Dalian iron ore prices fell 6% to hit the downside limit on Monday, leading another intense sell-off in China's ferrous metal futures as stricter measures to contain the coronavirus pandemic further darkened the global economic outlook.
The fast-spreading coronavirus has set off another wave of community lockdowns and business shutdowns across the world, clouding the prospects for an economic rebound for top steel producer and exporter China, where the daily tally of new infections has declined.
Iron ore's most-traded May contract on the Dalian Commodity Exchange closed at the day's downside limit of 629 yuan ($88.41) a tonne, the lowest since March 9. Futures on the Singapore Exchange fell 5.6% in afternoon trade.
"The rapid spread of the coronavirus in the last two weeks, widespread business closures and unprecedented restrictions on social interactions will result in a permanent hit to global economic activity this year," Moody's Investors Service said in a note.
While the plateauing of the number of new infections in China will allow for a normalisation of economic activity over the second quarter, Moody's said the process will be slow because many of the country's curbs on social interactions will remain in place to prevent a renewed outbreak.
Chinese steel futures also fell despite signs of increased demand locally, with domestic stocks of steel products down 4.8% on a weekly basis at 37.05 million tonnes as of Thursday, according to Mysteel, marking the first drop since December 19.
Construction steel rebar on the Shanghai Futures Exchange fell 3.0%, while hot-rolled steel coil, used in cars and home appliances, shed 3.7% and stainless steel dropped 1.4%.
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