The congestion at ports in China due to restrictions following an outbreak of COVID-19 cases has injected fresh uncertainty over shipment logistics in several chemical markets in Asia.
Major ports in China are facing severe operational disruptions following an outbreak of COVID-19 in Jiangsu province , with the Chinese government tightening policies such as mass nucleic acid testing to stem rising infection numbers.
China is battling its worst coronavirus outbreak in more than a year, with the Delta variant detected in more than a dozen cities since late July.
Shipowners are now expecting higher premiums under high risks of delays due to frequent change of berth policies and long waiting period.
Ethylene spot discussions for September-delivery were hampered by vessel delays following harsher restrictions on foreign vessels at certain ports in Jiangsu.
Some of the affected suppliers have been busy rescheduling their vessels for August shipments and are currently not ready to offer ethylene spot cargoes for September.
At Zhoushan port in Ningbo, Zhejiang province, operations were suspended at its Meishan dock on 11 August after one employee tested positive for COVID-19. Zhoushan port is the world’s largest cargo port and the third biggest container port.
The restrictions in China has disrupted owners’ schedules, especially vessels that arrived at the affected ports before the policies were tightened.
Market sources said owners struggled to sort out schedules based on word-of-mouth updates from different sources and worked on the relevant paperwork required by the port authorities.
In the glycerine market, shipments to China may face further delays following a disruption of operations at Ningbo.
China is a major importer of crude glycerine from Brazil and Argentina which are usually shipped in flexi-bags on container ships.
Apart from deep-sea trades, regional shipments of crude and refined glycerine from southeast Asia may also face further delays.
“It is very difficult to find vessel space from southeast Asia to China also. Shipping and freight rates are getting very complicated and are key issues affecting trade,” a regional supplier said.
In the butyl glycol (BG) market, supply in the China market has tightened due to port restrictions, which has slowed down arrivals and offloading.
BG cargoes have been arriving time in south China, but market sentiment remained elevated as overall port inventories in China were still limited.
In the methyl isobutyl ketone (MIBK) market, buyers in urgent need had to pay higher prices to secure volumes from sellers with goods on hand following the restrictions at Chinese ports.
Transport facilities had also been reduced due to the port issues, with some MIBK volumes stuck at the ports without drivers to their destinations.
The port issues in China have compounded worries on high freight rates in Asia.
A recycled polyethylene terephthalate (R-PET) producer said that their regular clients in the US and Europe were not enquiring about Asia-origin cargoes mainly due to escalating shipping costs.
Continued tightness of container availability, coupled with port congestions due to COVID-19, have caused an uptrend in freight rates.
In the palm oil market, freight rates for have ticked up for parcels from southeast (SE) Asia to China.
The cost for chartering a 10,000-tonne vessel for the SE Asia-S China route has risen to high-$20’s/tonne and for the SE Asia-N China route has risen to mid-to-high-$30’s/tonne since H1 August 2021, ICIS data showed.
Similarly, the cost for chartering a 15,000-tonne vessel for the SE Asia-S China route has risen to mid-to-high-$20’s/tonne and for the SE Asia-N China route has risen to mid-$30’s/tonne since H1 August 2021.
Global shipping container rates are continuing to skyrocket, with pressure on shipping expected to linger until at least the middle of next year, according to Eytan Buchman, chief marketing officer at online freight shipping marketplace and platform provider Freightos.
Global trade and supply chains have been continuously pummelled by “stressors” – issues that pop up and put additional stress on the supply chain, like the partial port closure this week in China.
The average time from port to port from China to the US went up from 20 days in 2019, to 21.5 in August 2020, to 30 days at present.
Buchman said that door to door – once the container leaves the yard – is even more of a difference, growing to 70 days at present from 47 days at this time a year ago.
Source: ICIS by Nurluqman Suratman https://www.icis.com/explore/resources/news/2021/08/13/10673740/china-port-issues-compound-worries-over-asian-chemical-shipping