China’s biggest coronavirus outbreak in months stalls coal, steel deliveries as frigid temperatures compound problems

Parts of China have started restricting vehicle traffic from Hebei province, which surrounds Beijing, and that includes trucks carrying essential coal for heating

Severe winter weather, with biting winds and subfreezing temperatures, is disrupting the transport of raw materials

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Deliveries of steel in parts of northern China have been affected by new coronavirus cases and frigid winter temperatures. Photo: AFP

Published: 8:04pm, 8 Jan 2021Updated: 10:37pm, 8 Jan 2021

As if China’s biggest outbreak of coronavirus in months were not enough, the coldest temperatures in the capital and surrounding areas in years are delaying the delivery of critical supplies of coal, in addition to steel.

“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 as local authorities have quickly imposed restrictions on trucking in parts of the province – disrupting the transport of both steel and raw materials – but the tangible impact on mill operations has been limited so far,” metal data provider Mysteel said in a note on Thursday.

While larger steel mills are still operating, there have already been logistical disruptions in terms of production and deliveries, because Hebei – which surrounds most of Beijing – has closed major highways leading into the provincial capital, Shijiazhuang, where some major steel factories are located.

Other regions of China have also begun implementing measures restricting traffic from Hebei, and that includes trucks carrying coal, which is in higher demand now, as it is used in power generation and heating. The China Meteorological Administration on Tuesday issued its first cold-weather alert of the year, warning of further temperature drops in much of the country, including parts of northeast and northern China.

The export of some coal from main production regions [to Hebei] has been blocked

Huatai Futures note

“Affected by the outbreak, there are been traffic restrictions in many highways in Hebei, and some coal mines in other regions do not allow trucks with Hebei licence plates to load coal, so the export of some coal from main production regions [to Hebei] has been blocked,” said Huatai Futures in a research note Thursday.