February 3, 2020 / 4:52 AM / in 20 days

UPDATE 2-China iron ore drops by most in nearly 15 months on virus fears

* Dalian iron ore, Shanghai steel hit limit-down

* Dalian, Shanghai bourses suspend night trading

* Coronavirus death toll rises to 361 in China

* Top steelmaking city suspends public transit (Updates with closing prices, additional chart)

By Enrico Dela Cruz

MANILA, Feb 3 (Reuters) - 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 Jan. 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 Jan. 28 to prevent further spread of the virus.

However, government stimulus to support the slowing Chinese economy could provide some boost to prices of iron ore going forward.

Rohan Kendall, head of iron ore and steel at Wood Mackenzie, said the consultancy does not see any immediate need to revise its 2020 price forecast of $80 a tonne due to iron ore’s vulnerability to supply side risks and potential for financial stimulus from Beijing.

FUNDAMENTALS

* Other ferrous raw materials were also sold down, with coking coal 4% lower, while coke lost 5.9%.

* Stainless steel futures slid 8%.

* The Shanghai and Dalian bourses will suspend night-time trading sessions from Monday until further notice.

* China’s factory activity expanded at its slowest pace in five months in January, even as the virus outbreak added to risks facing the world’s second-largest economy, a private survey showed.

($1 = 6.9040 yuan)

Reporting by Enrico dela Cruz; Editing by Subhranshu Sahu and Aditya Soni

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