Iron Ore-Spot prices inch up but China demand still weak

Thursday, 23 Feb2012

Spot iron ore prices in China inched up on Wednesday but traders said the underlying poor health of the steel sector would continue to restrain demand. "The whole market is poor and prices still aren't ideal -- we won't be able to meet our sales target for this month," said the manager of an iron ore trading firm based in southern China.

Pilbara fines with 61.5 percent iron content were being quoted at $136-138 per tonne including cost and freight on Wednesday, inching up $1 from the previous day, according to consultancy Umetal. Iron ore with 62 percent iron content edged up 0.2 percent to $135.40 a tonne on Tuesday, according to reference price provider Steel Index.Slow steel demand in China, the world's biggest producer and consumer, has curbed the appetite for iron ore and sent the raw material's prices down more than 2 percent so far this year after falling nearly 19 percent in 2011.

"Demand ultimately depends on steel mills and they just can't accept our prices right now, and we can't go lower because our costs are too high," the trader said, adding that he didn't expect the market to recover until next month. China's move to cut banks' reserve requirement ratio for the first time this year helped Shanghai rebar futures end a seven-day slide on Monday and iron ore to snap a nine-day losing streak.
The price of Shanghai's most traded May rebar contract rose 23 yuan ($3.65) or 0.54 percent to end Wednesday at 4,251 yuan per tonne.Shanghai rebar futures and iron ore indexes at 0335 GMT
Source: Reuters

Iron Ore-Seen treading water this week with China away

Mon Jan 23, 2012

* Iron ore posts first weekly loss in five last week
* Limited downside risk seen for iron ore-analyst

SINGAPORE, Jan 23 (Reuters) - Spot iron ore prices may be little changed this week with top buyer China off for the Lunar New Year holiday, and stockpiles at Chinese ports more than enough to meet any immediate demand.Iron ore with 62 percent iron content .IO62-CNI=SI was nearly flat at $139.80 a tonne on Friday, according to Steel Index, ending 1.7 percent lower last week, its first weekly loss in five.
Demand for the steelmaking ingredient in the spot market thinned sharply last week as trading activity ground to a halt ahead of this week's holiday.Those seeking small cargoes this week can readily secure
material from Chinese ports, traders said, where stockpiles of imported iron ore stood at 98.41 million tonnes last week, up 1 percent from the previous week, data from industry consultancy Mysteel showed on Friday.

Traders are relatively optimistic iron ore prices, languishing near two-week lows, will rebound after the holiday, with steel prices gradually edging higher.The most-traded May rebar contract on the Shanghai Futures Exchange hit a three-month high on Friday, and finished last week up 2.2 percent, its biggest gain since early December."I don't see much downside risk for iron ore because China continues to produce steel and liquidity is improving although not significantly," said Henry Liu, head of commodity research at Mirae Asset Securities. At current steel and iron ore prices, Chinese producers of
long steel products still make a margin of 150-200 yuan per tonne ($24-32), said Liu.Data released on Saturday showed China diversified its spot iron ore buying away from India in 2011, largely in favour of
South Africa, but failed to reduce its dependence on term purchases from top suppliers Australia and Brazil.
China imported 64 percent of its iron ore from Australia and Brazil, unchanged from the year before, while iron ore purchases from India dropped by 24 percent, as exports from that country were curbed by policy restrictions.

Iron ore indexes
PLATTS 62 PCT INDEX 140.75 0.00 0.00
THE STEEL INDEX 62 PCT INDEX 139.8 0.10 0.07
METAL BULLETIN INDEX 139.56 -0.15 -0.11
*Index in dollars/tonne, show close for the previous trading day

($1 = 6.3390 Chinese yuan)
(sourced Reuters)

Iron Ore-Spot at 7-week top, Australian miners suspend loading

Wed Jan 11, 2012
* Rio, Fortescue suspend loading ops ahead of cyclone
* China iron ore demand seen rising after Lunar holiday

SINGAPORE, Jan 11 (Reuters) - Spot iron ore prices rose to seven-week highs, spurred by Chinese steel mills building inventories ahead of the Lunar New Year break later this month and expectations prices may climb further after the holiday.News of supply disruption from top iron ore exporter Australia, where miners Rio Tinto and Fortescue Metals Group have suspended loading operations ahead of a cyclone bearing down on the west coast, should also support prices.

