CRU: Coronavirus to Cause Protracted Disruption to Transport and Labour
LONDON, Feb. 20, 2020 /PRNewswire/ -- Last week, CRU's China offices in Shanghai and Beijing returned to work following the Chinese New Year holiday, which was extended due to the outbreak of novel coronavirus (Covid-19).
This virus has had a heavy human cost, and there has also been severe disruption to business and trade in China. CRU's analysts, on-the-ground in China, provide us with three key takeaways for commodities: first, labour shortages and transport disruptions have reduced both metals demand and supply; second, industries face bottlenecks at different parts along their value chain; third, it will take time for labour to return to work and for these bottlenecks to clear. As such, we do not see a return to business as usual until at least March.
Major business disruption to transport
Road transport is a universal problem disrupting the commodity supply chains in China. Bottlenecks are forming through supply chains, especially those that are reliant on trucking. For steel the blockage appears to be between steel mills and warehouses. For aluminium it is earlier, between smelter and fabrication plants.
Moving goods in and out of China has also been affected. Although, ports appear to be operating well, enabling inflow of raw materials some supply chain disruption has led to concerns about export and thus global supply chains.
The implications for commodity prices are nuanced
On the demand side, metals demand is lower than the usual seasonal level. End use demand has fallen given reduced labour availability and medical equipment to ensure safety at work. For supply, blockages have built at different parts of the metals value chain. The implication of these changes for commodities markets depends on the speed of recovery of demand relative to supply in China, and China's role in global markets either as a net exporter or importer of the commodity.
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About CRU
CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.
Since our foundation by Robert Perlman in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China.
CRU employs over 280 experts and has more than 11 offices around the world, in Europe, the Americas, China, Asia and Australia – our office in Beijing opened in 2004 and Singapore in 2018.
When facing critical business decisions, you can rely on our first-hand knowledge to give you a complete view of a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.
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