SINGAPORE (Reuters) - Industrial goods from jet fuel and iron ore to rubber and sulphuric acid are sliding towards their lowest prices in weeks, months or even years as China’s coronavirus epidemic hobbles movement and eats away demand in the world’s no.2 economy.
China’s iron ore futures are headed for their biggest weekly loss in six months, oil prices hit their lowest since January, and Tokyo rubber futures have shed 15% since mid-January.
The economic impact of the coronavirus lockdown in China is being felt across the globe, with exporters, miners and manufacturers of everything from coal to fruit facing trade disruption. The Baltic Dry Index .BADI of freight rates has hit its weakest since 2016.
“The adverse impacts of the coronavirus on China’s economy look set to spill over significantly to the rest of the world,” Oxford Economics said in a note.
“In addition to weaker Chinese import demand, a sharp drop in the country’s industrial activity may cause substantial supply-side disruptions elsewhere.”
GRAPHIC: Global commodities clobbered by coronavirus epidemic in top buyer China here
Dubbed the factory of the world, China is normally the largest and most voracious consumer of a slew of global raw materials, fuels and foods.
The country, the largest crude oil importer, also accounts for around half of global copper and iron ore imports.
Short-term sales of crude oil and liquefied natural gas into China almost ground to a halt this week as the virus spread, leaving buyers to ponder legal action to avoid having to honour purchase agreements, trade sources said.
Many steel mills and ports are shut while construction projects are on hold, curbing metal demand.
Shanghai Futures Exchange steel rebar and hot-rolled coil are on course for their biggest weekly declines since November 2018.
The collapse in downstream industrial activity spurred China’s biggest liquefied gas importer to suspend some import contracts.
China’s copper smelters will reduce output by more than 15% in February from last month due to the virus, according to the China Nonferrous Metals Industry Association.
“Chinese buyers are largely continuing to honour supply contracts and importing normal levels of raw materials while travel restrictions are in place,” ANZ said in a note.
“However, this will only last while there is enough storage capacity at the ports and nearby facilities.”
China is also by far the world’s biggest consumer of most crops, but Chicago agricultural markets have so far seen limited impact.
However, the virus is expected to disrupt trading in other food products, including wine, meat and fruits.
Reporting by Naveen Thukral; Additional reporting by Florence Tan in Singapore, Enrico Dela Cruz in Manila and Mai Nguyen in Hanoi; Editing by Kenneth Maxwell