Iron Ore-Spot prices steady in India, China; steel demand eyed

Thu Mar 10, 2011 6:51am GMT
* Iron ore indexes at two-month lows; China imports slow
* Port Hedland sees 16 pct dfrop in shipments
* Stockpiles, steel demand eyed for signs market turning positive

SINGAPORE, March 10 (Reuters) - Steel prices extended losses in China on Thursday, while spot iron ore was steady to lower at around $180 a tonne as traders watched for signs of a turnaround in steel demand that would also herald a rally in ore prices.

Spot Indian fines around 63-63.5 percent iron were quoted at around $180 a tonne by consultancy Mysteel. By 0618 GMT, the 62 percent March iron ore futures contract on the Indian Commodity Exchange was 8,105 rupees ($180) per tonne, up 1.50 rupees.

Platts 62 percent iron ore benchmark IODBZ00-PLT fell $1 to $175 a tonne on Wednesday, extending its losing streak to a 15th consecutive session.

The index, widely used by global miners in setting quarterly contract prices, has lost 9.3 percent since hitting a record high of $193 in mid-February as demand from top iron ore buyer China slowed last month.

But the Steel Index's 62 percent gauge .IO62-CNI=SI was unchanged at $171.60 but Metal Bulletin's index .IO62-CNO=MB dropped $1.30 to $171.95 and all three indexes are at their lowest levels since early January.

China's iron ore imports in January-February rose 22.6 percent from a year ago to 120 million tonnes, China's customs agency said in a statement on Thursday.

"(January) demand was strong and prices were rising just because of supply issues in Brazil and Australia, and some materials (due in February) were brought forward to January," said Graeme Train, analyst with Macquarie in Shanghai.

China imported a record 68.97 million tonnes of the raw material in January, suggesting the volume tumbled to 51.03 million tonnes in February, according to Reuters calculations.

The price of ore has been in a steady decline for around three weeks on reduced Chinese appetite for imports due to high prices and a lacklustre steel market.

Shanghai's most-active steel rebar futures contract for October, fell 1.7 percent to 4,688 yuan a tonne and earlier dipped to 4,683 yuan, its weakest since mid November.

Iron ore shipments from Australia's Port Hedland fell 16 percent in February to 12.85 million tonnes from 15.33 million tonnes in January, according to port authority figures.

Shipments to China fell to 9.03 million tonnes in February from 9.97 million tonnes in January, the data showed.

Exports from India's largest port of Mormugao also dropped last month, falling 4.2 percent from a year earlier to 4.5 million tonnes.

Analysts said that suggested comparatively weaker import data for March too, with Chinese buyers meeting more of their needs from stockpiles of imported ore ashore at Chinese ports, currently standing near record highs, above 80 million tonnes.

"If you include floating stocks, inventories have been falling since mid January," Macquarie's Train said.

He noted the weakness in recent weeks in iron ore and worries about falling steel prices had made mills cautious, but added: "Once you start to see steel end use pick up, it will translate into a rapid recovery in ore prices."

(Reporting by Nick Trevethan; Additional reporting by Rujun Shen; Editing by Ed Lane, sourced :Thomson Reuters)