March 6, 2020 / 4:39 AM / a month ago

China iron ore retreats on coronavirus fears, but set for weekly rise

* Dalian iron ore on track for nearly 7% weekly gain

* Other Chinese ferrous derivatives also up week-on-week

* Spot iron ore price climbs to highest in nearly 2 weeks

By Enrico Dela Cruz

MANILA, March 6 (Reuters) - Chinese iron ore futures 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 kept prices on course for a weekly rise.

Iron ore on the Dalian Commodity Exchange slipped as much as 1.6% to 654 yuan ($94.03) a tonne, but was on track to rise nearly 7% from last week. Futures on the Singapore Exchange also dropped 1.6%.

Other Chinese ferrous derivatives were also poised for weekly advances but retreated a bit in early trade.

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 first week of March for Dalian iron ore, however, prices have risen around 14% since hitting a three-month low on Feb. 10 at 580 yuan a tonne, propelled by hopes of more stimulus by China to support its economy.

FUNDAMENTALS

* Benchmark 62% iron ore’s spot price rose for a fourth straight day to $91.50 a tonne on Thursday, the highest since Feb. 24, SteelHome consultancy data showed. SH-CCN-IRNOR62

* Activity in China’s manufacturing and construction sectors is picking up after being stalled by the epidemic, but steel demand remains sluggish, putting a strain on mills and traders who are sitting on huge product stockpiles.

* 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.

* Construction steel rebar on the Shanghai Futures Exchange was down 0.8% by the midday break, while hot-rolled coil slipped 0.7% and stainless steel shed 0.3%.

* Coking coal slumped 1.4% and coke lost 0.6%.

$1 = 6.9555 yuan Reporting by Enrico dela Cruz; Editing by Maju Samuel

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