Disaster triggers rise in commodity prices
Commodity prices, including iron ore, increased after last week’s fatal blasts in Tianjin affected operations at the city’s port.
The explosions occurred on Aug 12 at warehouses in the BinhaiNewArea close to Tianjin Port.
Iron ore was priced at $56.75 a metric ton on Tuesday, a 1.34 percent rise from a week ago, according to Platts Iron Ore Index, a benchmark assessment of the spot price for physical iron ore.
Driven by weakening demand for iron ore from China and other emerging economies, prices bottomed at $44 a metric ton last month.
Following disruptions to supplies by the Tianjin blasts, iron ore rose to $57 a ton at Qingdao Port, another major trading port in northern China, last Thursday — the day after the explosions.
“The iron ore price might continue to rise in the future, mainly because of the yuan’s depreciation,” said Zhang Tieshan, a senior analyst at industrial information provider Mysteel.com. “The blasts’ effect on the iron ore price will be short-term.”
Zhang said the explosions will have a longer-term effect on the development of Tianjin Port because they showed that management had failed to prevent the disaster, raising doubts over whether the port had been growing too fast.
According to JYD Online Corp, a bulk commodity consultancy in Beijing, iron ore stocks at Tianjin Port stand at about 7.1 million tons, accounting for 8.73 percent of the national inventory.
TianjinPort is a comprehensive trading port with major businesses in cargo, crude oil, iron ore and coal.
It is the largest export port for coking coal and the secondimport port for iron ore in the country.
Besides iron ore, the futures price of sugar rose by 1.51 percent and that of cotton by 0.08 percent onMonday.
Xue Qun, an analyst at Shandong Longzhong Information Technology Co Ltd, a consultancy focusing on petroleum and chemical products, said, “Operations at Tianjin Port are still suspended.”
She said shipments previously scheduled for Tianjin have been transferred to other ports and it is not known when the port will reopen.
“If Tianjin Port remains closed for too long, costs for downstream processing companies will increase, as they have to obtain supplies from elsewhere,” Xue said.
Tianjin Port is a key distribution center for crude, refined and fuel oil. Many trading and logistics companies are located in the area.
The blasts will affect the distribution of oil from the port to neighboring areas including Hebei and Shandong provinces and the Inner Mongolia autonomous region.