Official documents seen by S&P Global Platts showed that the government imposed a restriction on number of trucking trips per day to Paradip and Gopalpur port due to heavy traffic congestion and to minimize the risk of the spreading of coronavirus, with effect from June 25.
The total trucking quota imposed on Paradip was at 935 per day and 332 per day for Gopalpur, with sources estimating a cut of around 60%-70% for trucking trips in Paradip.
Market sources pointed to existing long lineups of trucks waiting to enter Paradip with many companies having lengthy backlogs of logistical activities, following the lifting of the nationwide lockdown earlier.
A source pointed to pressure on existing spot contracts having last sailing date terms, with expectations of weak July shipments as well.
The total quota was understood by Platts to be allocated to various mining companies on the basis of their export requirements.
July spot availability for Indian fines are largely scarce due to the monsoon season but producers are unable to capitalize on higher buying interests as well due to the logistical delays, a seller said. The quota will not clear up the congestion immediately, but perhaps allow the larger producers to export their fines more effectively, the source added.
The pricing point for Indian fines are theoretically attractive but concerns over delays and logistical issues may steer end-users to procure Australian low grade fines instead, a Chinese trader said.
Export data seen by Platts showed a total of around 4.09 million tons of iron ore exported out of Paradip during April to May 2020.