Iron ore with 62 percent iron content gained 1.6 percent to $142.30 a tonne on Tuesday, cost and freight delivered to China, its highest since Nov. 23, according to Steel Index .IO62-CNI=SI.
The Australian supply disruption may cause a "near-term tightness in supply", said Rory MacDonald, iron ore broker at Freight Investor Services. But given a lacklustre steel market in China, the world's biggest iron ore buyer, MacDonald saw limited impact on the supply-demand balance from the closure of some of the world's largest iron ore ports in Australia."Whether we see prices gain significantly because of this is another thing altogether, but I don't think it's necessarily going to drive us into another upward cycle that we wouldn't be entering into anyway post-Chinese New Year holiday.

"If it's fairly minimal, then they'll be back on track in 48 hours or so, but if it repeats then obviously we're talking about a different scenario, but we'll have to wait and see," he said.
Traders are relatively upbeat about China's iron ore demand after the week-long holiday that starts Jan. 23, with construction activity seen picking up and on expectations the government will loosen monetary policy to boost the economy. The construction sector accounts for around half of steel demand in China. Iron ore touched a 2011 peak of $191.90 a tonne in mid-February in a rally following last year's Chinese New Year.

"Even as Chinese mills wind down buying activity ahead of Chinese New Year, traders are increasingly taking positions with a view that demand will increase following the New Year holidays in February, and on an expectation that more Chinese policy loosening will be delivered in the next quarter or two,"
Commonwealth Bank of Australia said in a note.

Several cargoes of Australian iron ore fines were sold on Tuesday at levels slightly higher than previous deals, surpassing expectations of many participants, Steel Index said. Rio Tinto sold 61.4-percent grade Pilbara fines at around $141.50 a tonne, while BHP Billiton sold 61-grade MAC fines also at $141.50, traders said. BHP also sold 62.7-grade Newman iron ore fines at $145.50 a tonne, traders said.

Shanghai rebar futures and iron ore indexes at 0744 GMT
Contract Change Pct Change
SHANGHAI REBAR* 4224 9.00 0.21
PLATTS 62 PCT INDEX 143.5 0.50 0.34
THE STEEL INDEX 62 PCT INDEX 142.3 2.30 1.64
METAL BULLETIN INDEX 141.42 0.71 0.50

*In yuan/tonne
#Index in dollars/tonne, show close for the previous trading day.

(sourced Reuters)

Iron Ore-China market still slow as traders stay away

Thursday, 05 January 2012

Spot iron ore prices in China were mostly unchanged on the first trading day of 2012, with buyers and sellers unable to find a reason to rush back from a two-day new year break.
The offer price of 61.5 percent Pilbara fines, including cost and freight, stood in the $136-139 per tonne range on Wednesday, unchanged from the last trading day of 2011, industry consultancy Umetal said. Analysts said there was little to entice buyers back into the market, with steel demand low and ore inventories generally sufficient to keep mills running.
"What concerns me a little bit is that Chinese mills seem to have restocked over the last three to four weeks without really pushing the price up at all," said Graeme Train, commodity analyst with Macquarie Securities in Shanghai.

Activity normally slows ahead of China's lunar new year, and many traders have expressed hope that the market will improve when the week-long holiday ends on Jan. 30, but the lull could last longer than that, said Train. "It seems everyone is waiting for some signal that things are going to get meaningfully better but the government has been very slow to send a very positive signal," he said.

"There is really no catalyst, and we are probably looking at two very quiet months at least."
Analysts played down the impact of India's decision to raise export tariffs in order to guarantee supplies to domestic users, saying the influence of the world's third-biggest iron ore producer had already been on the wane.

India announced this week that it would increase iron ore export tariffs from 20 percent to 30 percent in an effort to guarantee supplies for domestic users.
"I can't see demand strong enough in 2012 to make global supply and demand tight enough to bring Indian marginal producers back into the market, so I can't see it supporting higher prices," said Sebastian Lewis, head of data and analytics with Steel Business Briefing in Shanghai.
"More likely it will accelerate the trend in declining Indian exports and Australia and other miners will be the beneficiaries," he said. Umetal said Indian 63.5/63 percent iron ore was being offered at $143-146 per tonne on Wednesday, also unchanged.

