China’s metals fabricators likely to extend downtime

China’s metals fabricators likely to extend downtime

Anti-coronavirus measures reportedly will include forced factory downtime in several large Chinese cities.

January 30, 2020

Things may be looking up for global nonferrous scrap flows into China, thanks to proposed regulatory changes there, but some of that optimism is being overshadowed by the coronavirus spreading through that nation as of late January.

China-based information service provider Shanghai Metals Market (SMM) says, “Downstream producers [service centers, fabricators, other manufacturers] in the nonferrous metal industry in China have announced [intentions] to postpone their resumption after the Chinese New Year, as the government extended the seven-day Chinese New Year holiday due to the novel coronavirus outbreak.”

The situation could cause secondary producers and smelters to pile up inventory. Most smelters, says SMM, “continue to produce during the holiday, and logistics and warehousing enterprises keep most of their businesses running normally, an SMM survey showed.”

The coronavirus has been spreading in the central Chinese city Wuhan since December 2019. While Wuhan and surrounding Hubei province remain the epicenter of the epidemic, cases have now been confirmed in all of China’s provinces, territories and administrative regions. According to China’s National Health Commission, as of Jan. 30 more than 7,700 cases have been confirmed in China, leading to 170 deaths.

With the virus spreading, the Chinese government has already extended the Chinese New Year holiday to Feb. 2 nationally, and to Feb. 9 for Guangdong, Shanghai, Tianjin, Jiangsu, Zhejiang and some other areas that SMM calls “major [metals] production-oriented provinces and cities.”

SMM says the holiday extension does not apply to companies “related to public utilities (water supply, gas supply, power supply, communication) [and] other enterprises concerning national welfare and the people’s livelihood,” which could provide room for some factories to re-open their doors earlier.

An SMM survey of its readers indicates most firms contacted are planning to reopen Feb. 3, along with the Shanghai Futures Exchange and other commodity trading venues.

However, “Zinc die-casters, copper processors and aluminum extruders in Jiangsu, Zhejiang and other regions will extend their suspension as required—resuming operations no earlier than Feb. 9,” writes SMM.

According to SMM, China Customs will resume its activities Feb. 3, as will “most major warehousing firms.” On the transportation front, SMM says the freight rail network is operating normally, although “supplies for epidemic control and prevention as well as basic livelihood are set to be prioritized.” In the trucking sector, “capacity is set to reduce, even as it is not sure yet whether trucking companies will extend their holidays to Feb. 9,” writes SMM.