Economic Impact of the COVID-19 Outbreak in China

Chief Representative of Worldsteel's Beijing Office and Adviser for Economics, Commodities and Markets, Mr. Frank Zhong wrote: “Since mid-February, the situation in China has improved significantly. Most provinces have not reported any new internal infections for over six weeks. However, it is still unclear when the virus will be fully contained due to the risk of imported cases carried by travelers arriving in China. In this context, little by little, our life is starting to return to normal here in China. While we are still very careful and methodically employ social distancing and wear masks both at work and outdoors, most Chinese people firmly believe that the worst is over. Amid this growing confidence, the Chinese government has called for a quick resumption of activity in most sectors to cope with the slowdown. By the last week of April, all construction and industrial sectors had resumed normal operations, but some services, such as catering and tourism, are still suffering from significant declines in demand. ”

He writes: “According to Chinese media reports, more than 130 employees of Chinese steel companies have been infected, although this has not yet been fully confirmed. Of these infections, approximately 90% occurred in steel mills in Hubei province, where the epidemic originated in China, and another 5% of infections occurred in Tangshan, China's largest steel region. This means that very few infections have been reported in China's main metallurgical regions. "

He wrote: “In February, the supply of raw materials for most steel companies was very limited due to restrictions on transport systems throughout the country, especially road and water transport. Some regions have even blocked nearly all road transport, which means truck drivers and workers were unable to return to work in February. Since mid-March, bottlenecks in logistics have gradually decreased, and the supply of raw materials, as well as the supply of finished metal products, have returned to normal since the beginning of April. Thanks to stocks of raw materials, steel production in China in the first quarter of 2020 did not decrease as expected, but increased by 1.2% YoY. ”

He said: “The virus has greatly affected all industries using steel. However, the construction sector has been hit hardest as almost all projects have been suspended since the last week of January. ”

He added: “The collapse of public transport systems across the country has further exacerbated the situation. The situation has improved rapidly since early March as travel restrictions have been gradually lifted, but significant reductions in all sectors of steel use can be