It added in a research note that the decline in Indian iron ore export volumes had already been offset by growing shipments from South Africa, Iran, Canada and Russia.
While India remains China's third-biggest supplier after Australia and Brazil, its market share has been in decline. In the first 11 months of 2011, India's total shipments of 63.3 million tonnes represented 11 percent of the total, down from 15.6 percent in 2010.

Deliveries from South Africa, Iran, Canada and Russia reached nearly 73 million tonnes over the 11 months, up 33 percent compared with the same period of the previous year.
The most traded steel rebar contract on the Shanghai Futures Exchange ended Wednesday at 4,159 yuan ($660) per tonne, down 51 yuan per tonne or 1.21 percent from the previous session.
Source: Reuters

Iron Ore-China market still slow as traders stay away

Wed Jan 4, 2012

* Prices largely unchanged in first trading day of 2012
* No positive signals to entice buyers back to market
* Impact of Indian export tariff increase seen limited (Updates rebar price)

BEIJING, Jan 4 (Reuters) - Spot iron ore prices in China were mostly unchanged on the first trading day of 2012, with buyers and sellers unable to find a reason to rush back from a two-day new year break.

The offer price of 61.5 percent Pilbara fines, including cost and freight, stood in the $136-139 per tonne range on Wednesday, unchanged from the last trading day of 2011, industry consultancy Umetal said.

Analysts said there was little to entice buyers back into the market, with steel demand low and ore inventories generally sufficient to keep mills running.

"What concerns me a little bit is that Chinese mills seem to have restocked over the last three to four weeks without really pushing the price up at all," said Graeme Train, commodity analyst with Macquarie Securities in Shanghai.

Activity normally slows ahead of China's lunar new year, and many traders have expressed hope that the market will improve when the week-long holiday ends on Jan. 30, but the lull could last longer than that, said Train.

"It seems everyone is waiting for some signal that things are going to get meaningfully better but the government has been very slow to send a very positive signal," he said.

"There is really no catalyst, and we are probably looking at two very quiet months at least."

Analysts played down the impact of India's decision to raise export tariffs in order to guarantee supplies to domestic users, saying the influence of the world's third-biggest iron ore producer had already been on the wane.

India announced this week that it would increase iron ore export tariffs from 20 percent to 30 percent in an effort to guarantee supplies for domestic users.

"I can't see demand strong enough in 2012 to make global supply and demand tight enough to bring Indian marginal producers back into the market, so I can't see it supporting higher prices," said Sebastian Lewis, head of data and analytics with Steel Business Briefing in Shanghai.

"More likely it will accelerate the trend in declining Indian exports and Australia and other miners will be the beneficiaries," he said.

Umetal said Indian 63.5/63 percent iron ore was being offered at $143-146 per tonne on Wednesday, also unchanged.

It added in a research note that the decline in Indian iron ore export volumes had already been offset by growing shipments from South Africa, Iran, Canada and Russia.

While India remains China's third-biggest supplier after Australia and Brazil, its market share has been in decline. In the first 11 months of 2011, India's total shipments of 63.3 million tonnes represented 11 percent of the total, down from 15.6 percent in 2010.

Deliveries from South Africa, Iran, Canada and Russia reached nearly 73 million tonnes over the 11 months, up 33 percent compared with the same period of the previous year.

The most traded steel rebar contract on the Shanghai Futures Exchange ended Wednesday at 4,159 yuan ($660) per tonne, down 51 yuan per tonne or 1.21 percent from the previous session. ($1 = 6.294 yuan)

(sourced Reuters)

Iron Ore-Spot prices seen edging up, but gains capped

Tuesday, 13 December 2011

Spot iron ore prices are expected to tick higher this week as Chinese steel mills replenish inventories ahead of the Lunar New Year in late January, although subdued steel prices could limit any buying interest. Iron ore with 62 percent iron content was nearly flat at $139.50 a tonne on Friday, cost and freight delivered to China, according to Steel Index.
The raw material gained half a percent for all of last week, reflecting slow demand from top importer China where steady steel prices point to thin demand.

