Chinese futures decline amid raging virus

Shanghai steel futures extended losses in trading on Thursday ahead of the weeklong Lunar New Year hiatus amid fears that a new coronavirus outbreak in the country will hit construction activity.

The best-selling steel rebar contract on the Shanghai Futures Exchange fell 0.4% to 3,523 yuan ($ 510.28) a tonne on Thursday around 02:15 GMT. It fell about 2%, its first weekly drop in a month.

Hot rolled steel in Shanghai used in automobiles and home appliances also fell 0.4% to RMB 3,534 a tonne, down nearly 3% on the week.

"The spread of the coronavirus in China raises concerns that the busy construction period after the Lunar New Year will be postponed," ANZ Research wrote.

“Construction activity was positive for the metallurgical sector. However, any disruption during this peak time could ruin the fragile recovery that emerged in December, ”he added.

China has confirmed 571 total cases and 17 deaths as a result of the coronavirus outbreak believed to have emerged late last year from illegal wildlife trade at an animal market in the central Chinese city of Wuhan.

Meanwhile, benchmark iron ore futures on the Dalian Commodity Exchange, expiring in May, remain stable after China's second largest steelmaker, HBIS Group, said it received two letters of credit to buy iron ore from Brazilian Vale under a contract for 200 million yuan.