February 7, 2020 / 4:08 AM / 12 days ago

China iron ore set for biggest weekly loss in 6 months on virus concerns

* Dalian iron ore falls 11% this week amid virus fears

* Australia’s iron ore ports cleared ahead of cyclone

* Coking coal, coke extend rally on supply concerns

By Enrico Dela Cruz

MANILA, Feb 7 (Reuters) - China’s iron ore futures steadied on Friday, as news that Australian miners were bracing for a cyclone offset worries over a coronavirus outbreak that put the bulk commodity on course for the biggest weekly loss in six months.

The Dalian Commodity Exchange’s most-traded iron ore contract, expiring in May, ended the morning session flat at 584.50 yuan ($83.75) a tonne, after moving sideways in early trade.

Tumbling more than 11% since Feb. 3 when trading resumed after an extended Lunar New Year holiday, Dalian iron ore was set to post its biggest weekly loss since early August last year.

Travel curbs adopted by China, where more than 600 people have died due to the coronavirus epidemic, have disrupted economic activity in the world’s top steel producer and iron ore buyer.

“In an effort to stymie the spread of the infection, authorities in China have set up barriers that will ultimately snarl supply chains, diminish business confidence and slowdown international trade,” ANZ commodity strategists wrote in a note.

Around 90% of China’s major iron ore ports are in the provinces that have travel restrictions or are still on extended holidays, they said.

“To complicate things, a tropical cyclone is now bearing down on the Pilbara coast, home to Australia’s largest iron ore port,” they added.

Australian iron ore miners such as Rio Tinto and BHP Group , among China’s biggest suppliers, said they were preparing for a tropical cyclone that will hit the country’s iron ore rich Pilbara region over the weekend.

Spot iron ore prices remained volatile, with the benchmark 62% iron-content ore for delivery to China settling at $83.30 a tonne on Thursday, down from $83.80 on Wednesday, based on data tracked by SteelHome consultancy. SH-CCN-IRNOR62

The China Iron and Steel Association on Thursday asked steel firms to maintain stability amid fluctuations in steel prices caused by slumping demand due to the epidemic.

FUNDAMENTALS

* The most-traded construction steel rebar on the Shanghai Futures Exchange rose as much as 0.8%, but was headed for its biggest weekly fall since November 2018.

* Hot-rolled steel coil, used in cars and home appliances, advanced by up to 0.6%, but was also set to mark its biggest weekly loss since November 2018.

* Other ferrous raw materials extended their rallies, driven by concerns over tight supply as China’s coal mines have also been unable to resume operations due to the epidemic, with coking coal up 1.2%, while coke rose 0.6%.

($1 = 6.9807 yuan)

$1 = 6.9792 Chinese yuan renminbi Reporting by Enrico dela Cruz; Editing by Aditya Soni

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