Iron Ore-Key indexes mixed; Shanghai rebar gains

Wed Apr 13, 2011 9:02am GMT

* Indian 63.5 pct ore offers steady at $188-$190/T
* Iron ore swaps down, sentiment mixed
* Rio Tinto sees 2011 ore output at 191 mln T

By Jacqueline Wong and Ruby Lian

SHANGHAI, April 13 (Reuters) - Spot offers of iron ore to China were steady on Wednesday while global price indexes were mixed, reflecting market concerns that Chinese steel mills may be slowing down their purchases given the recent rapid rise in spot prices.

Most Chinese steelmakers, the biggest consumers of iron ore, have cut steel prices for May bookings, suggesting a stockpiling-fueled rush for iron ore may soon lose steam.

"Iron ore prices are likely to fall in the near future, mainly due to margin constraints," said Cameron Hunt, head of Metal Bulletin's Iron Ore Index.

"The spring construction increase has already been factored into the iron ore demand levels, so any slippage from that will impact steel prices and then iron ore prices."

Indian ore with 63.5 percent iron content was quoted at $188-190 a tonne, including freight, on Wednesday, unchanged for a second day, Chinese consultancy Mysteel said.

A few Chinese traders are still upbeat iron ore prices will stay firm in coming weeks on hopes that steelmakers are producing at utilization rates of up to 90 percent as construction activity picks up.

Major iron ore indexes, reflecting spot prices and used by global miners in determining supply contracts, were mixed on Tuesday.

The Steel Index's 62 percent benchmark .IO62-CNI=SI fell $1.10 to $181.90 per tonne, after hitting a six-week high on Monday.

Metal Bulletin's 62 percent index .IO62-CNO=MB rose 99 cents to $182.44, its highest since Feb. 24. Platts 62 percent iron ore index IODBZ00-PLT was unchanged at $184.50.

SHANGHAI REBAR FIRMS

Shanghai steel rebar futures gained on Wednesday, tracking firmer equities, after losses in the previous session.

The most briskly traded rebar contract for October delivery on the Shanghai Futures Exchange closed up 0.4 percent at 4,922 yuan ($752.5) a tonne.

"Shanghai rebar rallied on rising equities and investors are expecting no negative news right now and remain positive on the overall market outlook," said Jiang Zhiwei, an analyst with BOC International Futures.

The benchmark Shanghai Composite Index rose nearly 1 percent on a technical correction, following two days of declines.

Rio Tinto , the world's second-biggest iron ore producer, forecast its 2011 iron ore output at 191 million tonnes, roughly meeting market estimates despite cyclones and rains denting its output by 3 percent for the March quarter.

Chief Executive Tom Albanese expected commodity prices to continue to power higher this year, echoing Fortescue Metals 's forecast that iron ore prices will likely remain reasonably strong.

Iron ore swaps cleared by the Singapore Exchange <0#SGXIOS:> fell on Tuesday. The April contract dropped $2.07 to $179.88 a tonne, May fell $2.55 to $173.25 and June slipped $2.60 to $169.50. ($1 = 6.541 Chinese yuan)(Editing by Manolo Serapio Jr., Himani Sarkar,sourced:Thomson Reuters)