News: China iron ore futures extend post-holiday selloff on demand concerns

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    • Dalian iron ore falls as much as 1.7%
    • Spot iron ore rebounds on stimulus hopes
    • Coking coal, coke futures extend rally

    Iron ore futures in China extended a post-Lunar New Year selloff into a fourth session on Thursday, on rising concerns over demand prospects in the world's top importer of the steelmaking raw material that has been hit by a coronavirus outbreak.

    The Dalian Commodity Exchange's most-traded iron ore contract DCIOcv1 , expiring in May, slumped 1.7% to 574.50 yuan ($82.30) a tonne.

    On the Singapore Exchange, the front-month April contract was down 0.8% to $77.50 a tonne in early trade.

    The Chinese iron ore benchmark has shed more than 10% so far this year, after three straight years of gains.

    While prices are widely expected to continue normalising this year after last year's surge due to tight supply concerns, the fall this week was the sharpest so far in six months.

    The coronavirus epidemic, which has killed 563 people so far in China, has prompted restrictions on movement of people and transportation in the mainland, disrupting many businesses such as construction, manufacturing and infrastructure.

    Many analysts have cut their growth outlook for China due to the epidemic, but global markets have stabilised in recent days amid central bank stimulus measures and hopes for a vaccine.

    "The ongoing coronavirus outbreak will dampen economic growth in China this year, but the scale of the impact remains uncertain and will depend on the duration and intensity of the health crisis," Fitch Ratings said.

    FUNDAMENTALS

    • Amid optimism over the central banks' stimulus measures, spot iron ore prices rose on Wednesday, with the benchmark 62% iron-content ore for delivery to China settling at $83.80 a tonne, rebounding from three-month lows, SteelHome consultancy data showed. SH-CCN-IRNOR62
    • The most-traded construction steel rebar contract on the Shanghai Futures Exchange SRBcv1 was down 0.4% by 0302 GMT, while hot-rolled steel coil SHHCcv1 , used in cars and home appliances, slipped 0.2%.
    • A group of steel mills in Shaanxi, Shanxi, Sichuan and Gansu provinces will cut steel output by 30%, equivalent to about 55,000 tonnes, as the virus outbreak curbed demand, according to ANZ Research.
    • Other ferrous raw materials extended their gains, with Dalian coking coal DJMcv1 up as much as 2.3% and Dalian coke DCJcv1 gaining up to 0.7% on growing concerns over tight supply as many mines and coke plants in China remained shut.
    • Shanghai stainless steel futures SHSScv1 were up 0.1%.
 
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