"We expect the Chinese mills to come in and buy to restock as we approach the Chinese New Year. If the mills want to go on holidays they're going to have to do all their buying in December," said an iron ore physical trader in Singapore. The 2012 Lunar New Year holidays start from Jan. 22, earlier than in 2011 when they were in early February.

Chinese steel mills normally heavily restock on iron ore ahead of the Lunar New Year, pushing spot prices higher. Prices hit a record of above $190 a tonne in February, helped by the buying momentum built ahead of the festival. But traders said they don't expect the Chinese to be as aggressive in replenishing inventories this time given sluggish steel demand.
"We're capped on the upside, the price will probably be capped at $150," said the Singapore trader, referring to the 62-percent iron ore reference price by Steel Index.

In a sign that Chinese steel demand remains thin, Baoshan Iron and Steel said it plans to keep hot-rolled coil prices unchanged for January bookings, and increase cold-rolled coil by 100 yuan ($16) per tonne, a hike that analysts deem small.
Sellers of imported iron ore in China kept their offer prices unchanged on Monday, amid hopes buyers would return to the market. Australian Pilbara iron ore fines were quoted at $139-$141 a tonne, C&F, and Newman fines were offered at $141-$143, said Chinese consultancy Umetal. Indian 63.5/63-grade fines were quoted at $149-$151 a tonne.

The most-traded May rebar contract on the Shanghai Futures Exchange closed nearly flat at 4,168 yuan, after rising just 0.1 percent last week.
Steel prices in China, the world's largest consumer and producer, are likely to hit bottom in January or February, Mirae Asset Securities analysts said in a note.
"But given the current low steel inventory level, we may see a small and quick rally, at most, in December. In addition, a rally should follow in the second quarter after the early Chinese New Year when steel demand recovers seasonally in March or April," they said.
Elsewhere, Vale may start operating its iron ore transshipment centre in the Philippines early next year, two years ahead of a similar facility in Malaysia, as the world's top iron ore miner moves closer to its biggest market, China.

sourced Reuters

Iron Ore-Upward momentum intact on tight supply, demand

Wednesday, 16 November 2011

Limited supplies and sustained buying interest from top consumer China lifted spot iron ore prices for an 11th straight day and the market stayed well bid on Tuesday, suggesting the upward momentum may not lose steam soon.

Firmer Chinese steel futures this month helped iron ore rebound from a more than 30 percent slide in October, encouraging steel mills to replenish run-down inventories of the raw material.
Iron ore with 62 percent iron content rose 0.4 percent to $138.30 a tonne on Monday, the highest since Oct. 24, according to the Steel Index.

Iron ore has gained 18.3 percent over the past 11 trading sessions.
"We're getting regular inquiries from China for cargo, from steel mills and traders and there isn't a lot available out there," said an iron ore trader in Shanghai who sells mostly Indian material to Chinese buyers.

Iron ore supply in the spot market has thinned with fewer tenders from Australia and Brazil, the world's two biggest iron ore exporters, while shipments from third-ranked India remain disrupted by logistical problems and the government's crackdown on illegal mining, traders said.
"Some of the sellers also feel that the market is rising and a lot of people are going to ask them for cargo so they want to hold off for a bit to get better prices," said the Shanghai trader, adding that prices may go up another $5-$10 from current levels.

Some buyers are bidding $148 a tonne, cost and freight for Indian high-grade 63.5/63 iron ore fines, said Dhruv Goel, managing director at Steel Mint in India's eastern Orissa state.
That is well above the offer price on Tuesday of $142-$145 a tonne of the Indian material in China, according to Chinese consultancy Umetal. Offers for Australian and Brazilian ore rose a further $1-$3 a tonne, Umetal said.

Despite rising prices, many Indian exporters, whose costs are inflated by export tariffs and high railway freight rates, are unwilling to sell at current levels, traders said.

Including freight, the cost of producing 63.5/63 grade in India is about $145-$150 a tonne, the Shanghai trader said. "It doesn't make sense to export at a loss. The mine owners can sell it to the domestic market where the return is better," he said.

Signs of easing credit conditions in China, particularly towards small and medium sized enterprises, may be helping steel prices recover some ground with product inventories at Chinese mills back to near recent lows on a days-of-supply basis, Commonwealth Bank of Australia said in a note.

