Iron ore futures in China and Singapore slipped on Friday on fears over a potentially deeper global economic downturn due to the coronavirus outbreak, but hopes of more policy support for businesses drove prices higher on a weekly basis.
Iron ore on the Dalian Commodity Exchange closed 2.2% lower at 650 yuan ($93.58) a tonne, but jumped 5.4% from last week. Futures on the Singapore Exchange were down 1.1% in afternoon trade. Other Chinese ferrous derivatives also came under selling pressure but posted weekly gains.
The coronavirus spreading around the world from China is "starting to look like a global pandemic", said Singapore minister Lawrence Wong, who co-heads the country's virus fighting taskforce. The World Health Organization has not categorised it as such, but the spread of infection, which is already disrupting global business, has accelerated in other parts of the world, including in Europe and North America.
"Markets are likely to remain volatile as they continuously re-assess the probable economic impacts largely based on headlines," said Tapas Strickland, director of economics at National Australia Bank. The magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain, the Asian Development Bank said, projecting a worldwide impact of up to $347 billion, or 0.4% of global gross domestic product.
Despite a volatile week, however, Dalian iron ore has risen 12.1% since hitting a three-month low on February 10 at 580 yuan a tonne, propelled by hopes of more stimulus by China to prop up its economy paralysed for weeks by the epidemic.
Benchmark 62% iron ore's spot price rose for a fourth straight day to $91.50 a tonne on Thursday, the highest since February 24, SteelHome consultancy data showed.
Several mills in China's top steel-producing city of Tangshan plan to halt more facilities this month in compliance with anti-pollution production restrictions, industry data provider Mysteel said. Chinese warehouses storing steel products are reaching full capacity, Mysteel said, as the country's inventory of the construction and manufacturing material has swollen to a record-high due to the coronavirus outbreak-related restrictions. Construction steel rebar on the Shanghai Futures Exchange was down 1.0%, while hot-rolled coil slipped 0.9% and stainless steel shed 0.4%.
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