LONDON, Feb. 4, 2020 /PRNewswire/ -- Rather than returning to work from 31 January, the New Year holiday pause this week in Chinese activity is being extended to varying degrees around the country in an attempt to contain the spread of the disease.
The government has extended the current holiday nationwide until 3 February, with longer extensions until 10 February in many other cities/provinces – including Shanghai, Tianjin, Changsha, Chongqing, Fujian, Yunnan, Jiangsu, Zhejiang, Henan, Shandong, Anhui, Jiangxi, Heilongjiang, Inner Mongolia and Guangdong. The outbreak source city of Wuhan is set to remain in lockdown indefinitely, while the surrounding province of Hubei has just announced that the post-holiday restart of any business has been postponed until 14 February. So, the seasonal dip in lead demand and production will be longer-lasting and more pronounced than around previous New Year holidays – the uncertainty revolves around exactly how much longer and how deep the dip will prove to be.
Battery makers extend downtime…
Regarding Chinese lead demand, over 90% of downstream consumers (mainly lead-based battery makers) were planning to be out of production in the last week of January, with some halting operations earlier this month in light of poor end-user demand and weak lead prices. Some smaller battery manufacturers were already planning to stay idle until mid-February, but larger-sized ones had been expected to reopen next week. Those located in the cities/provinces named above will have to delay resuming for at least another week. Further downstream, most battery distributors and retailers are also unlikely to return to work until 9 February at the earliest, depending on how the outbreak unfolds between now and then.
CRU reckons that Hubei, the outbreak source province, maybe accounts for around 10% of the country's lead-based battery production. However, the disruption is clearly more widespread, so the short-term hit on Chinese lead consumption is going to be marked. Using the 2002-2003 SARS outbreak as a guide to the likely hit from 2019-nCoV on Chinese lead demand provides little help. Back in the early 2000s lead usage was growing rapidly at 'double-digit' pace amid the Chinese 'boom' years of largely unchecked economic and industrial expansion – SARS did not noticeably 'check' this growth. In the first quarter of the last five years, Chinese lead consumption has dropped on average by 13% quarter-on-quarter with each year also seeing a bigger fall than the one before. It seems highly likely that the 1Q2020 drop will surpass this average.
Read the full story:
Read more about CRU: http://bit.ly/About_CRU
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.
CRU – big enough to deliver a high-quality service, small enough to care about all of our customers.
Photo: https://mma.prnewswire.com/media/1085984/CRU_Coronavirus_Chinese_lead_dip.jpg
CRU: https://mma.prnewswire.com/media/536199/CRU_Logo.jpg
Share this article