In August 2017, the Qingdao Municipal Safety Production Committee Office issued a communique in relation to the “ban or limitation” of Export Operations of Dangerous Goods in Qingdao Port.
After Tianjin ceased handling dangerous goods-about 60% -70% of the hazardous chemicals are now being exported via the Qingdao port. On the ground, the situation is a complete blockade of hazardous cargoes both into & out of Qingdao port.
The proposed ban or limitation covers the following Hazardous Chemicals:
- Class 1: e.g Explosives chemicals and products as fireworks, detonators, TNT, PETN
- Class 2:e.g Compressed and Liquefied Gases as Aerosols and Refrigerant gases
- Class 3: e.g Flammable liquids as Methyl Isobutyl Carbinol (MIBC) and Methyl Isobutyl Ketone (MIBK)
- Class 4: e.g Flammable substances liable to spontaneous combustion as Xanthates family products
- Class 5:e.g Oxidizing substances and Organic Peroxide as Ammonium Nitrate, Hydrogen Peroxide, and Calcium Hypochlorite
- Class 6.1:e.g Toxic Substances as Sodium Cyanide and Lead Nitrate
- Class 7: e.g Radioactive materials as every uranium derivatives
Only Hazardous chemicals of class 8 and 9 are currently being accepted for shipment via Qingdao port as “low-risk dangerous goods”;
- Class 8:e.g Corrosives as Caustic Soda, D2EHPA, and Sulfamic acid
- Class 9: e.g Miscellaneous dangerous goods as Copper sulphate pentahydrate and Cobalt sulphate
So what does it mean for Chemical buyers?
As a result, chemical suppliers are scrambling to look for alternative ports with options such as Lianyungang, Yantai, Shanghai- etc . The alternative options present several challenges mainly because they are either further away from the factories, low vessel traffic ( which mean lack of availability to many destination ports), higher handling costs. This then translates further into increased lead times and higher FOB prices.
So far a lot of suppliers are playing a “wait and see” game as buyers cannot and are not willing to accept increased prices.
For some chemicals like Sodium Cyanide, the process is a bit more complicated as it would call for all current export licenses in circulation to be amended to reflect the new shipping port.
Let’s takes an example with our Xanthates production area based in Muping (Shandong province).
For example, the distance from Xanthates production area to Qingdao port is 240 Km Versus 930 Km to Shanghai port and 470 Km to Lianyungang port. If the FOB port is Shanghai, that will increase the cost by approximately $80/Mt because of higher inland transportation costs. Furthermore, handling cost is higher in Shanghai port as compared to Qingdao port.
Currently, we don’t know if this law project will be enacted. In the meantime, all exportation of Hazardous chemicals (except Class 8 and 9) are banned for exportation from Qingdao port for an unknown period.
If this law is enacted, many suppliers of commodity hazardous chemicals will lose the business and will be less competitive since their cost increased because of higher transportation cost. Furthermore, lead time will increase as well.
Personally, I think this will not happen because this will destroy plenty of business activities in that region and increase the global unemployment rate. What do you guys think?