MANILA – Prices of steel products and raw materials on China's futures markets tumbled on Friday, with iron-ore dropping nearly 5% as the fast-spreading coronavirus fuelled fears of a global recession, darkening the demand outlook for ferrous metals.
China, where the coronavirus originated and has infected and killed thousands of people, accounts for more than half of the world's steel output and is the biggest exporter of the manufacturing and construction material.
China, also the top iron ore importer, has come under pressure to sell more steel products as its inventories have piled up after the epidemic stalled many construction projects and kept factories shut for weeks, denting demand.
Iron ore's most-active contract on the Dalian Commodity Exchange dropped as much as 4.7% to 606 yuan a tonne, as spot prices hit their lowest in more than two weeks. Futures on the Singapore Exchange lost as much as 3%.
The sell-off intensified as the coronavirus infections spread rapidly around the world, including to China's key trading partners, potentially leading to a pandemic that will further disrupt global business.
While economic activities slowly resume in China after its self-imposed shutdowns to contain the coronavirus, other countries have begun imposing their own restrictions.
"The preventative measures - quarantines and lockdowns - adopted by affected regions and countries may derail China's imports and exports," said Helen Lau, analyst at Argonaut Securities in Hong Kong.
"That may severely weigh on China's economic recovery."