/biz/ - Business & Finance

In Australia, after hauling hundreds of thousands of tons of iron ore to China, returning freighters can face a 14-day quarantine before being able to reload.

BHP, which has headquarters in London and Melbourne and is one of the world’s largest copper mining companies, has been in talks to possibly delay shipments to Chinese ports.

And from Qatar to Indonesia, exporters of liquefied natural gas face the prospect of disrupted shipments after a crucial importer in China is reportedly turning back deliveries after invoking clauses in long-term contracts that blame a “greater force.”

Prices for key industrial raw materials such as copper, iron ore, nickel, aluminum and liquid natural gas have plummeted since the virus emerged. Currencies of countries that export these goods at high rates, including Brazil, South Africa and Australia, are near their lowest levels in recent memory. And manufacturers, mining companies and commodity producers of all stripes are weighing whether they will be forced to cut back on production for fear of adding to a growing inventory glut.

The woes of the commodities markets — arguably the worst-performing asset in financial markets this year — reflect the basic reality that China’s industry-heavy economy is the most important consumer of raw materials on earth.

JPMorgan economists now think China’s economy will grow at a pace of just 1 percent in the first quarter, well down from an initial forecast that anticipated a peppy 6.3 percent rate.
The slowdown will be most pronounced in the industrial sector. Most Chinese provinces had extended the Lunar New Year holiday and kept factories closed until Monday in an effort to contain the virus. Some have reopened, but it could be weeks or months before production can fully ramp up.