Posted on 04 Feb 2021
The Chinese New Year (CNY) holiday over February 11-17, usually a hallowed time for family unions, is only one week away. But unlike in normal years, this year migrant workers in major urban centres across China are being encouraged by the central government to stay where they are for the celebrations, as part of Beijing's efforts to prevent the spread of the resurgent COVID-19. To some degree, this policy may lead to sustained but mild consumption of steel over the CNY break, some Chinese market insiders maintain.
New COVID-19 infection cases have emerged in several parts of the country including North China’s Hebei, Northeast China’s Jilin and Heilongjiang, and East China’s Shanghai since the beginning of January, as reported. In response, the Joint Prevention and Control Mechanism of the State Council, an organization specially established for COVID-19 curtailment, announced on January 21 that migrant workers returning to their hometowns during the “CNY travel period” over January 28-March 8 will need to have received a negative result of a COVID-19 test taken within seven days prior to their arrival at their destinations.
On January 27, the State Council announced that people in high- and medium-risk areas must stay where they are for the CNY break, and encouraged those in low-risk areas to stay at their places of work and not to travel. In addition, local governments at province-, city- or county-level are also introducing their own policies regarding travel which might be even stricter than those mandated by the Joint Prevention and Control Mechanism, Mysteel Global noted. Some, for example, included “seven-day” quarantine or isolation for people returning from high- and medium-risk areas.
For the hotel-stay quarantine, be it seven days or 14 days, the cost will be borne by the individuals, which many range Yuan 2,000-4,000 ($310-619) and this will be an extravagant amount for the construction site workers, for example, and it will be sufficient to discourage many from returning to the hometown.
To compensate the absence from the family gather-togethers, some cities have rolled out incentive policies to encourage migrant workers to stay put and avoid travelling. For example, the government of Hangzhou city of East China’s Zhejiang province will provide migrant workers staying Hangzhou for the seven-day festival with a subsidy of Yuan 1,000/person ($154.8/person) and the offer of free mobile data and other perks.
Over January 28-30, the first three days of the “CNY travel period”, passengers of China’s railways totalled 8.9 million, less than one fourth of the number last year, and on January 31, the passengers taking railways declined 75% on year to 2.9 million, according to a China Railway release.
Some steel market watchers, thus, anticipate that many migrant workers not traveling home this year but staying at or close to work, may lead to sustained steel consumption at construction sites. Building contractors may not suspend building activity for the duration of the holiday or those that do, may restart work earlier than usual after CNY.
“There is still demand. Some civil engineering work and bridge construction are still ongoing,” a steel trader based in South China’s Guangdong province told Mysteel Global.
“Although usually some urgent civil construction work will continue over CNY, the number of such cases will increase this year,” he observed.
“Many migrant workers are not going home for the holiday – in order to avoid troublesome test procedures or possible quarantine – and they will be enjoying various government benefits such as shopping coupons,” he added.
However, the offices of steel trading firms will still be closed as usual and the construction sites that expect to remain at work have already stocked up the steel they need, according to him.
Mysteel’s survey across 116 construction companies in China at the end of January recorded 76 companies as saying that none of their projects had been idled, while 40 said part of the projects had been halted for CNY. The surveyed contractors indicated that 533 projects will not be stopped for the break, up 52.7% on year, with most of the projects located in South and East China, as Mysteel Global reported.
Mysteel estimated that in February, consumption of the five major steel products – rebar, wire rod, medium plate, hot-rolled coil and cold-rolled coil – will be up by 12 million tonnes on year, partly due to the continued work at these projects, but also due to the low basis of last February. That was when domestic steel demand was stagnated amid the rapid spread of COVID-19 and nationwide lockdown measures introduced across China.
Source:Mysteel Global