"Declining inventories might reflect a combination of some production cuts, much lower pricing, better access to credit for SMEs and robust underlying demand," the bank said.

"To the extent underlying steel demand remains robust and credit conditions continue to ease in a 'targeted' fashion, we see China's commodity demand and prices as reasonably well supported."
The most-active May rebar contract on the Shanghai Futures Exchange eased 0.8 percent to close at 4,157 yuan a tonne on Tuesday, after two sessions of gains. Despite the loss, rebar is up 0.6 percent so far in November after three months of decline.

Source: Reuters

Iron Ore-Spot rises for third day, outlook shaky

Thu Nov 3, 2011

* Market may be seeing "temporary stability" -trader
* UBS cuts Q4 iron ore price forecast to $143 from $166
* Volume of iron ore swaps hit record high in Oct
By Manolo Serapio Jr

SINGAPORE, Nov 3 (Reuters) - Spot iron ore rose for a third day running on Thursday although steady price offers point to a shaky recovery for the steelmaking raw material amid an unclear demand picture in China.

Iron ore with 62 percent iron content rose 0.6 percent to $120.75 a tonne on Wednesday, according to Platts IODBZ00-PLT.

Iron ore has risen 3.4 percent since Monday after a slide of more than 35 percent in September and October drew some Chinese buyers back into the market, although traders say it may be too early to judge that the market has turned around.

"It's a temporary stability. To be honest, I'm not quite sure how it will pan out in the long term but talking about a bounce is a little premature," said a physical iron ore trader in Singapore.

But in a sign that demand from China, the world's biggest iron ore consumer, has been tepid, price offers for imported ore were mostly steady on Thursday, after rising as much as $5 a tonne on Wednesday, according to Chinese consultancy Umetal.

"I think the Chinese buyers are still price sensitive but they're at a stage where they have to buy.

"But there's certainly still potential for the market to go lower," said the Singapore-based trader.

UBS on Thursday cut its realised price forecast for iron ore sold by BHP Billiton and Rio Tinto for the December quarter to $143 per tonne from $166, citing an industry shift to more spot pricing.

SHANGHAI REBAR SLIPS

One key factor for the slow recovery in iron ore prices is the continuing weakness in Chinese steel prices, which point to tepid demand in China, the world's biggest steel market.

The most-traded May 2012 rebar contract on the Shanghai Futures Exchange dropped for a fourth straight day on Thursday, down 0.4 percent at 4,027 yuan a tonne by the midday break.

The drop in Shanghai rebar prices "is likely to curtail any strong upward price momentum in iron ore markets in the immediate term," Commonwealth Bank of Australia said in a note.

While inquiries from Chinese mills to buy iron ore have increased, purchased volumes are "not that big," said a shipping manager for an iron ore trading firm in Shanghai, adding there is more interest in Australian cargoes which are deemed more attractively priced than Indian and Brazilian material.

BHP Billiton sold Australian 62-grade MAC iron ore fines at $117.50 a tonne on Wednesday, up from $116 on Monday, the manager said.

Prices of nearby iron ore swaps <0#SGXIOS:> rose, reflecting investor optimism of more price gains in the near term.

The Singapore Exchange-cleared November contract rose $2.33 to $128.50 a tonne, December added $1.34 to $130.67 and January also gained $1.34 to $131.17.

The volume of iron ore swaps cleared globally soared to an all-time high above 9 million tonnes in October, the Steel Index said, following a collapse in prices.

(sourced Reuters)

Iron ore spot prices rise on Chinese mill restocking but traders wary

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)

China taking advantage of new iron ore price option - Report

Thursday, 20 Oct 2011

Dow Jones quoted officials with three large Chinese steel mills said several Chinese steel makers have taken advantage of a new iron ore pricing option from global iron ore miners including Brazilian Vale SA and BHP Billiton Ltd amid falling spot iron ore prices and depressed steel prices in China.

These steelmakers have chosen to base quarterly iron ore prices on average prices for the current quarter rather than the preceding quarter, a calculation method that lets them benefit faster from falling prices.

Steelmakers will have to buy iron ore from Vale at around USD 175 per tonne in the fourth quarter according to previous contracts while the spot market prices in the recent week would suggest a price of about USD 160 per tonne.

