SMM Hot News-China Metal Special Report 3: Impact of the...

SMM Hot News-China Metal Special Report 3: Impact of the coronavirus outbreak on China metals market

Smm Insight

05:50PM

Feb 11,2020

Source:SMM

As business activity starts to resume after the extended holiday, activity levels remain subdued. Quarantine regulations mean anyone moving between provinces need to be self-quarantined at home for 14 days, while areas of central China remain locked down. Our Shanghai office, for example has only about 20% of staff in the office this week, with most working from home, and this is effecting all industries. Our channel checks suggest trading activity is starting to return in most areas, and overall confidence in future demand remains solid with the government clearly sending out a supportive message towards economic support in the face of the disruption. Activity at end users is varied across industries and regions however, with many requiring govt permission to restart such as is Guangdong. It remains too early to say whether there is any aggregate demand loss, but clearly activity remains subdued and demand will be delayed. Inventory is rising for most metals, but given this is still normal for this post CNY period markets appear unperturbed for now.

Transportation restrictions remain the main disruptor in the market currently, with backlogs building at many ports, and smelters and mines in many internal provinces in particular struggling to move material around as we have discussed previously. This continues to be a particular issue for zinc and copper smelters in terms of disposing of sulphuric acid, and alumina refineries in terms of raw material deliveries and sending alumina to smelters. We estimate 1.8mt of alumina capacity has been disrupted by the logistics issues.

Please see below for more details on the impact to each metal, and don’t forget to join our webinar on the latest impact from the virus, and a deep dive into copper and zinc markets, tomorrow ( February 12) at 5PM China time. Book your slots by following this link https://register.gotowebinar.com/register/8327328738461958411