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Iron ore futures extend losses on weaker demand outlook; steel futures down China
Times:[ 2020-03-02 Author:admin Hit:
Iron ore futures in China extended losses on Friday to mark their first monthly drop since October, as the fast-spreading coronavirus fuelled fears of a global recession, darkening the demand outlook for the steelmaking raw material.

China, where the coronavirus originated and has infected and killed thousands of people, accounts for more than half of the world's steel output and is the biggest exporter of the manufacturing and construction material.

China, also the top iron ore importer, has come under pressure to sell more steel products and curb mill output, as its inventories have piled up after the epidemic stalled construction projects and kept factories shut for weeks, denting demand.

Iron ore's most-active contract on the Dalian Commodity Exchange ended down 3.1pct at 616.50 yuan (USD 87.91) a ton, after falling as much as 4.7pct earlier in the session. Futures on the Singapore Exchange shed 1.4pct in afternoon trade.

Dalian iron ore slumped 8pct from last week, marking its first weekly loss in three, and posted a 6.5pct loss this month.

The sell-off across China's ferrous metal complex intensified as the coronavirus infections spread rapidly around the world, potentially leading to a pandemic that will further disrupt global business.

While economic activities slowly resume in China after its self-imposed shutdowns to contain the coronavirus, other countries, including its trading partners, have begun imposing their own restrictions.

"The preventative measures - quarantines and lockdowns - adopted by affected regions and countries may derail China's imports and exports (and) severely weigh on China's economic recovery," said Helen Lau, analyst at Argonaut Securities.

Financial markets are bracing for downbeat Chinese trade data for January and February to be released next week, which is expected to start reflecting the impact of the country's coronavirus containment measures.

Construction steel rebar on the Shanghai Futures Exchange fell 2.7pct, while hot-rolled coil shed 1.8pct, and stainless steel lost 1.9pct.

Coking coal slid 2.2pct, while coke slumped 1.8pct.

Benchmark 62pct iron ore's spot price settled at USD 88 a ton on Thursday, falling for three consecutive sessions to the lowest since Feb. 12.