Thu Dec 6, 2012
* Spot iron ore prices bounce further off 6-week lows
* Iron ore may rise to $130 after Chinese New Year-FIS
By Manolo Serapio Jr
SINGAPORE, Dec 6 (Reuters) - Prices of iron ore swaps steadied near three-week highs on Thursday as traders bet demand for the steelmaking raw material would rise after the Chinese New Year break in February.
Hopes are growing that China's economy will be in better shape in the first half of 2013 after its new leader, who takes over in March, announced his commitment to pro-growth policies, boding well for demand in the world's biggest steel consumer.
Iron ore prices in the physical market turned higher this week after hitting six-week lows as traders began picking up cargoes for delivery over the next two months on expectations demand from top buyer China will recover.
"What we're looking at now in the physical market are cargoes to be delivered mid-January to mid-February. So you've got a few traders taking some position cargoes ahead of the Chinese New Year," said Rory MacDonald, iron ore broker at Freight Investor Services (FIS).
"While sentiment on December delivery was bearish, we're now looking at Jan-Feb delivery so the sentiment's better. There's always an expectation that you'll get a bit of a price spike after the Chinese New Year, so there is the same anticipation this time around."
A fall in Chinese steel prices this month to levels last seen in September prompted iron ore buyers to limit spot purchases. That pushed down the price of benchmark 62-percent grade iron ore .IO62-CNI=SI to $115.30 per tonne on Monday, its lowest since Oct. 19.
The price has since recovered to $117.90 on Wednesday, based on data from information provider Steel Index. Price offers for imported iron ore cargoes in China rose by $1-$2 per tonne on Thursday, according to Chinese consultancy Umetal.
RISING OPTIMISM
Chinese steel mills normally stock up on iron ore ahead of the week-long Lunar New Year break that falls in February next year, and buying extends after the holiday.
MacDonald said he expects the price of iron ore to rise above $130 after the Chinese holiday. "We may even challenge $140," he added.
The optimism is reflected in swaps, with the January contract holding at $117 in early deals in Asia, after settling at $117.19 on Wednesday, its highest since Nov. 13.
The first-quarter price was at $117.25 versus Wednesday's close of $117.06, traders said.
But some Chinese traders say many steelmakers are still not too keen on buying forward cargoes, unsure of the outlook for future demand.
"Many steel mills, which are not stuck in long-term contracts with miners, are not willing to make forward bookings and would rather buy for immediate use from the existing inventories at ports. And also they are trying to keep very low inventories," said a Beijing-based iron ore trader.
Stocks of iron ore at Chinese ports fell below 80 million tonnes last week for the first time since December 2010, Commonwealth Bank of Australia has said.
Shanghai rebar futures and iron ore indexes at 0704 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3595 -24.00 -0.66
PLATTS 62 PCT INDEX 119.5 +1.00 +0.84
THE STEEL INDEX 62 PCT INDEX 117.9 +0.80 +0.68
METAL BULLETIN INDEX 119.43 +1.56 +1.32
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
(Additional reporting by Ruby Lian in Shanghai; Editing by Himani Sarkar and Miral Fahmy)
* Spot iron ore prices bounce further off 6-week lows
* Iron ore may rise to $130 after Chinese New Year-FIS
By Manolo Serapio Jr
SINGAPORE, Dec 6 (Reuters) - Prices of iron ore swaps steadied near three-week highs on Thursday as traders bet demand for the steelmaking raw material would rise after the Chinese New Year break in February.
Hopes are growing that China's economy will be in better shape in the first half of 2013 after its new leader, who takes over in March, announced his commitment to pro-growth policies, boding well for demand in the world's biggest steel consumer.
Iron ore prices in the physical market turned higher this week after hitting six-week lows as traders began picking up cargoes for delivery over the next two months on expectations demand from top buyer China will recover.
"What we're looking at now in the physical market are cargoes to be delivered mid-January to mid-February. So you've got a few traders taking some position cargoes ahead of the Chinese New Year," said Rory MacDonald, iron ore broker at Freight Investor Services (FIS).
"While sentiment on December delivery was bearish, we're now looking at Jan-Feb delivery so the sentiment's better. There's always an expectation that you'll get a bit of a price spike after the Chinese New Year, so there is the same anticipation this time around."
A fall in Chinese steel prices this month to levels last seen in September prompted iron ore buyers to limit spot purchases. That pushed down the price of benchmark 62-percent grade iron ore .IO62-CNI=SI to $115.30 per tonne on Monday, its lowest since Oct. 19.
The price has since recovered to $117.90 on Wednesday, based on data from information provider Steel Index. Price offers for imported iron ore cargoes in China rose by $1-$2 per tonne on Thursday, according to Chinese consultancy Umetal.
RISING OPTIMISM
Chinese steel mills normally stock up on iron ore ahead of the week-long Lunar New Year break that falls in February next year, and buying extends after the holiday.
MacDonald said he expects the price of iron ore to rise above $130 after the Chinese holiday. "We may even challenge $140," he added.
The optimism is reflected in swaps, with the January contract holding at $117 in early deals in Asia, after settling at $117.19 on Wednesday, its highest since Nov. 13.
The first-quarter price was at $117.25 versus Wednesday's close of $117.06, traders said.
But some Chinese traders say many steelmakers are still not too keen on buying forward cargoes, unsure of the outlook for future demand.
"Many steel mills, which are not stuck in long-term contracts with miners, are not willing to make forward bookings and would rather buy for immediate use from the existing inventories at ports. And also they are trying to keep very low inventories," said a Beijing-based iron ore trader.
Stocks of iron ore at Chinese ports fell below 80 million tonnes last week for the first time since December 2010, Commonwealth Bank of Australia has said.
Shanghai rebar futures and iron ore indexes at 0704 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3595 -24.00 -0.66
PLATTS 62 PCT INDEX 119.5 +1.00 +0.84
THE STEEL INDEX 62 PCT INDEX 117.9 +0.80 +0.68
METAL BULLETIN INDEX 119.43 +1.56 +1.32
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
(Additional reporting by Ruby Lian in Shanghai; Editing by Himani Sarkar and Miral Fahmy)
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