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China steel futures weaken on global coronavirus panic

Benchmark steel futures in China pulled back on Tuesday after hitting near two-month highs in the previous session on rising worries over the coronavirus pandemic and its impact on the world economy.

Construction steel rebar on the Shanghai Futures Exchange ended down 0.2% at 3,555 yuan ($507.76) a tonne. Both hot-rolled coil, used in cars and home appliances, and stainless steel slumped 0.7%.

Border closures and travel bans worldwide have intensified as the virus spreads at a breakneck pace, feeding a steady rise in new infections and deaths. In China, where local transmission of the disease has slowed, authorities are struggling to control new infections from abroad.

“Even though China’s coronavirus cases are subsiding, supply chains will remain broken from the suspension of factory operations globally, and as demand from the rest of the world shrinks, dealing a double blow to China’s factories and exports,” said Iris Pang, ING chief economist for Greater China.

China on Monday reported dismal industrial production data for the first two months of the year, indicating a dramatic downturn for the world’s second-biggest economy due to the pandemic.

ING has downgraded its growth forecasts for China to 3.6% for the first quarter from 4.4% previously, and to 4.8% for the full year from 5.2% earlier.

* The Dalian Commodity Exchange’s most-traded iron ore contract closed 0.9% higher at 671 yuan ($95.84) a tonne in another volatile session. Futures on the Singapore Exchange rose 1.1% in afternoon trade.

* S&P Global Platts, which has an iron ore benchmark index, said on Monday iron ore prices have been resilient and activity levels have remained healthy recently.

* However, industry group China Iron & Steel Association on Sunday warned about speculation risks in the futures market as the iron ore index was deviating from supply and demand fundamentals and the spot market.

* Brazil’s iron ore miner Vale SA said workers around the globe and third-party service providers in administrative roles would start working from home amid the health crisis caused by the pandemic.

* Industry benchmark 62% iron ore’s spot price climbed to $92 a tonne on Monday, the highest since Feb. 24, based on data from SteelHome consultancy.

* Coking coal gained 0.2% but coke slipped 0.3%.
Source: Reuters (Reporting by Enrico dela Cruz; Editing by Devika Syamnath and Anil D’Silva)