Mon Oct 29, 2012
* Last week's price spike spurs caution among mills
* China daily steel output up 4 pct in mid-Oct
* Iron ore seen averaging $115 by 2015 as China shifts gear-poll
By Manolo Serapio Jr
SINGAPORE, Oct 29 (Reuters) - Spot iron ore prices may ease this week after gaining nearly 4 percent last week as buyers from top consumer China exercise caution after filling up short-term needs, although a gradual pickup in steel demand should keep losses in check.
China's steel prices have rebounded more than 13 percent from September lows, reflecting a pickup in construction activity as Beijing boosts infrastructure investment. But the recovery remains fragile, prompting mills to limit stockpiles of iron ore.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI dropped 0.3 percent to $119.60 a tonne on Friday, according to Steel Index. The day before, the price rose to $120, the highest since late July.
"It looks like $120 is a very sensitive level for mills and trading volumes were really low in the run-up towards that level last week," said an iron ore trader in Shanghai.
"I think some mills have already bought enough cargoes for one to two weeks' more of stock so they're not in a hurry to buy again. I don't think they want to see iron ore go beyond $120 because they don't want to lose the current margins that they have."
Iron ore prices may drop nearly 10 percent to average $115 by 2015 as China's economic growth shifts to a slower gear, threatening to squeeze profits at global miners Vale, Rio Tinto and BHP Billiton, a Reuters poll showed.
LESS INQUIRIES
While recent gains in steel prices have boosted profit margins among Chinese producers, the recovery in end-user demand has been modest.
A drop in Shanghai rebar futures may also weaken appetite for iron ore this week. The most traded contract for May delivery on the Shanghai Futures Exchange fell 1.7 percent to close at 3,619 yuan ($580) a tonne.
"So far, inquiries from mills are less today compared to the start of last week," said another Shanghai-based trader.
"The big mills would probably take a break from purchasing new cargoes. But if the price moves closer to $110 again, some buyers may come back."
Since rebounding from three-year lows of below $87 touched in early September, iron ore prices have been trapped in narrow ranges of between $110 and just below $120 as China's economic slowdown curbs its appetite for raw materials.
Still, miners continue to offload cargoes on the spot market, hoping for a sustained increase in China's steel production.
China's average daily crude steel output hit nearly 2 million tonnes over the Oct. 11-20 period, rising 4.3 percent from the previous 10 days, industry data showed on Monday.
Brazil's Vale is selling around 147,000 tonnes of 60.43-percent grade iron ore, and 95,000 tonnes 62.94-percent grade material at tenders closing later on Monday, traders said.
Shanghai rebar futures and iron ore indexes at 0758 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3619 -64.00 -1.74
PLATTS 62 PCT INDEX 120.5 +0.00 +0.00
THE STEEL INDEX 62 PCT INDEX 119.6 -0.40 -0.33
METAL BULLETIN INDEX 120.76 +0.28 +0.23
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2489 Chinese yuan)
(Editing by Miral Fahmy)
* Last week's price spike spurs caution among mills
* China daily steel output up 4 pct in mid-Oct
* Iron ore seen averaging $115 by 2015 as China shifts gear-poll
By Manolo Serapio Jr
SINGAPORE, Oct 29 (Reuters) - Spot iron ore prices may ease this week after gaining nearly 4 percent last week as buyers from top consumer China exercise caution after filling up short-term needs, although a gradual pickup in steel demand should keep losses in check.
China's steel prices have rebounded more than 13 percent from September lows, reflecting a pickup in construction activity as Beijing boosts infrastructure investment. But the recovery remains fragile, prompting mills to limit stockpiles of iron ore.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI dropped 0.3 percent to $119.60 a tonne on Friday, according to Steel Index. The day before, the price rose to $120, the highest since late July.
"It looks like $120 is a very sensitive level for mills and trading volumes were really low in the run-up towards that level last week," said an iron ore trader in Shanghai.
"I think some mills have already bought enough cargoes for one to two weeks' more of stock so they're not in a hurry to buy again. I don't think they want to see iron ore go beyond $120 because they don't want to lose the current margins that they have."
Iron ore prices may drop nearly 10 percent to average $115 by 2015 as China's economic growth shifts to a slower gear, threatening to squeeze profits at global miners Vale, Rio Tinto and BHP Billiton, a Reuters poll showed.
LESS INQUIRIES
While recent gains in steel prices have boosted profit margins among Chinese producers, the recovery in end-user demand has been modest.
A drop in Shanghai rebar futures may also weaken appetite for iron ore this week. The most traded contract for May delivery on the Shanghai Futures Exchange fell 1.7 percent to close at 3,619 yuan ($580) a tonne.
"So far, inquiries from mills are less today compared to the start of last week," said another Shanghai-based trader.
"The big mills would probably take a break from purchasing new cargoes. But if the price moves closer to $110 again, some buyers may come back."
Since rebounding from three-year lows of below $87 touched in early September, iron ore prices have been trapped in narrow ranges of between $110 and just below $120 as China's economic slowdown curbs its appetite for raw materials.
Still, miners continue to offload cargoes on the spot market, hoping for a sustained increase in China's steel production.
China's average daily crude steel output hit nearly 2 million tonnes over the Oct. 11-20 period, rising 4.3 percent from the previous 10 days, industry data showed on Monday.
Brazil's Vale is selling around 147,000 tonnes of 60.43-percent grade iron ore, and 95,000 tonnes 62.94-percent grade material at tenders closing later on Monday, traders said.
Shanghai rebar futures and iron ore indexes at 0758 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3619 -64.00 -1.74
PLATTS 62 PCT INDEX 120.5 +0.00 +0.00
THE STEEL INDEX 62 PCT INDEX 119.6 -0.40 -0.33
METAL BULLETIN INDEX 120.76 +0.28 +0.23
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2489 Chinese yuan)
(Editing by Miral Fahmy)
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