China's steel market unfazed by COVID upsurge for now

While health authorities in many Chinese cities battle a resurgence of the coronavirus, so far the country's steel sector has been little impacted and is running as per normal, despite tightening controls on movement and transportation in cities worst hit by the outbreak, industry sources said on August 5.

As of Thursday, several provinces and municipalities were still reporting new cases daily. On August 4, 62 local cases were confirmed, with 40 in East China's Jiangsu province, nine in Central China's Hunan, three in Beijing, East China's Shandong, Central China's Henan, Southwest China's Yunnan respectively and one in Central China's Hebei, according to the latest daily report of National Health Commission.

The country had largely returned to normal after last year's onslaught of the virus but concerns about a new COVID-19 wave began rising again late last month, Mysteel Global noted, with affected cities introducing new lockdowns while others - even those where no new cases have been reported - are also increasing prevention measures.

"Everyone in our community will need to get virus test once per day and we are ordered to stay at home and not go anywhere," a resident in Yangzhou city of Jiangsu province said, describing the situation there. Of the 40 local cases in Jiangsu on Wednesday, 36 were in Yangzhou and the remaining four in Nanjing, the provincial capital.

In Nanjing, Nanggang Iron & Steel United Co (NISCO), a 10 million t/y steelmaker in the city, has strengthened its checks on drivers entering the steelworks, according to an official from a Nanjing-based logistic company.

"We are now working from home, and employees at steel trading companies working in the same building as us are also working from home as well," the official stated.

"Short-distance transportation is still not a problem but for trans-city deliveries, the drivers are being tested constantly and must return negative COVID-19 results as they will be checked frequently along their way," he said.

Other major steel mills in the worst-hit Jiangsu province interviewed by Mysteel claimed limited impact from the new virus outbreak.

"All our operations are normal," one official said. "Demand is slack, but not because of COVID-19 but due to low interest that our agents have in stocking," he said.

"Only sales to Nanjing and a few other cities surrounding it are being partially affected, but that is completely okay for us as the market is quite small there," another Jiangsu-based mill official stated.

An official from a leading steel producer in Hunan, the province reporting the second highest number of cases on Wednesday, declared no impact from the virus resurgence.

"We just simply increase the frequency of body temperature tests and checks on the 'Travel Cards' of newcomers. No other changes," she said.

The Travel Card or 'Communication Big Data Travel Card' is used to tell whether someone is directly affected by the virus, or a close contact, or whether they have travelled in an area exposed to virus risks, Mysteel Global notes.

Nevertheless, some steel industry insiders fear that the intensifying COVID-19 situation in China may weigh on demand.

"Actually, we are concerned that the resurgence of virus case will impact steel demand in the future. But for now, it is hard to predict," an official with a Henan-based steel mill in Central China said.

On the contrary, the second Jiangsu mill official claimed that some of its customers among building contractors had recently stepped up buying and are stocking up steel products, fearing that "COVID-19 may impede steel deliveries later."

On August 4, the trading volume of construction steel including rebar, wire rod and bar-in-coil across 237 Chinese steel traders nationwide had leapt by 86,837 tonnes/day or 38.4% on day to 225,872 t/d, according to Mysteel's tracking. This was the first time that daily trading volume had surpassed the 200,000 t/d threshold since July 14.

Written by Olivia Zhang, zhangwd@mysteel.com and Victoria Zou, zyongjia@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.