Thu Sep 13, 2012
* China spot steel prices drop after recent surge
* China mills' steel stocks up 34 pct in June vs year-ago - analyst
* Iron ore price offers in China cut by $2 to $4/tonne
By Manolo Serapio Jr
SINGAPORE, Sept 13 (Reuters) - Iron ore fell back below $100 a tonne after a three-day rally, prompting sellers to cut price offers on Thursday, after a drop in Chinese steel prices pointed to a market struggling with slow demand and oversupply.
Price offers for imported iron ore in top consumer China dropped by $2-$4 per tonne, according to industry consultancy Umetal, after the benchmark 62-percent grade .IO62-CNI=SI fell 2.1 percent to $98.10 a tonne on Wednesday, based on data from price provider Steel Index.
Iron ore prices surged more than 15 percent from Friday to Tuesday, taking the rate to $100.20 this week, after China's approval of 1 trillion yuan ($158 billion) worth of infrastructure projects raised hopes for a recovery in steel demand.
But those hopes quickly faded amid scant details of the projects that involve building highways, ports and airport runways, which are also likely to take years.
"The fundamentals haven't really changed since that news came out. There's still so much supply of steel out there and demand is really slow," said an iron ore trader in Shanghai.
"There are expectations supply of raw steel could rise again because a lot of the small- and medium-sized steel mills that closed for maintenance weeks ago have now restarted production."
China's crude steel output dropped a modest 1.7 percent to 58.7 million tonnes in August from a year earlier, government data showed on Tuesday. For January-August, output is up 2.3 percent at about 482 million tonnes.
The inventory of finished steel products among major Chinese steel producers stood at 12.9 million tonnes at the end of June, 34 percent more than the same period a year ago, according to data compiled by Bank of America-Merrill Lynch.
FINDING BALANCE
Many Chinese steel mills have cut prices again amid lean demand after raising them over the past few days, traders said.
The price of steel billet in China's key Tangshan area fell by 160 yuan to 2,800 yuan per tonne on Wednesday, said Umetal.
The most-traded rebar contract for January delivery on the Shanghai Futures Exchange closed nearly flat at 3,455 yuan per tonne on Thursday.
Iron ore traders have similarly cut back prices as buying interest swiftly thinned out.
Australian 61-percent grade Pilbara iron ore fines stocked at China's ports were being sold at 740 yuan per tonne on Tuesday morning, and went up to 800 yuan in the afternoon, another Shanghai trader said.
But by Wednesday afternoon, the price had dropped to 760 yuan, and some traders were offering cargoes at 720-740 yuan per tonne by Thursday, he said.
"The mills were really hungry for raw material in the past three days, since many of them were running low on inventory. But now those mills have already bought some cargoes and at a higher price so they're not in a hurry to buy more," said the second trader.
"The effect of the infrastructure projects has passed and now the market is adjusting again to find its balance," he said, adding iron ore prices could drop to $90 by the end of the week.
Iron ore hit a low of $86.70 last week, its weakest since October 2009.
Shanghai rebar futures and iron ore indexes at 0707 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3455 -2.00 -0.06
PLATTS 62 PCT INDEX 99.25 -2.50 -2.46
THE STEEL INDEX 62 PCT INDEX 98.10 -2.10 -2.10
METAL BULLETIN INDEX 100.79 -0.85 -0.84
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1=6.3264 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Clarence Fernandez and Robert Birsel)
* China spot steel prices drop after recent surge
* China mills' steel stocks up 34 pct in June vs year-ago - analyst
* Iron ore price offers in China cut by $2 to $4/tonne
By Manolo Serapio Jr
SINGAPORE, Sept 13 (Reuters) - Iron ore fell back below $100 a tonne after a three-day rally, prompting sellers to cut price offers on Thursday, after a drop in Chinese steel prices pointed to a market struggling with slow demand and oversupply.
Price offers for imported iron ore in top consumer China dropped by $2-$4 per tonne, according to industry consultancy Umetal, after the benchmark 62-percent grade .IO62-CNI=SI fell 2.1 percent to $98.10 a tonne on Wednesday, based on data from price provider Steel Index.
Iron ore prices surged more than 15 percent from Friday to Tuesday, taking the rate to $100.20 this week, after China's approval of 1 trillion yuan ($158 billion) worth of infrastructure projects raised hopes for a recovery in steel demand.
But those hopes quickly faded amid scant details of the projects that involve building highways, ports and airport runways, which are also likely to take years.
"The fundamentals haven't really changed since that news came out. There's still so much supply of steel out there and demand is really slow," said an iron ore trader in Shanghai.
"There are expectations supply of raw steel could rise again because a lot of the small- and medium-sized steel mills that closed for maintenance weeks ago have now restarted production."
China's crude steel output dropped a modest 1.7 percent to 58.7 million tonnes in August from a year earlier, government data showed on Tuesday. For January-August, output is up 2.3 percent at about 482 million tonnes.
The inventory of finished steel products among major Chinese steel producers stood at 12.9 million tonnes at the end of June, 34 percent more than the same period a year ago, according to data compiled by Bank of America-Merrill Lynch.
FINDING BALANCE
Many Chinese steel mills have cut prices again amid lean demand after raising them over the past few days, traders said.
The price of steel billet in China's key Tangshan area fell by 160 yuan to 2,800 yuan per tonne on Wednesday, said Umetal.
The most-traded rebar contract for January delivery on the Shanghai Futures Exchange closed nearly flat at 3,455 yuan per tonne on Thursday.
Iron ore traders have similarly cut back prices as buying interest swiftly thinned out.
Australian 61-percent grade Pilbara iron ore fines stocked at China's ports were being sold at 740 yuan per tonne on Tuesday morning, and went up to 800 yuan in the afternoon, another Shanghai trader said.
But by Wednesday afternoon, the price had dropped to 760 yuan, and some traders were offering cargoes at 720-740 yuan per tonne by Thursday, he said.
"The mills were really hungry for raw material in the past three days, since many of them were running low on inventory. But now those mills have already bought some cargoes and at a higher price so they're not in a hurry to buy more," said the second trader.
"The effect of the infrastructure projects has passed and now the market is adjusting again to find its balance," he said, adding iron ore prices could drop to $90 by the end of the week.
Iron ore hit a low of $86.70 last week, its weakest since October 2009.
Shanghai rebar futures and iron ore indexes at 0707 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3455 -2.00 -0.06
PLATTS 62 PCT INDEX 99.25 -2.50 -2.46
THE STEEL INDEX 62 PCT INDEX 98.10 -2.10 -2.10
METAL BULLETIN INDEX 100.79 -0.85 -0.84
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1=6.3264 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Clarence Fernandez and Robert Birsel)
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