Tue Aug 7, 2012
* Ample supply in spot market also weighing on iron ore
* At $116.60/tonne, iron ore may drop another $5 - trader
* China daily steel output down 2.2 pct in late July - CISA
By Manolo Serapio Jr
SINGAPORE, Aug 7 (Reuters) - Buying interest for iron ore cargoes from top consumer China remained thin on Tuesday as uncertainty over when steel demand will pick up depressed appetite for the raw material.
Benchmark iron ore prices, which hit their lowest in 31 months last week, could fall further amid ample spot supplies as miners continue to offer material, hoping some Chinese mills will return to the market to replenish inventories.
"I'm afraid too much spot material is chasing too few houses," said an iron ore trader in Hong Kong. "I would still bet that iron ore prices have more downside, but probably limited to $5."
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI slipped 10 cents to $116.60 per tonne on Monday, according to Steel Index.
That is not far off the $115.20 reached last week -- the lowest since Dec. 29, 2009 -- although prices have plateaued after falling steeply in the previous two weeks.
A slide in Chinese steel prices, reflecting sluggish demand, has slashed interest for iron ore, forcing smaller producers in the world's biggest steel market to curb output to stem losses.
In the first six months of 2012, China's crude steel output, which is half the world's, rose just 1.8 percent from a year earlier. In the same period in 2011, output was up nearly 10 percent.
BUYERS' MARKET
On a daily basis, China's crude steel production fell 2.2 percent to 1.949 million tonnes on average over July 21-31 from July 11-20, data from the China Iron and Steel Association showed on Tuesday.
For all of last month, daily average output dropped 2 percent to 1.967 million tonnes, from 2.007 million tonnes in June, the second highest on record.
"An increasing number of steel mills are reducing production because they don't see hope that demand will recover this month," said an iron ore trader in the port city of Rizhao in China's eastern Shandong province.
He said his company was struggling to sell even half of a 60,000-tonne cargo, even at a loss, because potential buyers wanted to buy it cheap.
"It's now become a buyers' market," he said.
Sustained spot supply from major miners such as Vale SA and BHP Billiton Ltd is also helping depress prices, as the big producers continue to push out
cargoes, with current spot prices still at about three times their production cost.
Brazil's Vale, the world's top iron ore exporter, is selling another 147,000 tonnes, of 64.08-percent grade iron ore, via a tender on Tuesday, traders said. It sold two cargoes, totalling more than 300,000 tonnes, on Monday.
BHP Billiton is selling 90,000 tonnes of 57.5-percent grade Australian Yandi iron ore fines at a separate tender, traders said.
Miners are also offering material on physical platforms GlobalOre and on the China Beijing International Mining Exchange, although bids were scarce, traders said.
Shanghai rebar futures and iron ore indexes at 0702 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3687 +5.00 +0.14
PLATTS 62 PCT INDEX 117.75 +0.50 +0.43
THE STEEL INDEX 62 PCT INDEX 116.6 -0.10 -0.09
METAL BULLETIN INDEX 118.97 -0.49 -0.41
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin and Chris Lewis)
* Ample supply in spot market also weighing on iron ore
* At $116.60/tonne, iron ore may drop another $5 - trader
* China daily steel output down 2.2 pct in late July - CISA
By Manolo Serapio Jr
SINGAPORE, Aug 7 (Reuters) - Buying interest for iron ore cargoes from top consumer China remained thin on Tuesday as uncertainty over when steel demand will pick up depressed appetite for the raw material.
Benchmark iron ore prices, which hit their lowest in 31 months last week, could fall further amid ample spot supplies as miners continue to offer material, hoping some Chinese mills will return to the market to replenish inventories.
"I'm afraid too much spot material is chasing too few houses," said an iron ore trader in Hong Kong. "I would still bet that iron ore prices have more downside, but probably limited to $5."
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI slipped 10 cents to $116.60 per tonne on Monday, according to Steel Index.
That is not far off the $115.20 reached last week -- the lowest since Dec. 29, 2009 -- although prices have plateaued after falling steeply in the previous two weeks.
A slide in Chinese steel prices, reflecting sluggish demand, has slashed interest for iron ore, forcing smaller producers in the world's biggest steel market to curb output to stem losses.
In the first six months of 2012, China's crude steel output, which is half the world's, rose just 1.8 percent from a year earlier. In the same period in 2011, output was up nearly 10 percent.
BUYERS' MARKET
On a daily basis, China's crude steel production fell 2.2 percent to 1.949 million tonnes on average over July 21-31 from July 11-20, data from the China Iron and Steel Association showed on Tuesday.
For all of last month, daily average output dropped 2 percent to 1.967 million tonnes, from 2.007 million tonnes in June, the second highest on record.
"An increasing number of steel mills are reducing production because they don't see hope that demand will recover this month," said an iron ore trader in the port city of Rizhao in China's eastern Shandong province.
He said his company was struggling to sell even half of a 60,000-tonne cargo, even at a loss, because potential buyers wanted to buy it cheap.
"It's now become a buyers' market," he said.
Sustained spot supply from major miners such as Vale SA and BHP Billiton Ltd is also helping depress prices, as the big producers continue to push out
cargoes, with current spot prices still at about three times their production cost.
Brazil's Vale, the world's top iron ore exporter, is selling another 147,000 tonnes, of 64.08-percent grade iron ore, via a tender on Tuesday, traders said. It sold two cargoes, totalling more than 300,000 tonnes, on Monday.
BHP Billiton is selling 90,000 tonnes of 57.5-percent grade Australian Yandi iron ore fines at a separate tender, traders said.
Miners are also offering material on physical platforms GlobalOre and on the China Beijing International Mining Exchange, although bids were scarce, traders said.
Shanghai rebar futures and iron ore indexes at 0702 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3687 +5.00 +0.14
PLATTS 62 PCT INDEX 117.75 +0.50 +0.43
THE STEEL INDEX 62 PCT INDEX 116.6 -0.10 -0.09
METAL BULLETIN INDEX 118.97 -0.49 -0.41
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin and Chris Lewis)
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