LAUNCESTON, Australia, Jan 23 (Reuters) – The risk to commodity demand from the spread of a new flu-like virus in China has so far focused on crude oil and related products such as jet fuel, but the iron ore and steel markets will also be keeping a nervous watching brief.
The effective quarantining of Wuhan, a city of 11 million people where the new strain of coronavirus emerged, sounds like a major step to combat the virus which has so far killed 17 people and infected several hundred more.
That the move comes on the eve of the Lunar New Year holidays, which typically see millions of Chinese travel to visit family and friends, underlines the disease’s danger.
It will, however, only become a problem for iron ore and steel demand if it spreads far enough to make an impact on China’s construction season, which tends to start in earnest after the Lunar New Year break.
It’s still way too early to make an assessment that construction activity may be crimped by the coronavirus, but it is another risk factor for the outlook for iron ore and steel demand.