Chinese futures gained on supply tightness on Wednesday, amid demand uncertainty due to the coronavirus outbreak.
The most-actively traded iron ore futures on the Dalian Commodity Exchange (DCE), for May 2020 delivery hiked up by 1.65% day-on-day to RMB 676 per tonne on Wednesday.
However, the steel rebar contract for May 2020 delivery on the Shanghai Futures Exchange contracted slightly 0.06% day-on-day to RMB 3,548 per tonne.
Malaysia’s lockdown to affect 800,000- 840,000 mt
The recent lockdown of Malaysia is estimated to affect around 840,000 tonnes of iron ore for Vale’s blending at Teluk Rubiah terminal, according to Mysteel.
Meanwhile, China-based financial service firm, Horizon Insight expected the affected blending volume at around 800,000 tonnes of iron ore.
Due to the coronavirus outbreak, the Malaysian authority decided to lockdown the country till 31 Mar 2020 to curb the spread of virus.
China’s steel market to make full recovery in May-June
China’s steel market is expected to make a full recovery later till May or June, according to Roskill’s Neal Brewster.
However, the new risk to the Chinese economy is slated to come from trade disruption risks from other parts of world affected by coronavirus.
According to Platts, the migrant workers had been returning back to work since second half of February 2020 but the economic activity is still down 50% relative to normal time.
Going forward, there might be a sharp rebound in economic activity, due to draconian measures adopted by China to contain the outbreak and peaking of the pandemic.