China Iron Ore Recoups Losses Amid Stimulus Hopes
China's iron ore futures erased earlier losses to end flat on Thursday, regaining support as miner Vale SA said it may temporarily halt activities at its Malaysian distribution center as a safety measure against the coronavirus pandemic.
Iron ore's most-traded contract on the Dalian Commodity Exchange steadied at 678 yuan ($95.76) a tonne, after tumbling 5.8% earlier in the session.
On the Singapore Exchange, the front-month iron ore contract trimmed losses to just 0.3% in afternoon trade from 4.1% earlier in the day.
Iron ore supplier Vale said on Wednesday its Malaysian distribution center may halt operations between March 21-31 to safeguard employees and as authorities imposed transportation restrictions to contain coronavirus infections.
The miner, however, said its 2020 production and sales volumes would not be affected, despite an impact of about 800,000 tonnes in first-quarter sales.
Dalian iron ore is up 4.9% so far this year, displaying resilience despite panic gripping financial markets over the spreading coronavirus and its economic impact, as investors were hopeful of an infrastructure-led stimulus package from Beijing.
Steel futures also trimmed losses, although doubts remained over the effectiveness of further economic stimulus measures being rolled out across the world.
"Policymakers around the world are doing what they can, but it is unclear whether that is enough in economies that are likely to be in lockdown for an unknown number of months," Tapas Strickland, director of economics at National Australia Bank in Sydney, said in a note.
China accounts for more than half of the world's steel output and about half of total consumption of the manufacturing and construction material.
Beijing was hit by a record number of imported coronavirus infections while new local transmissions in China fell to zero, Thursday's data showed, putting more pressure on the capital to screen out sick passengers and isolate suspected cases.
(Reuters reporting by Enrico dela Cruz; Editing by Devika Syamnath and Shailesh Kuber)