Tue Sep 18, 2012
* Iron ore cargoes snapped up as China steel prices rise
* Without China stimulus, price rebound seen short-lived
* Australia cuts iron ore export revenue goal on low prices
By Manolo Serapio Jr
SINGAPORE, Sept 18 (Reuters) - Spot iron ore prices jumped on Tuesday as rising steel prices encouraged mills and traders to chase cargoes, boosting sentiment in a market hit hard by an economic slowdown in top consumer China.
Iron ore bounced back from near three-year lows earlier this month after Beijing's approval of more than $150 billion in infrastructure projects raised hopes the plan would resuscitate steel demand.
Prices got a further boost from a broad-based commodities rally spurred by the Federal Reserve's push late last week to stimulate the U.S. economy via a third round of bond buying.
A 165,000-tonne cargo of Australian 61-percent grade Pilbara iron ore fines was sold at $109 per tonne on the China Beijing International Mining Exchange on Tuesday, up from a previous deal of $106.23, said an iron ore trader in Hong Kong.
A separate cargo of 57.7-percent grade Australian Yandi fines was sold on the same platform at $99 a tonne, up from $95 for a similar grade last week, said a Shanghai-based trader.
A Brazilian shipment of 63.5-percent grade iron ore was sold at $111.20 per tonne, up from Monday's $107.41, he said.
"A lot of the mills have been away from the market for a while so most of them are just hungry for material. Some traders are also starting to take positions thinking the market is on a rebound," the Shanghai trader said.
Some Chinese mills may also be stocking up on iron ore ahead of the week-long National Day holiday in China early next month, traders said.
Higher prices for spot cargoes could lift the benchmark 62-percent grade iron ore .IO62-CNI=SI further on Tuesday. The benchmark rose 3.4 percent to $105.10 a tonne on Monday, the highest since Aug. 21, according to data provider Steel Index.
CAUTION REMAINS
Rising steel prices are largely behind the upbeat tone in the iron ore market.
"Some mills are seeing better demand for some steel products like hot-rolled coil, cold-rolled coil and strip steel, which will give them incentive to continue full production. And they will need more iron ore for that," said another Shanghai-based trader.
The price of steel billet in China's key Tangshan area rose by 120 yuan on the day to 3,120 yuan per tonne on Monday, traders said. A week ago, the price stood at 2,960 yuan.
The most-traded rebar for January delivery on the Shanghai Futures Exchange closed up 0.8 percent at 3,582 yuan, rebounding 12 percent from a record low touched on Sept. 6.
But some analysts say it may be too early to declare a turnaround in the iron ore and steel markets, since the key to sustaining price gains lies in whether China's steel demand will recover significantly and only more stimulus steps by Beijing can make that happen.
"Iron ore prices will still be under pressure since China will be cautious in rolling out stimulus right now that there's a lot of liquidity in global markets, which means it would be difficult to do it without causing inflation," said Helen Lau, senior commodities analyst at UOB-Kay Hian.
"Given there's probably no strong stimulus going forward in China, the likelihood that iron ore prices have turned around is low."
Reflecting expectations that iron ore prices will stay low, top exporter Australia cut its revenue forecast for the steelmaking ingredient by a fifth on Tuesday to A$53.2 billion ($55.9 billion) in this fiscal year.
Australia's Fortescue Metals Group, the world's No.4 iron ore miner, has lined up $4.5 billion in debt and is in talks to sell stakes in some of its assets, as it moves swiftly to shore up funding to cope with a slump in prices.
Shanghai rebar futures and iron ore indexes at 0713 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3582 +28.00 +0.79
PLATTS 62 PCT INDEX 106.5 +1.25 +1.19
THE STEEL INDEX 62 PCT INDEX 105.1 +3.50 +3.44
METAL BULLETIN INDEX 105.75 +1.21 +1.16
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1=6.3173 Chinese yuan)
($1=0.9521 Australian dollars)
(Reporting by Manolo Serapio Jr.; Editing by Clarence Fernandez and Joseph Radford)
* Iron ore cargoes snapped up as China steel prices rise
* Without China stimulus, price rebound seen short-lived
* Australia cuts iron ore export revenue goal on low prices
By Manolo Serapio Jr
SINGAPORE, Sept 18 (Reuters) - Spot iron ore prices jumped on Tuesday as rising steel prices encouraged mills and traders to chase cargoes, boosting sentiment in a market hit hard by an economic slowdown in top consumer China.