An official with one of China top steelmakers by output on condition of anonymity said "From the fourth quarter this year, we will purchase iron ore from Vale and BHP on quarterly contracts which are based on the average spot market prices in that quarter instead of prices in the preceding quarter."

He said that purchases from Rio Tinto PLC will still be based on monthly contracts.

He added that "Actually, you have the right to chose contracts based on the average spot prices in the current quarter, previous quarter or even the next quarter. The options have been there for a long time but different steelmakers had chosen differently until now."

The downside is that costs for steelmakers will rise immediately too if prices continue to increase in the current quarter.

The miners are providing the new pricing option to ensure the steel makers don't delay their purchases and potentially hurt mining revenue.

(Sourced from Dow Jones)

Iron ore prices could slide to USD 140 per tonne

Thursday, 20 Oct 2011

It is reported that prices of iron ore, the main ingredient for making steel, could slide to as low as USD 140 per tonne in the coming months.

In September, spot iron ore prices grew above USD 181 per tonne but on Monday fell deeply to USD 157.25.

Analysts and mines experts said developments in China over its monetary policy have been affecting demand for iron ore, noting the commodity weakening prices could extend into the early part of this quarter.

Recently reports circulated that Brazil Vale was selling iron ore for fourth quarter contracts cheaply to the Chinese an indication that iron ore miners were giving in to Chinese pressure.

Reports said iron ore miners were selling to Chinese steel mills at USD 175 a tonne. But the Chinese were not buying because the fourth quarter contract rate was based on June to August average spot prices. Iron ore is currently less than USD 160 a tonne average. But miners said prices will likely recover coming into the New Year as Chinese steel consumption is expected to grow 7.5% this year.

(sourced from Gantdaily)

Iron ore prices dip as SHFE rebar futures contract at lowest level

Tuesday, 18 Oct 2011

Reuters reported that spot iron ore prices may extend losses this week after sliding to their lowest in more than 11 months as key steel prices in top consumer China which fell to a contract low on Monday continue to restrain buying interest.

Supply of iron ore in the spot market has risen sharply with cargoes meant for long term, or three-month, contracts being sold at spot rates because Chinese mills were not keen on buying the material at contract rates that are far higher than spot.

Under supply contracts for the fourth quarter, miners are charging more than USD 175 a tonne for iron ore based on a pricing system that averages spot prices over a previous three-month period. But spot rates have fallen sharply over the past week to under USD 160 a tonne on Friday as weaker steel demand in China cut appetite for iron ore, the key raw material in making steel.

A Shanghai based iron ore trader said "It's difficult to say where the bottom is for prices. At this moment, it seems that USD 150 probably won't be the bottom for 62 (grade ore)."

The trader said "We haven't seen any change in sentiment. If the miners will continue to put all these spot cargoes in the market I believe the price will be pushed further down."

According to the Steel Index iron ore with 62% iron content fell 1.7% to USD 157.50 a tonne on Friday .IO62-CNI=SI and down 1.7% to USD 157.25 based on Platts IODBZ00-PLT. Both are the lowest levels since early November last year.

Both indexes lost more than 7% last week, their biggest weekly drop since early July 2010. Those losses could stretch this week, with steel futures in China down for a third straight session on Monday.

(Sourced from Reuters)

Iron ore spot at 11 month low and Shanghai rebar falls for 5th week

Saturday, 15 Oct 2011

Reuters spot iron ore prices fell to fresh 11 month lows on Friday on thin appetite from top buyer China where steel futures dropped for a second day on Friday on route for a fifth weekly decline.

Iron ore prices have lost around $10 a tonne so far this week as lower steel prices and tighter credit in China as well as the uncertainty facing the global economy convinced Chinese mills there was no immediate need to restock on the steel-making raw material.

An iron ore trader in Shanghai said "I can sum up the market in one word, terrible. We're still holding on to some cargo because prices have gone down a lot since after the Chinese holiday and they continue to fall. But you can easily get cargo these days."

Traders have said the steep drop in iron ore spot prices has prompted Chinese steel mills to seek either a postponement of shipments or a renegotiation of fourth quarter contracts. But BHP Billiton the world No. 3 iron ore miner said it has not had any shipment to China cancelled or renegotiated in the last few weeks.

