BEIJING, April 1 (Reuters) - Spot iron ore prices extended their recovery on Friday, inching towards $180 per tonne as Chinese buyers continued to replenish their stocks, but traders were still bracing themselves for another slump.
A commodities broker based in Hong Kong said most in the market still believed current prices were unsustainable, even after the pick-up in trade this week.
"We may have seen a jump this week but generally people are in the market for one or two shipments and that's it -- they will buy what they need but stockpiles are still pretty high," the broker said.
Industry consultancy Mysteel's 63.5-63 percent index for Indian fines on the Chinese market reached $179 per tonne on Friday, up $2 on the day and $8 since last week.
Platts 62 percent iron ore index IODBZ00-PLT ended Thursday unchanged at $175 a tonne after jumping $5.50 on Wednesday.
Metal Bulletin's 62 percent gauge .IO62-CNO=MB reached $172.87, up $3.16, while the Steel Index .IO62-CNI=SI saw a $1.90 increase to $172.40.
The broker said the relatively large increases might have been down to a decision by Rio Tinto and BHP Billiton to auction off a number of cargoes this week.
"They have each got a dozen customers and they hold internal auctions of cargoes -- these didn't previously go into the index but now they do, and they might have a substantial impact," he said.
Three Chinese traders contacted by Reuters on Friday said the consensus in the market was that prices will fall to around $160-165 in the coming month.
As the second quarter begins, the rationale behind the three-month pricing system used by the big iron ore suppliers could be further undermined, the broker suggested.
According to the new rules, April-June prices will be based on an average of index prices from December to February. Despite a slump in spot iron and steel prices in March, mills are now facing record-high contract iron ore costs.
Reuters calculations suggest that three-month contract prices could rise 20 percent to almost $180 per tonne beginning on April 1. [ID:nL3E7E107E]
"The buyer has a choice and he could say that he doesn't want the benchmark but wants the spot price instead -- and that could force (the spot price) up," said the broker. (Reporting by David Stanway; Editing by Ken Wills, sourced Reuters)
Tags :BHP Billiton, Chinese iron ore traders, raw material, steel mills, steelmaking, spot prices
A commodities broker based in Hong Kong said most in the market still believed current prices were unsustainable, even after the pick-up in trade this week.
"We may have seen a jump this week but generally people are in the market for one or two shipments and that's it -- they will buy what they need but stockpiles are still pretty high," the broker said.
Industry consultancy Mysteel's 63.5-63 percent index for Indian fines on the Chinese market reached $179 per tonne on Friday, up $2 on the day and $8 since last week.
Platts 62 percent iron ore index IODBZ00-PLT ended Thursday unchanged at $175 a tonne after jumping $5.50 on Wednesday.
Metal Bulletin's 62 percent gauge .IO62-CNO=MB reached $172.87, up $3.16, while the Steel Index .IO62-CNI=SI saw a $1.90 increase to $172.40.
The broker said the relatively large increases might have been down to a decision by Rio Tinto and BHP Billiton to auction off a number of cargoes this week.
"They have each got a dozen customers and they hold internal auctions of cargoes -- these didn't previously go into the index but now they do, and they might have a substantial impact," he said.
Three Chinese traders contacted by Reuters on Friday said the consensus in the market was that prices will fall to around $160-165 in the coming month.
As the second quarter begins, the rationale behind the three-month pricing system used by the big iron ore suppliers could be further undermined, the broker suggested.
According to the new rules, April-June prices will be based on an average of index prices from December to February. Despite a slump in spot iron and steel prices in March, mills are now facing record-high contract iron ore costs.
Reuters calculations suggest that three-month contract prices could rise 20 percent to almost $180 per tonne beginning on April 1. [ID:nL3E7E107E]
"The buyer has a choice and he could say that he doesn't want the benchmark but wants the spot price instead -- and that could force (the spot price) up," said the broker. (Reporting by David Stanway; Editing by Ken Wills, sourced Reuters)
Tags :BHP Billiton, Chinese iron ore traders, raw material, steel mills, steelmaking, spot prices
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