Mon Feb 18, 2013
* Chinese mills may restock iron ore after Lunar New Year break
* Iron ore swaps edge lower after rebar drop
By Manolo Serapio Jr
SINGAPORE, Feb 18 (Reuters) - Shanghai steel futures fell on Monday to their lowest since late January as investors trimmed expectations for an immediate pickup in Chinese steel demand on the first trading day after a week-long Lunar New Year break.
Weaker steel prices usually translate to slower demand for iron ore, but some Chinese mills may restock on the raw material after the long holiday which should support prices. Traders are watching a tender for Australian iron ore fines for any indication of market direction.
The most traded rebar contract for October delivery on the Shanghai Futures Exchange hit a session low of 4,192 yuan ($670) a tonne, its weakest since Jan. 29. It was down 1.7 percent at 4,202 yuan by the midday break.
Rebar, used in construction, rose to nine-month highs the week before China went on holiday on expectations steel demand in the world's biggest consumer and producer would turn brisk after the break.
"We expect steel consumption to pick up from March onwards when we will see more construction activities," said a Shanghai-based iron ore trader. Most migrant workers in China are only returning to work next week, the trader added.
The decline in Shanghai rebar prices weighed on sentiment towards iron ore swaps<0#SGXIOS:>, which gained last week in anticipation physical prices will ounce back.
The second-quarter contract traded at $144.50 a tonne, down from Friday's settlement of $146, while the third-quarter contract slipped to $138.50 from $139.21, brokers said. The swaps are cleared by top global clearer Singapore Exchange.
Some traders are bracing for firmer prices in the spot market, with several Australian and Ukrainian cargoes on tender.
Rio Tinto is offering 165,000 tonnes of 61.5-percent grade Australian Pilbara iron ore fines at a tender closing later on Monday.
"The Pilbara fines will be the bellwether for what's going to happen in the market," said a Singapore trader.
Some in China expect steel mills to replenish iron ore stockpiles that may have dropped during the holidays, that may push prices higher.
"There could be some restocking after the holiday. Mills may do it with caution, but some traders could be aggressive," said another trader in Shanghai who sees the Pilbara fines being sold at $155-$156 per tonne from a previous sale of around $153.
Rio is also offering a cargo of 64.5-percent grade PMC iron ore concentrate, while Ukrainian miner Metinvest is offering five cargoes of concentrates with grades ranging from 65 and 67 percent, traders said.
Benchmark 62-percent grade iron ore .IO62-CNI=SI was unchanged at $155.10 a tonne last week, according to data provider Steel Index.
Shanghai rebar futures and iron ore indexes at 0407 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 4202 -73.00 -1.71
THE STEEL INDEX 62 PCT INDEX 155.1 +0.00 +0.00
METAL BULLETIN INDEX 155.89 +0.00 +0.00
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2325 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)
* Chinese mills may restock iron ore after Lunar New Year break
* Iron ore swaps edge lower after rebar drop
By Manolo Serapio Jr
SINGAPORE, Feb 18 (Reuters) - Shanghai steel futures fell on Monday to their lowest since late January as investors trimmed expectations for an immediate pickup in Chinese steel demand on the first trading day after a week-long Lunar New Year break.
Weaker steel prices usually translate to slower demand for iron ore, but some Chinese mills may restock on the raw material after the long holiday which should support prices. Traders are watching a tender for Australian iron ore fines for any indication of market direction.
The most traded rebar contract for October delivery on the Shanghai Futures Exchange hit a session low of 4,192 yuan ($670) a tonne, its weakest since Jan. 29. It was down 1.7 percent at 4,202 yuan by the midday break.
Rebar, used in construction, rose to nine-month highs the week before China went on holiday on expectations steel demand in the world's biggest consumer and producer would turn brisk after the break.
"We expect steel consumption to pick up from March onwards when we will see more construction activities," said a Shanghai-based iron ore trader. Most migrant workers in China are only returning to work next week, the trader added.
The decline in Shanghai rebar prices weighed on sentiment towards iron ore swaps<0#SGXIOS:>, which gained last week in anticipation physical prices will ounce back.
The second-quarter contract traded at $144.50 a tonne, down from Friday's settlement of $146, while the third-quarter contract slipped to $138.50 from $139.21, brokers said. The swaps are cleared by top global clearer Singapore Exchange.
Some traders are bracing for firmer prices in the spot market, with several Australian and Ukrainian cargoes on tender.
Rio Tinto is offering 165,000 tonnes of 61.5-percent grade Australian Pilbara iron ore fines at a tender closing later on Monday.
"The Pilbara fines will be the bellwether for what's going to happen in the market," said a Singapore trader.
Some in China expect steel mills to replenish iron ore stockpiles that may have dropped during the holidays, that may push prices higher.
"There could be some restocking after the holiday. Mills may do it with caution, but some traders could be aggressive," said another trader in Shanghai who sees the Pilbara fines being sold at $155-$156 per tonne from a previous sale of around $153.
Rio is also offering a cargo of 64.5-percent grade PMC iron ore concentrate, while Ukrainian miner Metinvest is offering five cargoes of concentrates with grades ranging from 65 and 67 percent, traders said.
Benchmark 62-percent grade iron ore .IO62-CNI=SI was unchanged at $155.10 a tonne last week, according to data provider Steel Index.
Shanghai rebar futures and iron ore indexes at 0407 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 4202 -73.00 -1.71
THE STEEL INDEX 62 PCT INDEX 155.1 +0.00 +0.00
METAL BULLETIN INDEX 155.89 +0.00 +0.00
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2325 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)
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