Mon Jun 6, 2011 4:06am GMT
* Price bounce comes after fall to two-month lows
* Chinese mills restocking, BHP tender eyed
By Manolo Serapio Jr
SINGAPORE, June 6 (Reuters) - Spot iron ore prices are set to regain more ground this week after rising for the first time in about a month on Friday as Chinese steel mills returned to the market to replenish run-down inventories.
Prices of the steelmaking ingredient had fallen to more than two-month lows before Friday's recovery on limited interest from top buyer China.
"We believe there are quite a lot of people who are comfortable to buy at these levels. Also you have some mills who have not bought over the last few weeks and they're running low on inventories," said an iron ore trader in Singapore.
"I don't think we're in an explosive scenario but i think prices will correct up."
The Steel Index's benchmark for ore with 62 percent iron content .IO62-CNI=SI rose $1.40 to $170.20 a tonne on Friday, its first gain since May 4.
Platts 62 percent iron ore index IODBZ00-PLT edged up 75 cents to $171.75, rising for the first time since May 11. A similar index by Metal Bulletin .IO62-CNO=MB slipped 12 cents to $170.30.
But a public holiday in China is expected to limit activity in the physical market on Monday. "Today is going to be dead," said the Singapore trader.
For the rest of the week, traders are eyeing a tender by BHP Billiton which should help indicate where prices are headed.
BHP is selling a capesize cargo, half of which is 61.4 percent grade and the rest at 58 percent grade, with the tender closing on Tuesday, traders said.
Chinese traders said BHP is looking for a bid of at least $172 a tonne.
"For people thinking the market is going to surge, they will bid up, but it may not be representative of the entire market," said a Shenzhen-based trader, adding Chinese steel mills are still finding it hard to buy higher-grade 63.5 percent ore at $179 a tonne at this stage.
But gains in forwards swaps <0#SGXIOS:> on Friday suggest market players are looking at firmer spot prices ahead.
The Singapore Exchange-cleared July contract rose 49 cents to $167.12 a tonne, August edged up 31 cents to $166.25 and September added 43 cents to $165.37.
"We expect spot iron ore prices to stabilise over coming months. Continued strong demand for imported iron ore in China will be driven by ongoing fixed asset investment in social housing, and central/western province infrastructure," Commonwealth Bank of Australia said in a note. (Additional reporting by Ruby Lian in Shanghai; Editing by Randy Fabi, sourced Thomson Reuters)
* Price bounce comes after fall to two-month lows
* Chinese mills restocking, BHP tender eyed
By Manolo Serapio Jr
SINGAPORE, June 6 (Reuters) - Spot iron ore prices are set to regain more ground this week after rising for the first time in about a month on Friday as Chinese steel mills returned to the market to replenish run-down inventories.
Prices of the steelmaking ingredient had fallen to more than two-month lows before Friday's recovery on limited interest from top buyer China.
"We believe there are quite a lot of people who are comfortable to buy at these levels. Also you have some mills who have not bought over the last few weeks and they're running low on inventories," said an iron ore trader in Singapore.
"I don't think we're in an explosive scenario but i think prices will correct up."
The Steel Index's benchmark for ore with 62 percent iron content .IO62-CNI=SI rose $1.40 to $170.20 a tonne on Friday, its first gain since May 4.
Platts 62 percent iron ore index IODBZ00-PLT edged up 75 cents to $171.75, rising for the first time since May 11. A similar index by Metal Bulletin .IO62-CNO=MB slipped 12 cents to $170.30.
But a public holiday in China is expected to limit activity in the physical market on Monday. "Today is going to be dead," said the Singapore trader.
For the rest of the week, traders are eyeing a tender by BHP Billiton which should help indicate where prices are headed.
BHP is selling a capesize cargo, half of which is 61.4 percent grade and the rest at 58 percent grade, with the tender closing on Tuesday, traders said.
Chinese traders said BHP is looking for a bid of at least $172 a tonne.
"For people thinking the market is going to surge, they will bid up, but it may not be representative of the entire market," said a Shenzhen-based trader, adding Chinese steel mills are still finding it hard to buy higher-grade 63.5 percent ore at $179 a tonne at this stage.
But gains in forwards swaps <0#SGXIOS:> on Friday suggest market players are looking at firmer spot prices ahead.
The Singapore Exchange-cleared July contract rose 49 cents to $167.12 a tonne, August edged up 31 cents to $166.25 and September added 43 cents to $165.37.
"We expect spot iron ore prices to stabilise over coming months. Continued strong demand for imported iron ore in China will be driven by ongoing fixed asset investment in social housing, and central/western province infrastructure," Commonwealth Bank of Australia said in a note. (Additional reporting by Ruby Lian in Shanghai; Editing by Randy Fabi, sourced Thomson Reuters)
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