The coronavirus won’t wreck the commodities market www.mining.com

A rampaging epidemic in the country that consumes about half of the world’s metals has to be bad news for mining stocks, right?

Investors are certainly making that bet. The week started with the Bloomberg World Mining Index falling the most in nearly six months, and a six-day losing streak continued Tuesday on expectations that a slowdown in economic activity will cut China’s voracious appetite for commodities.

Australian shares of Rio Tinto Group fell as much as 5.9% when trading resumed after a public holiday Monday, on track for their biggest slide in three-and-a-half years. Those of iron-ore producer Fortescue Metals Group Ltd. slumped as much as 8.7% in early trading.

That looks overdone. In the grip of an epidemic, it can feel like the sky is falling — but most such viruses die down in a matter of months, and people shouldn’t underestimate how much industrial stimulus Beijing will inject in the economy to keep growth on-target in the aftermath.

Consider Severe Acute Respiratory Syndrome, which swept through southern China and east Asia in the early months of 2003. Like most coronaviruses — and indeed, most infections of the nose and throat, such as influenza — it exhibited a pronounced winter seasonality, with infections beginning in November and dropping rapidly through April, before approaching zero in June.

Even Middle East Respiratory Syndrome, a coronavirus associated with parts of the world where winter weather is less extreme, showed a relatively similar pattern, with a peak in the early months of the year.

Combined with this natural decline is the fact that, despite early surveillance and response lapses, China and other countries are already employing extreme measures to halt the spread. While quarantining of the entire city of Wuhan may not be sufficient — given the disease appears to have spread unchecked until it was too late — that probably won’t be the last attempt to isolate the virus. China’s government, property developers and businesses are likely to implement further measures such as canceling public events and closing commercial and retail spaces.

If things play out this way, it’s not impossible that the epidemic could start to subside in April, just as China’s industrial machine is revving up from its normal winter slumber. Cold weather and the long shadow of the Lunar New Year holiday typically lead to very low levels of industrial activity in January and February, before picking up to full speed between March and June.

In the five years through 2018, for instance, daily pig iron production in March was about 7.4% higher on average than it was in January. Cement output ramps up even more rapidly, as warming weather makes it possible to mix concrete on building sites again: While January and February figures are often too weak to be reported by China’s statistical agency, May output over the same period averaged about 23% above the levels just two months earlier.

That cycle could be particularly pronounced this year. China’s consumers are staying home during what’s traditionally been high season for shopping, dining, seeing films or traveling. A 10% fall in services consumption could cut gross domestic product growth by about 1.2 percentage points, according to S&P Global Ratings.

That could, in theory, put a serious dent in output over the full year, which economists already expect to fall below the government’s target of “about 6%.” It might also violate a long-term pledge to double the country’s GDP by 2020, delivered on the eve of Xi Jinping’s accession to the Communist Party’s highest leadership in 2012.

Beijing is unlikely to take that sort of blow lying down. Just recall the responses to the 2003 SARS outbreak, the 2008 financial crisis, and the overzealous economic rebalancing toward consumption in 2015. As on those occasions, fixed-asset investment (particularly by state-owned companies) is likely to surge to fuel fresh industrial activity. China’s yearlong credit diet — no less serious, in its way, than the one that preceded the 2016 boom — will be loosened to inject some fresh life into a virus-hit economy.

That’s likely to further defer China’s shift to an economy more dependent on consumption and less on mounting debt and carbon emissions — but it will also be bullish, not bearish, for commodities. China’s coal imports in the 12 months through June 2017 were nearly a third higher than in the preceding year; copper rose 12%, oil by 13% and iron ore by 7.7%.

As the virus dies down, don’t be surprised to see that pattern play out one more time. What exactly is it about a country vowing to build two hospitals in a fortnight that makes investors think industrial commodities are heading for the sick bay?

(By David Fickling)

Oil prices have fallen 10% as coronavirus raises fears for global growth www.cnn.com

Mongolia evacuating its students from Wuhan amid virus outbreak www.akipress.com

The government of Mongolia at the session decided to urgently evacuate Mongolian students from the Chinese city of Wuhan, which is a center of the coronavirus today, Deputy Prime Minister Ölziisaikhany Enkhtüvshin said.

Mongolia's border with China remains open, and some restrictions have been imposed www.montsame.mn

Ulaanbaatar /MONTSAME/. In connection with the coronavirus outbreak, it was decided to impose some temporary restrictions on movement at border checkpoints between Mongolia and China, starting from 28 January 2020, the General Authority for Border Protection reports.

