Wednesday, 02 Nov 2011 | Reuters
Reuters reported that spot iron ore prices inched up for the first time in eight weeks as several steel mills in the world's top buyer China began to rebuild inventories, but slower steel demand and high ore stocks at Chinese ports are expected to cap gains.
Some traders remained concerned about the high level of stocks at Chinese ports and a flood of shipments to the Chinese coast, and a growing number of Chinese steel mills are launching overhauls to cope with slower steel demand during the winter season, which may choke off iron ore buying.
Chinese steelmakers and traders are struggling with a tighter credit as they need to repay bank loans as the year end approaches, while Beijing has no intention to ease its tightening policies in short term.
China's steel industry association said iron ore stockpiles at eight major ports had now reached as high as 98 million tonnes, with much of that bought at prices of around USD 165 per tonne.
On the other hand Morgan Stanley said that iron ore prices may fall to their lowest in more than two years amid weak demand from traders and steel mills in China. Melbourne based analysts Mr Peter Richardson and Joel Crane said in a note that “Prices may drop to as low as USD 95 a tonne in the short term.”
They said “Absent a complete implosion of steel demand, which based on leading indicators of industrial production, is not our base case expectation, the current spot iron ore price looks increasingly like a cyclical correction with an on going bullish trend.”
(sourced Bloomberg)
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