now, many overseas clients have suspended operations, and inquiries are rare."  

A brown fused alumina producer in Henan said: "Highways have been made toll-free at the moment, which constitutes a drop in freight. And operations at ports [in China] are not affected."

Meanwhile, a magnesia producer added: "Transportation within Liaoning has run normally since late February, and domestic transportation has no big problems. Transport fees have returned to previous normal levels as well. The problem is downstream buying remains slow, and global buyers slowed down their purchasing pace due to the impact of the spread of the virus."

Even in Wuhan, refractory operations have started to recover since April 8 – the day the city’s lockdown ended – albeit at a minimum level. Demand for flake graphite raw materials is expected to be back to normal by the end of April," a flake graphite trader in Shandong, China, said.

However, with the coronavirus spreading around the world, export orders for many refractory raw materials have been delayed.

"We shipped some fused alumina to Japan and South Korea last week. There seems to be a quarantine check when passing South Korea, which would result in the delay of shipments by 10-15 days," a second fused alumina producer in Henan told Fastmarkets.

"Fluorspar acidspar orders from overseas buyers have reduced, and even inquires have become fewer." a fluorspar exporter said. "Some overseas buyers worry whether the materials can pass their customs clearance at the destination port, so most of them haven’t placed any orders."

And a magnesia trader added: "There are no problems in delivering materials from China – the problem is some buyers’ countries closing their doors to control the coronavirus. My major magnesia customers are from India, and they delayed purchasing due to the [lockdown there]. I have no orders for the whole of April."

Others are saying that orders to countries such as Russia and the United States have been delayed due to concerns surrounding the unloading of material when the cargo arrives.