Commodities plummet in China as coronavirus raises demand fears 


The country’s three major commodity exchanges, including crude oil and copper fell Thursday, extending their recent slide on concerns that the coronavirus outbreak would reduce Chinese demand for raw materials. Investors have deserted raw materials around the world from copper in London to palm oil in Kuala Lumpur over fears about the economic fallout from the virus. More than a dozen Chinese provinces have announced an extension of the new year holiday by more than a week in a bid to slow down the spread of the virus that has killed hundreds of people and made thousands very ill. Meanwhile, Investors erased $393 billion from China's benchmark stock index on Monday and sold the yuan. An 8 per cent plunge on the Shanghai composite index was also its biggest daily fall in more than four years. The Chinese yuan blew past the 7-per-dollar mark. The total number of deaths in China from the coronavirus rose to 361 by Sunday, compared with 17 on 23 January, when Chinese markets last traded. More than 2,500 stocks fell by the daily limit of 10 per cent.

Source: Visual Capitalist

Copper sank to its lowest in more than three years, falling by its daily limit of 7 per cent, while aluminium, zinc and lead shed more than 4 per cent and soybeans dropped 2 per cent.

China's securities regulator moved to limit short selling and urged mutual fund managers not to sell shares unless they face investor redemptions.

Analysts said the epidemic's impact on commodity prices was greater than during the Severe Acute Respiratory Syndrome (SARS) outbreak in 2002-2003, which also originated in China and led to nearly 800 deaths.

China said on Monday its economy is facing increasing barriers from the virus, particularly around consumption, and injected 1.2 trillion yuan ($173.8 billion) of liquidity into markets.

Chinese brokerage CITIC Securities noted the outbreak was having a negative effect on the prices of goods like eggs, as it had delayed the restart of canteens in schools, companies and institutions, cutting demand.

For edible oils, like palm oil, the virus would create transport problems, although it was the low season for demand following the holiday break, it said.