* Falling ore stockpiles spur Chinese buying
* Forward swaps extend gains
By Manolo Serapio Jr
SINGAPORE, March 18 (Reuters) - Spot iron ore prices rose for the first time in a month and offers remained firm on Friday as Chinese steel mills returned to the market to replenish
dwindling stockpiles.
Prices for the steelmaking raw material had fallen 15 percent since hitting record highs near $200 a tonne in mid-February as rising raw material cost and slow steel demand turned off top buyer China.
But some Chinese mills are looking at increasing steel exports to the region as production at quake-hit Japan could slow and domestic demand may spike when reconstruction starts.
Japan was Asia's biggest steel exporter last year.
"We had always thought that the dearth of Chinese buying in recent weeks would not last - steel production rates continue to record new highs and iron ore stocks can only sustain production
for perhaps a month or two," Commonwealth Bank of Australia said in a note.
China's daily crude steel output rose 0.5 percent from January to a record high of 1.94 million tonnes in February.
Inventories of imported iron ore at major Chinese ports fell to 80.4 million tonnes last week after climbing above 81 million tonnes towards the end of February.
Iron ore indexes, based on spot transactions in China and which global miners use in determining quarterly contract prices, rose on Thursday, the first uptick since they touched record peaks in mid-February.
The Steel Index's 62 percent benchmark .IO62-CNI=SI rose 30 cents to $163.90 a tonne, including freight, and Platts' 62 percent index IODBZ00-PLT jumped $1.50 to $166.50.
Metal Bulletin's 62 percent gauge.IO62-CNO=MB edged up 60 cents to $163.49.
Those gains may be sustained on Friday as offers from sellers remained firm, with Indian 63.5 percent iron ore quoted at $170-$172 a tonne, according to Chinese consultancy Mysteel.
"Sentiment is improving and there are more inquiries," Mysteel said.
"Iron ore buyers have come back because a lot of Chinese steel mills are very, very low on iron ore inventory and they now need to buy to sustain themselves," said an iron ore trader
in Shanghai.
"But will they come buy and disappear again which would make the price slide further or will they stay for sometime which will help prices rebound? That is still an unanswered question."
Further gains in iron ore forward swap prices on Thursday suggested confidence is slowly returning to the market.
The Singapore Exchange-cleared April contract climbed 3 percent to $157.80 a tonne, May rose 2 percent to $154.80 and June gained 1.8 percent to $152.40.
(Reporting by Manolo Serapio Jr.; Editing by Manash Goswami,sourced:Reuters)
dwindling stockpiles.
Prices for the steelmaking raw material had fallen 15 percent since hitting record highs near $200 a tonne in mid-February as rising raw material cost and slow steel demand turned off top buyer China.
But some Chinese mills are looking at increasing steel exports to the region as production at quake-hit Japan could slow and domestic demand may spike when reconstruction starts.
Japan was Asia's biggest steel exporter last year.
"We had always thought that the dearth of Chinese buying in recent weeks would not last - steel production rates continue to record new highs and iron ore stocks can only sustain production
for perhaps a month or two," Commonwealth Bank of Australia said in a note.
China's daily crude steel output rose 0.5 percent from January to a record high of 1.94 million tonnes in February.
Inventories of imported iron ore at major Chinese ports fell to 80.4 million tonnes last week after climbing above 81 million tonnes towards the end of February.
Iron ore indexes, based on spot transactions in China and which global miners use in determining quarterly contract prices, rose on Thursday, the first uptick since they touched record peaks in mid-February.
The Steel Index's 62 percent benchmark .IO62-CNI=SI rose 30 cents to $163.90 a tonne, including freight, and Platts' 62 percent index IODBZ00-PLT jumped $1.50 to $166.50.
Metal Bulletin's 62 percent gauge.IO62-CNO=MB edged up 60 cents to $163.49.
Those gains may be sustained on Friday as offers from sellers remained firm, with Indian 63.5 percent iron ore quoted at $170-$172 a tonne, according to Chinese consultancy Mysteel.
"Sentiment is improving and there are more inquiries," Mysteel said.
"Iron ore buyers have come back because a lot of Chinese steel mills are very, very low on iron ore inventory and they now need to buy to sustain themselves," said an iron ore trader
in Shanghai.
"But will they come buy and disappear again which would make the price slide further or will they stay for sometime which will help prices rebound? That is still an unanswered question."
Further gains in iron ore forward swap prices on Thursday suggested confidence is slowly returning to the market.
The Singapore Exchange-cleared April contract climbed 3 percent to $157.80 a tonne, May rose 2 percent to $154.80 and June gained 1.8 percent to $152.40.
(Reporting by Manolo Serapio Jr.; Editing by Manash Goswami,sourced:Reuters)
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