Thu Jan 17, 2013
* Iron ore fell 5 pct on Wednesday, biggest drop in 14 months
* Many China mills have ample ore stocks, no rush to buy
By Manolo Serapio Jr
SINGAPORE, Jan 17 (Reuters) - Offers for foreign iron ore cargoes in top importer China fell for a fourth day running on Thursday, a day after the benchmark price fell the most in nearly 14 months amid thin demand.
Cargoes from top suppliers Australia and Brazil dropped by $5-$9 per tonne, according to Chinese consultancy Umetal, reflecting poor buying interest among steelmakers. The steel producers had previously been stocking up on the raw material since December, pushing prices to 15-month highs last week.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI slid 4.9 percent to $145.40 a tonne on Wednesday, the steepest single-day drop since Nov. 28, 2011, based on data from Steel Index.
It was the lowest price since Jan. 2.
"A lot of mills are not in a hurry to buy more cargo. Some have enough iron ore to feed their furnace until the end of the Chinese New Year," said an iron ore trader in Shanghai, referring to the week-long holiday in February.
"We heard several mills have 30-40 days of inventory right now. At the end of December up to early January, the average stocks at mills was just two weeks."
Amid Wednesday's steep decline in prices, BHP Billiton, the world's No. 3 iron ore producer, bought a 100,000-tonne cargo in a rare move that traders said may have been made to stem the price fall.
The more than 80 percent rebound in iron ore prices from three-year lows in September is a boon for miners such as BHP, but the recent rally has also taken the market by surprise and turned off many Chinese buyers, triggering a decline in prices from late last week.
BHP purchased the cargo of 62-percent grade Australian iron ore fines for February delivery at $145.50 a tonne via the GlobalOre trading platform on Wednesday, traders said.
"This is very unusual. Maybe BHP wants to support prices because there's no reason for it to buy the cargo, it's a producer," said another Shanghai-based iron ore trader.
BHP declined to comment on the transaction.
The benchmark price could slip further before it stabilises, the first Shanghai trader said. While Chinese mills have not cancelled shipments yet, they could do so if prices slide some more as they did four months ago when iron ore dropped to below $90 a tonne, he said.
"The price needs to go below $140 for mills to become profitable. They're still losing about 100 yuan per tonne since iron ore prices have far outpaced steel," said the first trader.
Potential buyers sought lower prices on Thursday for three cargoes of Australian iron ore fines on trading platform GlobalOre, with 90,000 tonnes of 62-percent grade iron ore fines bid at $139 a tonne, over $6 less than BHP's purchase price on Wednesday.
Shanghai rebar futures and iron ore indexes at 0733 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3946 +12.00 +0.31
THE STEEL INDEX 62 PCT INDEX 145.4 -7.50 -4.91
METAL BULLETIN INDEX 145.4 -5.02 -3.34
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
(Reporting by Manolo Serapio Jr.)
* Iron ore fell 5 pct on Wednesday, biggest drop in 14 months
* Many China mills have ample ore stocks, no rush to buy
By Manolo Serapio Jr
SINGAPORE, Jan 17 (Reuters) - Offers for foreign iron ore cargoes in top importer China fell for a fourth day running on Thursday, a day after the benchmark price fell the most in nearly 14 months amid thin demand.
Cargoes from top suppliers Australia and Brazil dropped by $5-$9 per tonne, according to Chinese consultancy Umetal, reflecting poor buying interest among steelmakers. The steel producers had previously been stocking up on the raw material since December, pushing prices to 15-month highs last week.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI slid 4.9 percent to $145.40 a tonne on Wednesday, the steepest single-day drop since Nov. 28, 2011, based on data from Steel Index.
It was the lowest price since Jan. 2.
"A lot of mills are not in a hurry to buy more cargo. Some have enough iron ore to feed their furnace until the end of the Chinese New Year," said an iron ore trader in Shanghai, referring to the week-long holiday in February.
"We heard several mills have 30-40 days of inventory right now. At the end of December up to early January, the average stocks at mills was just two weeks."
Amid Wednesday's steep decline in prices, BHP Billiton, the world's No. 3 iron ore producer, bought a 100,000-tonne cargo in a rare move that traders said may have been made to stem the price fall.
The more than 80 percent rebound in iron ore prices from three-year lows in September is a boon for miners such as BHP, but the recent rally has also taken the market by surprise and turned off many Chinese buyers, triggering a decline in prices from late last week.
BHP purchased the cargo of 62-percent grade Australian iron ore fines for February delivery at $145.50 a tonne via the GlobalOre trading platform on Wednesday, traders said.
"This is very unusual. Maybe BHP wants to support prices because there's no reason for it to buy the cargo, it's a producer," said another Shanghai-based iron ore trader.
BHP declined to comment on the transaction.
The benchmark price could slip further before it stabilises, the first Shanghai trader said. While Chinese mills have not cancelled shipments yet, they could do so if prices slide some more as they did four months ago when iron ore dropped to below $90 a tonne, he said.
"The price needs to go below $140 for mills to become profitable. They're still losing about 100 yuan per tonne since iron ore prices have far outpaced steel," said the first trader.
Potential buyers sought lower prices on Thursday for three cargoes of Australian iron ore fines on trading platform GlobalOre, with 90,000 tonnes of 62-percent grade iron ore fines bid at $139 a tonne, over $6 less than BHP's purchase price on Wednesday.
Shanghai rebar futures and iron ore indexes at 0733 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3946 +12.00 +0.31
THE STEEL INDEX 62 PCT INDEX 145.4 -7.50 -4.91
METAL BULLETIN INDEX 145.4 -5.02 -3.34
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
(Reporting by Manolo Serapio Jr.)
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