Chinese Ports not to lower handling costs despite dip in volumes

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Nov 2008

According to some major Chinese ports, though China's iron ore imports have decreased, for any single port, there is no momentum to cut handling cost since iron ore throughput still far surpasses designed capacity. The comment came in response to recent forecasts that Chinese ports intend to lower handling costs. Mr Sun Yufeng secretary to board chairman of Rizhao Port Group said that "It is utterly groundless to say that we will reduce iron ore handling cost. Despite two hikes in this year, its handling cost still goes in line with the standard fixed in 1985. Iron ore throughput at the port now breaks 50 million tonnes, far exceeding designed capacity of 16 million tonnes.”
Mr Guo Xiaowei securities affair representative of Tianjin Port Group also revealed that the port eyed considerable throughput in the third quarter. Latest statistics has not been released but it is sure that there is no handling cost cut plan in near future. The senior officials of the group have not discussed the issue.
China Ports & Harbours Association disclosed that it has heard of no handling cost cuts so far and is unclear of the availability of such plans.
Though ports have denied cutback plans, China's iron ore handling capacity will surge in 2009 and 2010 since ports all expand iron ore docks in view of rocketing ore imports in recent years. Besides, as economic recession deepens, iron ore imports will fall, hence some analysts believe handling costs are likely to be reduced by then.
Domestic steelmakers have slowed down iron ore imports due to economic recession. Statistics show the country imported 30.62 million tons of iron ore in October a MoM drop of 21.9%. Experts expected the imports to keep shrinking for some time. This has aroused concern on whether listed port companies will be influenced especially when some analysts forecasted ports would cut handling costs.
A more important reason is that in fact iron ore import volumes through the port still keep increasing in October and November. The volume in October gained 6% from September level and that in the first two days of November increased 4% from corresponding period of October. Mr Sun believed there is no reason to cut handling cost against such a backdrop.

Source: Securities Times