Friday, 14 Oct 2011
Iron ore with 62% iron content dropped 2.4% to USD 161.25 a tonne based on Platts iron ore index IODBZ00-PLT the lowest since November 15. A similar gauge by Steel Index .IO62-CNI=SI fell 1.5% to USD 162 a level not seen since November 12.
A Singapore based iron ore trader said "There's a lot of supply now in the spot market and the Chinese are probably waiting for prices to drop further."
Signs of slowing steel demand in China, the world No 1 consumer and producer have weighed on steel prices particularly long products used for construction due to tighter credit in China and as a construction boom that fuelled a record production pace earlier in the year had lost steam.
The most traded January rebar contract on the Shanghai Futures Exchange declined 0.7% to CNY 4,318 a tonne by the midday break. Lower steel prices meant there was no rush for Chinese mills to buy iron ore with analysts also looking at a further drop in the price of the raw material.
Commonwealth Bank of Australia said "The current level of SHFE steel rebar futures suggests the iron ore price may ease to around USD 150 per tonne to USD 160 per tonne in line with our forecasts."
It said "Cost support in China for the marginal producer is around USD 145 to USD 150. We would expect prices for seaborne iron ore to be supported at USD 150 to USD 160 initially barring a more dramatic global growth slowdown."
A further decline in forward swaps showed investors are seeing more room for spot rates to fall. The Singapore Exchange cleared November contract shed USD 1.50 to USD 152.67 a tonne and December was off USD 1.25 to USD 148.
Still customs data showed China imported 60.57 million tonnes of iron ore in September up by 2.5% from August and the highest monthly figure since January.
Mr Graeme Train commodity analyst at Macquarie in Shanghai said "It would take pretty drastic circumstances for the Chinese to push back on imported ore."
He said that "Whether the price is going up or going down, the absolute level of iron ore imports will be the same unless you get a situation where global credit markets crunch and nobody can get LCs and ships can't sail."
Mr Train said iron ore shipments to China should continue to rise in the coming months as domestic ore production drops over the winter.
(Sourced from Reuters)
Iron ore with 62% iron content dropped 2.4% to USD 161.25 a tonne based on Platts iron ore index IODBZ00-PLT the lowest since November 15. A similar gauge by Steel Index .IO62-CNI=SI fell 1.5% to USD 162 a level not seen since November 12.
A Singapore based iron ore trader said "There's a lot of supply now in the spot market and the Chinese are probably waiting for prices to drop further."
Signs of slowing steel demand in China, the world No 1 consumer and producer have weighed on steel prices particularly long products used for construction due to tighter credit in China and as a construction boom that fuelled a record production pace earlier in the year had lost steam.
The most traded January rebar contract on the Shanghai Futures Exchange declined 0.7% to CNY 4,318 a tonne by the midday break. Lower steel prices meant there was no rush for Chinese mills to buy iron ore with analysts also looking at a further drop in the price of the raw material.
Commonwealth Bank of Australia said "The current level of SHFE steel rebar futures suggests the iron ore price may ease to around USD 150 per tonne to USD 160 per tonne in line with our forecasts."
It said "Cost support in China for the marginal producer is around USD 145 to USD 150. We would expect prices for seaborne iron ore to be supported at USD 150 to USD 160 initially barring a more dramatic global growth slowdown."
A further decline in forward swaps showed investors are seeing more room for spot rates to fall. The Singapore Exchange cleared November contract shed USD 1.50 to USD 152.67 a tonne and December was off USD 1.25 to USD 148.
Still customs data showed China imported 60.57 million tonnes of iron ore in September up by 2.5% from August and the highest monthly figure since January.
Mr Graeme Train commodity analyst at Macquarie in Shanghai said "It would take pretty drastic circumstances for the Chinese to push back on imported ore."
He said that "Whether the price is going up or going down, the absolute level of iron ore imports will be the same unless you get a situation where global credit markets crunch and nobody can get LCs and ships can't sail."
Mr Train said iron ore shipments to China should continue to rise in the coming months as domestic ore production drops over the winter.
(Sourced from Reuters)
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