Enkhjin: Government should refinance its debts www.zgm.mn

Director-General at Reserve Management Financial Markets Department of the Bank of Mongolia (BoM), Enkhjin Atarbaatar talked about the current situation in the foreign exchange market of Mongolia and Fx price

Major economics challenges to deepen as debt rises www.zgm.mn

The 2020 State Budget deficit equaled 5.1 percent of the total GDP, which is almost MNT two trillion. This number may increase further due to the Government’s decision to repay pension loan amid expected repayments of foreign debts or government bonds that will expire from 2021. However, policymakers have not yet made a final conclusion to the concern, waiting for the parliamentary election results. Mongolia is scheduled to repay a total foreign debt of USD 14.4 billion in 2021-2024. Of these, government debt accounts for USD 2.9 billion. The Government needs to attract as much as MNT 800 billion to cover the pension loan repayment; Its solution to issue new bonds is increasing the potential debt amount in the future. Earlier this month, Parliament concluded its decision to issue bonds, presenting a plan to back Salkhit silver and gold deposit’s future profit. A controversy among the public continued for a certain time following the decision. Moreover, the Development Bank of Mongolia (DBM) could not guarantee the bonds, for the basic circumstances were violating the “Law on Development Bank of Mongolia”. Some economists are still against the decision, saying that the plan to issue bonds using a deposit’s unmade profit is not proper.Researcher of mineral resources law, Surakhbayar.G said, “Issuing bonds in advance when the feasibility study has not confirmed is the case which can occur only in Mongolia. It never happens in other countries around the world”.

Trade stats: Mongolia fueling China’s carbon emissions? www.news.mn

Mongolia traded with over 150 countries in 2019. The volume of trade between China and Mongolia has went up to USD 8.9 billion in 2019, accounting for 64.4 percent of the latter’s total foreign trade. This information was published on the site of the National Statistics Office of Mongolia on Sunday 26 January 2020.

Copper price losing streak now in double digits www.mining.com

The copper price fell sharply again on Monday as China, responsible for more than 50% of the world’s copper consumption, struggles to control the deadly coronavirus outbreak.

Coronavirus: Death toll climbs to 106 as China tightens measures www.bbc.com

China says 106 people have died from the new coronavirus and the cases of newly infected have almost doubled.

Coronavirus: Death toll rises to 80 as China extends holiday www.bbc.com

The number of people killed in China by the coronavirus has risen to 80, with almost 3,000 confirmed ill.

The national new year holiday has been extended by three days to Sunday, in an attempt to contain the outbreak.

Wuhan in Hubei, the source of the outbreak, is in lockdown and several cities have imposed travel bans.

Health commission officials said on Monday the number of deaths in Hubei province had climbed from 56 to 76, with four deaths elsewhere.

The overall number of confirmed cases in China is 2,744. State media say more than 300 are critically ill.

Another 41 cases have been confirmed abroad, including in Thailand, the United States, and Australia. There have been no deaths outside China.

The coronavirus causes severe acute respiratory infection and there is no specific cure or vaccine.

Most deaths involve elderly people or those with pre-existing respiratory problems.

Travel from the city, home to 11 million people, has been severely restricted and non-essential vehicles have been banned from the roads.

At the Hubei border, workers are checking people's temperatures before allowing them into the province.

The emergency has overwhelmed Wuhan's hospitals. More than half a million medical staff have joined prevention, control and treatment operations in Hubei province.

Two new makeshift hospitals are being built in Wuhan, the provincial capital, and factories are rushing to produce masks and protective clothing.

The city's mayor Zhou Xianwang said the number of cases would continue to rise, and warned that around five million new year travellers left the city before the lockdown.

New year celebrations were scaled back and four major cities - Beijing, Shanghai, Xi'an and Tianjin - have banned long-distance busses.

Beijing has closed the Forbidden City for tourists, as well as a section of the Great Wall.

In Guangdong province, several cities have made face masks mandatory in public. Both Disney parks in Hong Kong and Shanghai have closed.

On the weekend, Chinese officials warned the virus was able to spread during its incubation period, making it harder to contain the illness.

In humans, the incubation period - during which a person has the disease, but no symptoms - ranges from between one and 14 days, officials believe.

According to the World Health Organization and national authorities, there have been at least 41 confirmed cases outside China.

Eight cases: Thailand
Five: USA
Four: Singapore, Australia, Taiwan, Malaysia
Three: France, Japan
Two: South Korea, Vietnam
One: Nepal, Canada
Almost all had recently been to Wuhan.

The virus itself is a new, or "novel" coronavirus - a family that normally affects animals.

One human variant causes the common cold - but another variant, Sars, killed hundreds in a major outbreak in 2003.

'The symptomless spreaders'
The news that this virus can spread during the incubation period is a significant development in our understanding of the virus - and the lengths China will have to go to, to stop it.

People with Sars (the last deadly coronavirus outbreak to hit China) and Ebola are contagious only when symptoms appear.

Such outbreaks are relatively easy to stop - identify and isolate people who are sick and monitor anyone they came into contact with.

Flu, however, is the most famous example of a virus that you spread before you even know you're ill.

We are not at the stage where people are saying this could be a global pandemic like swine flu.

But stopping such "symptomless spreaders" will make the job of the Chinese authorities much harder.

There are still crucial questions - how infectious are people during the incubation period, and did any of the patients outside China spread the disease in those countries before becoming sick?