Chinese metals production is resuming at a rapid rate as new COVID-19 case numbers stabilise, Roskill reports.

While global virus numbers are just beginning to threaten some of the world’s other major economies, China — where the outbreak began — is getting back to business already.

A full recovery for the massive (but notoriously opaque) economy could be on the cards for May or June, says Roskill’s Neal Brewster.

“While risks of a second round of the virus reappearing in the country should not be discounted, economic activity now seems to be getting back to more usual levels relatively quickly,” he says.

“It remains notable that whilst a number of metals prices have fallen since the start of the year, the extent of the declines has, to date, been relatively modest.

“Although some metal inventories may have accumulated downstream, there is little evidence of any build-up in raw material stocks.”

For China, a halving in the oil price since the start of the year is also equivalent to a $US110bn ($180.7bn) boost to the economy, Brewster says. Bonus.

The new risk to the Chinese economy appears to be from disruptions to external trade, as the virus threatens to ‘freeze’ other major global economies, especially the US.

“Should that eventuate, the Chinese government is reported to be considering a set of significant stimulus measures,” Brewster says.

“[But] while global equity markets are now pricing in a major global economic downturn — US, European and Japanese exchanges are down 20-30 per cent year-to-date and major mining stocks are down around 40 per cent on average — at the moment, trends in the Chinese economy are more consistent with a sharp ‘v-shaped’ economic disruption.”

That is, a sharp drop leading to a relatively quick rebound.

Deloitte Access Economics agrees that industry in China appears to be rebooting as COVID-19 becomes more contained.

Although Beijing has not announced a stimulus response, its direction of $US500bn towards capital investment after the 2008 financial crisis provides a strong hint of what’s to come.

“If the magnitude of the coronavirus stimulus package is anything like that, Australian exporters could expect stronger demand for steelmaking inputs, including iron ore,” Deloitte says.