Iron ore bounced back from near three-year lows earlier this month after Beijing's approval of more than $150 billion in infrastructure projects raised hopes the plan would resuscitate steel demand.
Prices got a further boost from a broad-based commodities rally spurred by the Federal Reserve's push late last week to stimulate the U.S. economy via a third round of bond buying.
A 165,000-tonne cargo of Australian 61-percent grade Pilbara iron ore fines was sold at $109 per tonne on the China Beijing International Mining Exchange on Tuesday, up from a previous deal of $106.23, said an iron ore trader in Hong Kong.
A separate cargo of 57.7-percent grade Australian Yandi fines was sold on the same platform at $99 a tonne, up from $95 for a similar grade last week, said a Shanghai-based trader.
A Brazilian shipment of 63.5-percent grade iron ore was sold at $111.20 per tonne, up from Monday's $107.41, he said.
"A lot of the mills have been away from the market for a while so most of them are just hungry for material. Some traders are also starting to take positions thinking the market is on a rebound," the Shanghai trader said.
Some Chinese mills may also be stocking up on iron ore ahead of the week-long National Day holiday in China early next month, traders said.
Higher prices for spot cargoes could lift the benchmark 62-percent grade iron ore .IO62-CNI=SI further on Tuesday. The benchmark rose 3.4 percent to $105.10 a tonne on Monday, the highest since Aug. 21, according to data provider Steel Index.
CAUTION REMAINS
Rising steel prices are largely behind the upbeat tone in the iron ore market.
"Some mills are seeing better demand for some steel products like hot-rolled coil, cold-rolled coil and strip steel, which will give them incentive to continue full production. And they will need more iron ore for that," said another Shanghai-based trader.
The price of steel billet in China's key Tangshan area rose by 120 yuan on the day to 3,120 yuan per tonne on Monday, traders said. A week ago, the price stood at 2,960 yuan.
The most-traded rebar for January delivery on the Shanghai Futures Exchange closed up 0.8 percent at 3,582 yuan, rebounding 12 percent from a record low touched on Sept. 6.
But some analysts say it may be too early to declare a turnaround in the iron ore and steel markets, since the key to sustaining price gains lies in whether China's steel demand will recover significantly and only more stimulus steps by Beijing can make that happen.
"Iron ore prices will still be under pressure since China will be cautious in rolling out stimulus right now that there's a lot of liquidity in global markets, which means it would be difficult to do it without causing inflation," said Helen Lau, senior commodities analyst at UOB-Kay Hian.
"Given there's probably no strong stimulus going forward in China, the likelihood that iron ore prices have turned around is low."
Reflecting expectations that iron ore prices will stay low, top exporter Australia cut its revenue forecast for the steelmaking ingredient by a fifth on Tuesday to A$53.2 billion ($55.9 billion) in this fiscal year.
Australia's Fortescue Metals Group, the world's No.4 iron ore miner, has lined up $4.5 billion in debt and is in talks to sell stakes in some of its assets, as it moves swiftly to shore up funding to cope with a slump in prices.
Shanghai rebar futures and iron ore indexes at 0713 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3582 +28.00 +0.79
PLATTS 62 PCT INDEX 106.5 +1.25 +1.19
THE STEEL INDEX 62 PCT INDEX 105.1 +3.50 +3.44
METAL BULLETIN INDEX 105.75 +1.21 +1.16
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1=6.3173 Chinese yuan)
($1=0.9521 Australian dollars)
(Reporting by Manolo Serapio Jr.; Editing by Clarence Fernandez and Joseph Radford)
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