Tue Mar 15, 2011 8:05am GMT
* Chinese mills keep prices unchanged on weak steel demand
* Indian 63.5 ore quoted lower at $170-$174/tonne
* Shanghai rebar up modestly after drop to 4-mth low (Adds comments, updates rebar prices)
By Manolo Serapio Jr. and Ruby Lian
SINGAPORE/SHANGHAI, March 15 (Reuters) - Spot iron ore prices lost more ground on Tuesday as key indexes fell to more than three-month lows on the prospect of thinner Japanese demand after a massive earthquake and tsunami disrupted steel output.
Expectations of weaker Japanese demand for the steelmaking ingredient fueled a further decline in spot prices that have already been falling since hitting record highs near $200 a tonne in mid-February on slower purchases from top buyer China.
Japan is the world's second-largest steel producer after China.
Baoshan Iron and Steel , China's biggest listed steelmaker, said on Tuesday it would keep prices for key products unchanged for April bookings, after raising prices for the past three months, as Chinese steelmakers deal with weaker steel demand and rising inventories.
Wuhan Iron & Steel , China's third-largest steelmaker, also kept its main product prices steady for April.
"The steel market in China is still very weak. There are no signs of demand from the downstream sector picking up," said an iron ore trader in China's eastern Shandong province.
"If steel prices continue dropping, some mills might close by the end of this month. They cannot make any profit, and it's very hard to secure bank loans."
The most active rebar contract for October delivery on the Shanghai Futures Exchange rose 0.9 percent to close at 4,774 yuan a tonne on Tuesday, after hitting a four-month low of 4,641 on Monday.
MIXED VIEWS
The suspension of production at some Japanese steel mills has raised concern iron ore demand may weaken further, deflating prices even more. Japan imports around 135 million tonnes of iron ore a year, mostly from the seaborne market.
Japanese mills were diverting cargoes of metallurgical coal, another steelmaking material, due to plant outages, trade sources said.
Indian ore with 63.5 percent iron content was being offered in China at $170-174 per tonne, including freight, on Tuesday, down from around $175 on Monday, although bids were few and much lower at $165, traders said.
Iron ore indexes, which global miners use in setting quarterly contract prices, slid again on Monday.
Platts' 62 percent iron ore index IODBZ00-PLT dropped 1.5 percent to $165.50 a tonne, a level not seen since Nov. 25.
Steel Index's 62 percent benchmark .IO62-CNI=SI slipped 0.7 percent to $166.30 and Metal Bulletin's 62 percent gauge .IO62-CNO=MB slid 1.2 percent to $165.73 a tonne, both the lowest since Dec. 10.
Prices for iron ore forward swaps also extended losses as investors anticipated weaker spot prices ahead although Monday's decline was not as sharp as Friday's.
"Most players are still adopting a wait-and-see attitude and the buying interest from end-users remain weak with thin trading activity in the physical market," said Destiny Guo, an iron ore physical and derivatives broker at Market Securities.
But some analysts say the eventual reconstruction in Japan could push up raw material prices going forward.
"There's no doubt there's going to be quite a substantial lift in both iron ore and coking coal demand in six to 12 months time and demand should remain firm after that," said Mark Pervan, senior commodity analyst at ANZ Bank in Melbourne.(Editing by Himani Sarkar,sourced:Thomson Reuters)
Tags : Japanese steel plants, earthquake, Baoshan Iron and Steel Co., Platts, raw material, ANZ
* Chinese mills keep prices unchanged on weak steel demand
* Indian 63.5 ore quoted lower at $170-$174/tonne
* Shanghai rebar up modestly after drop to 4-mth low (Adds comments, updates rebar prices)
By Manolo Serapio Jr. and Ruby Lian
SINGAPORE/SHANGHAI, March 15 (Reuters) - Spot iron ore prices lost more ground on Tuesday as key indexes fell to more than three-month lows on the prospect of thinner Japanese demand after a massive earthquake and tsunami disrupted steel output.
Expectations of weaker Japanese demand for the steelmaking ingredient fueled a further decline in spot prices that have already been falling since hitting record highs near $200 a tonne in mid-February on slower purchases from top buyer China.
Japan is the world's second-largest steel producer after China.
Baoshan Iron and Steel , China's biggest listed steelmaker, said on Tuesday it would keep prices for key products unchanged for April bookings, after raising prices for the past three months, as Chinese steelmakers deal with weaker steel demand and rising inventories.
Wuhan Iron & Steel , China's third-largest steelmaker, also kept its main product prices steady for April.
"The steel market in China is still very weak. There are no signs of demand from the downstream sector picking up," said an iron ore trader in China's eastern Shandong province.
"If steel prices continue dropping, some mills might close by the end of this month. They cannot make any profit, and it's very hard to secure bank loans."
The most active rebar contract for October delivery on the Shanghai Futures Exchange rose 0.9 percent to close at 4,774 yuan a tonne on Tuesday, after hitting a four-month low of 4,641 on Monday.
MIXED VIEWS
The suspension of production at some Japanese steel mills has raised concern iron ore demand may weaken further, deflating prices even more. Japan imports around 135 million tonnes of iron ore a year, mostly from the seaborne market.
Japanese mills were diverting cargoes of metallurgical coal, another steelmaking material, due to plant outages, trade sources said.
Indian ore with 63.5 percent iron content was being offered in China at $170-174 per tonne, including freight, on Tuesday, down from around $175 on Monday, although bids were few and much lower at $165, traders said.
Iron ore indexes, which global miners use in setting quarterly contract prices, slid again on Monday.
Platts' 62 percent iron ore index IODBZ00-PLT dropped 1.5 percent to $165.50 a tonne, a level not seen since Nov. 25.
Steel Index's 62 percent benchmark .IO62-CNI=SI slipped 0.7 percent to $166.30 and Metal Bulletin's 62 percent gauge .IO62-CNO=MB slid 1.2 percent to $165.73 a tonne, both the lowest since Dec. 10.
Prices for iron ore forward swaps also extended losses as investors anticipated weaker spot prices ahead although Monday's decline was not as sharp as Friday's.
"Most players are still adopting a wait-and-see attitude and the buying interest from end-users remain weak with thin trading activity in the physical market," said Destiny Guo, an iron ore physical and derivatives broker at Market Securities.
But some analysts say the eventual reconstruction in Japan could push up raw material prices going forward.
"There's no doubt there's going to be quite a substantial lift in both iron ore and coking coal demand in six to 12 months time and demand should remain firm after that," said Mark Pervan, senior commodity analyst at ANZ Bank in Melbourne.(Editing by Himani Sarkar,sourced:Thomson Reuters)
Tags : Japanese steel plants, earthquake, Baoshan Iron and Steel Co., Platts, raw material, ANZ
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