Lockdowns caused by China’s new Covid-19 outbreak are sparking concerns over steel, iron ore

A new wave of Covid-19 cases in China’s Hebei province triggered transport restrictions in the major steel-producing region. The lockdowns in Hebei include areas surrounding steel mills, limiting the ability to transport the metal to customers. China is the world’s top steel producer and analysts say Hebei contributes over 20% of the country’s total output.

Coronavirus cases in Hebei have been rising since the start of the year, prompting the province to lock down its capital, Shijiazhuang, and at least two other areas in an effort to contain the spread of the coronavirus. The curbs are unlikely to affect steel production for now, but they could hurt demand by spurring the manufacturing sector to stop work earlier than planned ahead of the major Lunar New Year holiday, commodity data provider S&P Global Platts said earlier this month.

Demand and prices for raw materials used to make steel like iron ore could also shoot up, according to analysts. Steel deliveries by truck have been suspended in Hebei, leaving rail as the only way to transport steel, Shanghai-based Chinese metal data provider Mysteel said in a note last week. The report said blocked roads have led to completed steel piling up at major mills in the region.

Lockdowns caused by China’s new Covid-19 outbreak are sparking concerns over steel, iron ore, CNBC, Jan 20