International Steel Mills
Source in China Reports on Disruptions from Virus
Written by Tim Triplett
February 5, 2020
The frightening coronavirus outbreak in China has disrupted manufacturing and construction, which may lead to lower steel prices. Commerce at China’s many ports has also been impacted to varying degrees, reports a Steel Market Update source in Beijing.
At some Chinese ports, ships are able to berth and unberth as normal. In other locations, loading and unloading is slowed by a lack of manpower. Crew changes are restricted to prevent replacement workers from passing on the virus. Trains continue to move goods in most areas, but many highways are closed preventing trucks from making deliveries, the Chinese trader told SMU.
Steel prices in China are feeling downward pressure on both the supply and demand sides. Iron ore and coking coal prices are expected to drop another 10 percent, causing domestic steel prices to decline. As construction sites are closed and work is put on hold until the virus can be contained, Chinese steel traders may not be able to book their tonnages for February. This will lead to more steel offered for prompt export, causing steel prices in Asia to drop by 10-20 percent. “Or both will happen and Mr. Xi will be blamed,” the trader said.
Chinese President Xi is facing criticism for failing to respond more promptly to medical reports about the virus back in late December. “It could have been contained, but with Chinese New Year approaching no one wanted to bear the responsibility. Three million people traveled from Wuhan [where the virus originated] in the 10 days prior to CNY. The government knew of this virus well in advance and failed to act accordingly as the needs of the few outweighed the needs of the many around CNY,” he asserted.
The World Health Organization reports that more than 28,000 people have been infected with the virus so far, and more than 560 have died, including one death outside of China, as of Thursday, Feb. 6.
Tim Triplett
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