BEIJING (BLOOMBERG) - Port congestion in China is slowing the delivery of everything from iron ore to electronics, forcing companies to rely more on stockpiled inventories of goods.
It is taking a week to 10 days longer to deliver iron ore supplies into China compared with before the coronavirus pandemic, according to charterers and shipowners. That is because of tightened Covid-19 quarantine requirements for vessels and reduced manpower at ports, they said.
Adding to the problem is the situation in Hong Kong, as it battles one of its most challenging Covid-19 outbreaks. The city's harsh measures to control the spread of the Omicron variant is delaying shipments of electronics and petrochemicals through its port.
An average of 23 container ships per day waited to berth at Hong Kong in January, up from 18 vessels in December, according to data from logistics intelligence firm project44. That is one of the biggest jumps in congestion at Asian ports, which could worsen as Hong Kong attempts to test the entire city.
The shipping delays come at a sensitive time for iron ore, as China steps up a sweeping plan to cool rising prices. Top commodities trading firms have been asked to draw down inventories and cooperate with a probe into hoarding.
The directive followed a joint investigation with the market regulator in Qingdao, one of the country's biggest iron ore ports, where stockpiles had been found out to have increased rapidly amid suspicions of hoarding to drive up prices.
The campaign has caused prices for the steel-making raw material to plummet 15 per cent this week.
With port stockpiles at the highest since 2018, the impact of shipping delays on prices could be muted. Still, it could add some volatility to iron ore amid an uncertain outlook for demand and calls by the authorities for some traders to release "excessively high stockpiles".