The pain being felt across China’s behemoth steel sector from the coronavirus outbreak is far from over, according to a senior industry analyst, who expects further near-term declines in prices, bulging inventories, and weaker demand before a recovery kicks in after several months.
“The peak of the fundamental pressures has yet to come,” Wang Jianhua, chief steel analyst at Mysteel Research Institute, said in an interview. “While China is beginning to return to work, the rise in steel demand, activity is very limited, and it may take one to two weeks to even see a start in recovery.”
The world’s largest steel industry has been roiled by the crisis as an extended break, transport curbs, and quarantine policies threaten to hurt demand. While President Xi Jinping has vowed China will meet economic goals and win the battle against the epidemic, there are multiple signs mills are struggling. The pace of construction – a key source of steel demand – has slowed, according to Wang, who has more than 15 years’ experience in the steel industry.
“Demand for construction steel is literally almost at a standstill,” said Wang. After China extended the Lunar New Year break, and with the need for some workers to be quarantined, consumption is set to be affected for a considerable period of time, he said.