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China iron ore tumbles as global coronavirus-related curbs intensify

Published 23/03/2020, 02:42 pm
© Reuters.
FMG
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* Dalian iron ore falls 5.5%, Singapore futures down 4.7%

* China steel inventories dip as local demand picks up

* Iron ore port stocks in China at lowest since Aug 2019

By Enrico Dela Cruz

MANILA, March 23 (Reuters) - Dalian iron ore prices slid more than 5% on Monday, leading another intense sell-off in China's ferrous metal futures as stricter measures to curb the spread of the coronavirus pandemic further darkened the global economic outlook.

The fast-spreading coronavirus has set off another wave of community lockdowns and business shutdowns across the world, clouding the prospects for an economic rebound for top steel producer and exporter China, where the daily tally of new infections has declined.

Iron ore's most-traded May contract on the Dalian Commodity Exchange DCIOcv1 dropped as much as 5.5% to 632 yuan ($89.15) a tonne, the lowest since March 9. Futures on the Singapore Exchange fell 4.7%.

"The rapid spread of the coronavirus in the last two weeks, widespread business closures and unprecedented restrictions on social interactions will result in a permanent hit to global economic activity this year," Moody's Investors Service said in a note.

While the plateauing of the number of new infections in China will allow for a normalisation of economic activity over the second quarter, Moody's said the process will be slow because many of the country's curbs on social interactions will remain in place to prevent a renewed outbreak.

Chinese steel futures also fell despite signs of increased demand locally, with domestic stocks of steel products down 4.8% on a weekly basis at 37.05 million tonnes as of Thursday, according to Mysteel, marking the first drop since Dec. 19. Construction steel rebar on the Shanghai Futures Exchange SRBcv1 was down 2.6%, as of 0242 GMT, while hot-rolled steel coil SHHCcv1 , used in cars and home appliances, shed 3.1% and stainless steel SHSScv1 dropped 1.3%.

* Other steelmaking ingredients also slumped, with coking coal DJMcv1 down 1.7% while coke DCJcv1 lost 1.8%.

* Spot cargoes of benchmark iron ore with 62% iron content for delivery to China settled at $90 a tonne on Friday, below a nearly one-month peak of $92.50 hit on March 18, SteelHome consultancy data showed. SH-CCN-IRNOR62

* China's iron ore imports stocked at its ports stood at 123.75 million tonnes as of March 20, based on data tracked by SteelHome, the lowest since mid-August 2019.

* Fortescue Metals Group Ltd FMG.AX said its iron ore shipments from Australia's Port Hedland and mining and processing activity remained in line with its 2020 guidance. = 7.0891 yuan)

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