Tue Mar 5, 2013
* Property curbs cloud outlook for China steel demand
* Shanghai rebar rises slightly after Monday's slide
By Manolo Serapio Jr
SINGAPORE, March 5 (Reuters) - Spot iron ore prices fell to one-month lows as buyers from top importer China stepped away from the market, worried about weak steel demand that has pushed up steel stockpiles over the past two-and-a-half months.
China's renewed push to cool its property sector also fuelled doubts on the outlook for steel demand, although Shanghai steel prices regained some ground after Monday's sell-off.
Price offers for iron ore cargoes in China from top suppliers Australia and Brazil fell by $4 per tonne on Tuesday, according to Beijing-based consultancy Umetal.
Benchmark 62-percent grade iron ore .IO62-CNI=SI fell 1.2 percent to $148.80 a tonne on Monday, the lowest since Jan. 29, based on data from Steel Index.
Iron ore hit a 16-month high of $158.90 on Feb. 20, but has lost more than 6 percent as Chinese restocking waned. Buying interest thinned further on Monday after Shanghai steel prices reeled from news that China will strictly impose a 20 percent tax on home sales.
"Sentiment is weak because of the policy signals from the Chinese government, and the current iron ore prices are not really sustainable," said a physical iron ore trader in Hong Kong.
"Given weak demand for steel, many mills are still making huge losses."
Shanghai rebar futures rose slightly on Tuesday after falling nearly 3 percent in the prior session, the steepest decline since October 2011. By the midday break, the most-traded October rebar contract was up half a percent at 3,924 yuan ($630) a tonne.
Still, it was a weak bounce for rebar prices which traders say reflects concern about rising stockpiles of steel products in China, the world's biggest consumer and producer.
Inventories of five major steel products held by traders in China rose for a 10th straight week to 18.8 million tonnes as of Feb. 22, according to data compiled by Bank of America-Merrill Lynch.
Rebar, or reinforcing bar which is used in construction, accounted for about half of the inventory at 9.1 million tonnes, based on the data.
The high stockpiles suggest that the "iron ore demand pipeline feeding the production of more products could be temporarily overstretched," INTL FCStone said in a note, adding it expects iron ore prices to slip to $146-$147 over the course of March.
Iron ore prices are mainly driven by demand from China, which buys about two-thirds of global seaborne iron ore. The government is targeting 7.5 percent growth in gross domestic product for 2013 which should keep the economy on an even keel.
China also aimed for 7.5 percent GDP growth in 2012, when the economy expanded by 7.8 percent, the slowest since 1999.
Shanghai rebar futures and iron ore indexes at 0407 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 3924 +19.00 +0.49
THE STEEL INDEX 62 PCT INDEX 148.8 -1.80 -1.20
METAL BULLETIN INDEX 150.67 -1.57 -1.03
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2251 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)
* Property curbs cloud outlook for China steel demand
* Shanghai rebar rises slightly after Monday's slide
By Manolo Serapio Jr
SINGAPORE, March 5 (Reuters) - Spot iron ore prices fell to one-month lows as buyers from top importer China stepped away from the market, worried about weak steel demand that has pushed up steel stockpiles over the past two-and-a-half months.
China's renewed push to cool its property sector also fuelled doubts on the outlook for steel demand, although Shanghai steel prices regained some ground after Monday's sell-off.
Price offers for iron ore cargoes in China from top suppliers Australia and Brazil fell by $4 per tonne on Tuesday, according to Beijing-based consultancy Umetal.
Benchmark 62-percent grade iron ore .IO62-CNI=SI fell 1.2 percent to $148.80 a tonne on Monday, the lowest since Jan. 29, based on data from Steel Index.
Iron ore hit a 16-month high of $158.90 on Feb. 20, but has lost more than 6 percent as Chinese restocking waned. Buying interest thinned further on Monday after Shanghai steel prices reeled from news that China will strictly impose a 20 percent tax on home sales.
"Sentiment is weak because of the policy signals from the Chinese government, and the current iron ore prices are not really sustainable," said a physical iron ore trader in Hong Kong.
"Given weak demand for steel, many mills are still making huge losses."
Shanghai rebar futures rose slightly on Tuesday after falling nearly 3 percent in the prior session, the steepest decline since October 2011. By the midday break, the most-traded October rebar contract was up half a percent at 3,924 yuan ($630) a tonne.
Still, it was a weak bounce for rebar prices which traders say reflects concern about rising stockpiles of steel products in China, the world's biggest consumer and producer.
Inventories of five major steel products held by traders in China rose for a 10th straight week to 18.8 million tonnes as of Feb. 22, according to data compiled by Bank of America-Merrill Lynch.
Rebar, or reinforcing bar which is used in construction, accounted for about half of the inventory at 9.1 million tonnes, based on the data.
The high stockpiles suggest that the "iron ore demand pipeline feeding the production of more products could be temporarily overstretched," INTL FCStone said in a note, adding it expects iron ore prices to slip to $146-$147 over the course of March.
Iron ore prices are mainly driven by demand from China, which buys about two-thirds of global seaborne iron ore. The government is targeting 7.5 percent growth in gross domestic product for 2013 which should keep the economy on an even keel.
China also aimed for 7.5 percent GDP growth in 2012, when the economy expanded by 7.8 percent, the slowest since 1999.
Shanghai rebar futures and iron ore indexes at 0407 GMT
Contract Last Change Pct Change
SHFE REBAR OCT3 3924 +19.00 +0.49
THE STEEL INDEX 62 PCT INDEX 148.8 -1.80 -1.20
METAL BULLETIN INDEX 150.67 -1.57 -1.03
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2251 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)
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