China's iron ore and steel futures fell by their daily limits on Monday, with the key steelmaking raw material plunging the most in almost 15 months, on fears that a virus epidemic would curb demand and deliver a sharp blow to the economy.
The newly identified coronavirus, which has killed 361 people in China, has quickly spread to other parts of the world since the world's second-largest economy's financial markets began an extended Lunar New Year holiday on January 24.
The Dalian Commodity Exchange's most-traded iron ore contract closed down 8% - the maximum amount by which the price is allowed to drop for the day - at 606.5 yuan ($87.85) a tonne, the lowest since Dec. 2 last year.
That was the contract's biggest one-day fall since Nov. 26, 2018. Volumes, however, were thin as many market participants remained absent. On the Shanghai Futures Exchange, the most-active construction steel rebar contract shed 8% to a near three-month trough of 3,233 yuan a tonne, marking its biggest one-day drop since April 7, 2017.
Shanghai hot-rolled steel coil, used in cars and home appliances, slumped 8%, its steepest fall in nearly three years, to 3,246 yuan a tonne.
"We see the main impact (on commodity markets) being through the restrictions on travel impeding demand, but expect this to permeate through to manufacturing if the movement of workers is restricted following the Lunar New Year holidays," said Daniel Hynes, senior commodity strategist at ANZ.
Public transport in Tangshan, China's largest steelmaking city, has been suspended since January 28 to prevent further spread of the virus.
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