Sat, 29 October 2011
Spot iron ore prices are headed for their worst week ever as miners continued to ship cargoes even as demand from top consumer China remained slack.
But stabilising prices of forward swaps and growing inquiries from Chinese steel mills suggest the freefall in iron ore -- which has lost 34 percent of its value since early September -- may soon hit a bottom.
Iron ore with 62 percent iron content fell more than 6 percent to $120 a tonne on Thursday, according to Platts IODBZ00-PLT, its lowest since July 2010.
The steelmaking ingredient has dropped 16.7 percent so far this week, its steepest decline on record.
Top iron ore producer Vale is waiting to sell around 10-15 capesize cargoes, with each shipment at around 150,000 tonnes, while second-ranked Rio Tinto needs to liquidate around 15 million tonnes of Australian material, said a Singapore-based trader.
Vale, Rio and BHP Billiton , which together control more than two thirds of the global seaborne iron ore market, continue to produce at full capacity despite the slump in iron ore prices because they are betting on China's long-term demand remaining strong.
"All these are putting pressure on the market so the slide will continue for at least three more days including today. But if the paper market continues to go up it will give confidence to the mills and they'll start buying, maybe later part of next week," he said.
"But if the iron ore prices goes up, it won't be so fast because a lot of new tonnage will come into the market," he added.
Prices of forward swaps cleared by the Singapore Exchange <0#SGXIOS:> rose on Thursday after recent heavy losses, with the November and December contracts gaining $2 each to $118.83 and $118.17 a tonne, respectively.
The volume of SGX swaps hit a record 1,736 lots, or 868,000 tonnes, on Thursday. Open interest also reached an all-time high of 10,487 lots, or 5.2 million tonnes, according to the SGX website.
Rising inquiries from Chinese mills and more stable steel prices also spurred hopes iron ore prices could rebound soon.
"More mills have started inquiring so the market may find a bottom soon. They are showing interest and talking numbers while before they have simply dismissed offers," said a purchasing manager for an iron ore trading firm in Shanghai.
Shanghai steel futures rose 2 percent to close at 4,123 yuan a tonne on Friday, gaining 4.2 percent for the week, its first gain in seven weeks. The recent falls in steel prices saw Chinese mills curbing output with average daily crude steel production dropping to 1.7998 million tonnes over the Oct. 11-20 period, the first time it has fallen below 1.9 million tonnes since February, data from the China Iron & Steel Association (CISA) showed on Thursday.
source: Reuters
Spot iron ore prices are headed for their worst week ever as miners continued to ship cargoes even as demand from top consumer China remained slack.
But stabilising prices of forward swaps and growing inquiries from Chinese steel mills suggest the freefall in iron ore -- which has lost 34 percent of its value since early September -- may soon hit a bottom.
Iron ore with 62 percent iron content fell more than 6 percent to $120 a tonne on Thursday, according to Platts IODBZ00-PLT, its lowest since July 2010.
The steelmaking ingredient has dropped 16.7 percent so far this week, its steepest decline on record.
Top iron ore producer Vale is waiting to sell around 10-15 capesize cargoes, with each shipment at around 150,000 tonnes, while second-ranked Rio Tinto needs to liquidate around 15 million tonnes of Australian material, said a Singapore-based trader.
Vale, Rio and BHP Billiton , which together control more than two thirds of the global seaborne iron ore market, continue to produce at full capacity despite the slump in iron ore prices because they are betting on China's long-term demand remaining strong.
"All these are putting pressure on the market so the slide will continue for at least three more days including today. But if the paper market continues to go up it will give confidence to the mills and they'll start buying, maybe later part of next week," he said.
"But if the iron ore prices goes up, it won't be so fast because a lot of new tonnage will come into the market," he added.
Prices of forward swaps cleared by the Singapore Exchange <0#SGXIOS:> rose on Thursday after recent heavy losses, with the November and December contracts gaining $2 each to $118.83 and $118.17 a tonne, respectively.
The volume of SGX swaps hit a record 1,736 lots, or 868,000 tonnes, on Thursday. Open interest also reached an all-time high of 10,487 lots, or 5.2 million tonnes, according to the SGX website.
Rising inquiries from Chinese mills and more stable steel prices also spurred hopes iron ore prices could rebound soon.
"More mills have started inquiring so the market may find a bottom soon. They are showing interest and talking numbers while before they have simply dismissed offers," said a purchasing manager for an iron ore trading firm in Shanghai.
Shanghai steel futures rose 2 percent to close at 4,123 yuan a tonne on Friday, gaining 4.2 percent for the week, its first gain in seven weeks. The recent falls in steel prices saw Chinese mills curbing output with average daily crude steel production dropping to 1.7998 million tonnes over the Oct. 11-20 period, the first time it has fallen below 1.9 million tonnes since February, data from the China Iron & Steel Association (CISA) showed on Thursday.
source: Reuters
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