TOKYO — Prices of steel, petrochemicals and other commodities have rebounded in Asia, with China leading the way after its containment of the coronavirus outbreak has allowed business activity to resume.
Hot-rolled steel, widely used by automakers and other industries, has risen to $455 per ton, compared with $435 in April, a three-and-a-half-year low.
But with economic activity in the Europe and the U.S. only just beginning to pick up again, analysts say it will take time for overall demand to return to pre-crisis levels and that the pace of recovery will be gradual.
China is behind the rally. New auto sales in the world’s most populous nation posted a year-on-year gain of 11.7% in May, the first double-digit increase since April 2018.
The rebound in steel prices is also being fueled by expectations that government-led infrastructure projects will boost demand.
Some trading houses are stepping up purchases of steel products in anticipation of more economic activity ahead. Global steelmakers are also optimistic and have stopped cutting prices.
Prices of iron ore, a key ingredient in steel, are rallying. The benchmark iron price for north China delivery this month regained $100 per ton for the first time in 10 months. China produces more than 60% of global steel, and its steel output clung to year-earlier levels in April, bucking a slump in other countries.
In nonferrous metal markets, copper price gains have stood out. The benchmark copper contract hit 44,900 yuan (about $6,300) per ton on the Shanghai Futures Exchange on June 3, up 23% from a March low. During the same period, the price of copper rose 19% in London. Copper is a key material for electric wire and electronic devices.
The price for gas oil, or truck fuel, this month rallied to $44 per barrel in Singapore, up 90% from an April low.
“Consumption of gas oil has increased as trucking activity has recovered to about 80% of normal in April,” said Mika Takehara at Japan Oil, Gas and Metals National Corporation.
Some analysts warn the rapid recovery may not last, noting uncertainty in the new lifestyles being adopted as the world copes with the coronavirus.
“The economy may rebound at a rapid pace in the short term,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, “but the pace is likely to decelerate.”