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Monday, December 26, 2011

Iron Ore-Spot prices unchanged, deals slow

Monday, December26, 2011

Shanghai(Reuters) - Spot iron ore prices are expected to remain flat or dip this week, after last week's gains, as steel mills end a brief restocking period. Iron ore suppliers have also suspended offers during the Christmas holiday season, with steel mills in top buyer China still worried about the state of the market in the new year.

"I see mounting pressures on iron ore prices as spot billet prices continue to fall in Hebei because of rapidly shrinking demand, and we have received fewer offers due to the Christmas holiday," said an iron ore trader in the eastern coastal province of Shandong. Chinese steel mills boosted stockpiles of the raw material in the week before Christmas, picking up bargains as prices fell to around $130 per tonne.

Pilbara fines with 61.5 percent iron content were being offered at $135-138 per tonne on Monday including cost and freight, unchanged for the third consecutive day, Chinese consultancy Umetal said. "We expect to hear fewer deals next week due to the Christmans holiday period," Metal Bulletin Iron Ore Index said in a Friday note.

"Prior to the Chinese new year holiday during the last week of January we expect to see rises as mills look to cover production during this time. This expectation is likely to provide upward pressure over the next few weeks as mills see the stability in the spot price as a good chance to buy material." Iron ore with 62 percent Fe grade rose to $135.7 per tonne on Friday, gaining for a fourth consecutive day, according to the Steel Index .IO62-CNI=SI, surging by about 3 percent in the past week. The most active rebar futures on the Shanghai Futures Exchange rose to 4,244 yuan ($670) per tonne on Monday, their highest in more than three weeks and up half a percent from the previous close.

($1 = 6.3364 Chinese yuan)

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