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Tuesday, December 20, 2011

Iron ore may remain below USD 140 as Chinese mills limit purchases

Tuesday, 20 Dec 2011

Bloomberg quoted said iron ore prices may remain below USD 140 per ton as Chinese steel mills, the world biggest consumers limit purchases on profitability concerns.

Mr Chen Zhenxing a Shanghai-based analyst at the research firm “Iron ore above USD 140 may force steelmakers to incur losses at current steel prices. Prices may trade between USD 133 and USD 140 before the week-long Lunar New Year holiday which starts Jan 23.

He said that “Mills and traders are short of capital around the year end and that will also curb their buying activities.”

He added that “Steelmakers are trying to keep their raw-material inventories thin because the prices are increasingly volatile. They’d rather order only one or two ships from miners for the holiday and buy the rest from the spot market at ports.”

Ore prices have rebounded 13% from a year low on October 28. Prices have averaged 15% higher than last year USD 147 a ton. Steel prices have declined 11% from this year high in January.

(Sourced from Bloomberg)

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