Steel futures in China slipped on Wednesday on worries that the fast-spreading coronavirus outbreak would inevitably turn into a global pandemic, while expectations of a demand pick-up in the second quarter capped losses.
Construction steel rebar on the Shanghai Futures Exchange teetered before ending down 0.4% at 3,447 yuan ($491.53) a tonne, while hot-rolled coil shed 0.3% and stainless steel slid 2.6%.
Fears have mounted that the worsening health crisis, which has already disrupted businesses, may cripple steel trade, in a major blow to China that accounts for about half of the global steel output.
Authorities around the world have stepped up measures to prevent the spread of the coronavirus that has killed more than 2,700 people and infected about 80,000, mostly in China, with the death toll and new cases beyond Asia now rising as well.
In the United States, a health expert warned that while the immediate risk was still low, the current global situation suggested that a pandemic was likely.
"As the possibility of an outbreak in the United States gradually increases, the panic in the market has further spread," Huatai Futures Co Ltd analysts wrote in a note.
Helping calm nerves, many parts of China have now eased travel curbs while hundreds of thousands of migrant workers have returned to work in some of the main manufacturing hubs.
The Chinese steel industry, which is under pressure from rising inventories, weak downstream demand and falling spot prices, will likely recover soon, according to Luo Tiejun, vice-chairman of the China Iron and Steel Industry Association.
"A vigorous revival of market demand in the second quarter of this year is expected, given that Chinese authorities have rolled out a slew of measures to stabilise economic growth," he was quoted as saying in a China Daily newspaper report on Tuesday.
The outlook is also based on the assumption that the epidemic has tapered off.
Iron ore the Dalian Commodity Exchange fell 2.8%, pulling back further after a 10-session rally. Futures on the Singapore Exchange shed 3%.
Benchmark 62% iron ore's spot price settled at $91.50 a tonne on Tuesday, after scaling its highest in nearly five weeks at $93 on Monday, SteelHome consultancy data showed.
Iron ore miner Rio Tinto Chief Executive Jean-Sébastien Jacques said the next six months "could present some challenges".
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