Index-linked iron ore prices, based on spot deals in China and used by global miners in determining contract rates, fell to their lowest since November 2010 on Thursday.

An iron ore derivatives trader in Singapore said "The physical market is still under pressure and that's not going to be bullish for the swap market. Unless people see a ray of light at the end of the tunnel, we are not going to see a significant up move on swaps."

Key to the slower demand for iron ore is the sustained decline in steel prices in China, the world biggest consumer and producer. The most-traded January rebar contract on the Shanghai Futures Exchange slipped 0.6% to CNY 4,293 a tonne by the midday break. That contract hit a record low of CNY 4,255 on Wednesday.

Rebar which lost more than 11% in September is down by 1% this week its fifth straight week of decline excluding October 3 to 7 when China was shut for a public holiday.

(Sourced from Reuters)

Iron Ore-Spot prices firm on healthy outlook

Fri Sep 2, 2011

* Major indexes hit nearly four-month high
* Chinese buying interest picks up, lack of large purchases
* Shanghai rebar falls marginally, outlook healthy

SHANGHAI, Sept 2 (Reuters) - Spot iron ore prices were steady on Friday, as miners held offers firm amid an anticipated pick-up in Chinese steel demand as well as the continued tightness in supply from India, pushing up global indexes to nearly four-month highs.

The persistent shortage of iron ore exports from India's southern Karnataka state as well as the approaching peak consumption season in China have sustained the strength in iron ore offers.

"Although after 2-3 weeks the monsoon will finish in Goa, Indian supplies are likely to remain affected by high court rulings and investigations causing mine suspensions," The Steel Index .IO62-CNI=SI (TSI) said in a daily note on Friday.

Karnataka introduced a ban on exports in July 2010 which it said aimed to curb illegal mining. The Supreme Court ordered the export ban lifted in April although the southern state has yet to issue export permits.

Several tender cargoes from Australia, the world's largest iron ore exporter, were sold at firm levels, TSI added.

Chinese steel mills have been producing more than 1.9 million tonnes of crude steel per day since February, from an average 1.7 million tonnes last year, in expectation that steel demand will pick up in September and October.

"The spot market is firm this week amid growing buying interest from Chinese steel mills, but the market is still lacking active purchases in large volumes at the moment," said an iron ore trader in Shenzhen.

Global iron ore miners are likely to keep iron ore contract prices steady in the fourth quarter, with spot prices stabilising on solid Chinese demand and tight supplies, based on global indexes which are used by suppliers to fix quarterly pricing.

Platts Iron Ore Index for 62-percent grade IODBZ00-PLT surged $2 to $182.25 a tonne on Thursday, its highest since May 11.

TSI's similar gauge rose half a dollar to $180.4 a tonne, its highest since May 6, and Metal Bulletin Iron Ore Index .IO62-CNO=MB gained 49 cents to $179.98 a tonne, a level never seen since May 9.

Australian 62 percent Newman fines stood steady at $183-$185 a tonne, including freight, on Friday, and Indian 63.5/63 fines climbed to $187-$190, from $187-189, according to Chinese industry consultancy Umetal.

The most active January rebar contract on the Shanghai Futures Exchange fell marginally by 0.27 percent to 4,816 yuan ($755) per tonne on Friday.

Iron ore swaps cleared by the Singapore Exchange <0#SGXIOS:> gained for all contracts on Thursday. ($1 = 6.381 Chinese Yuan)

Iron Ore-Shanghai rebar falls for 3rd day on tighter liquidity

Mon Aug 29, 2011

* China daily crude steel output remains high
* Indian court expands mining ban in Karnataka

By Manolo Serapio Jr

MANILA, Aug 29 (Reuters) - China steel futures dropped for a third day running to hit two-week lows on Monday, with sentiment hurt by the country's latest move to tighten liquidity, which could curb steel demand as well as bank funds for steelmakers.

China has ordered banks to include their margin deposits in required reserves at the central bank to siphon off excess liquidity, banking sources said on Friday, part of Beijing's campaign to fight inflation.

The liquidity tightening move countered news that China's crude steel output stood at 1.947 million tonnes a day during the period Aug. 11-20, up 0.3 percent from the first 10 days of the month.

"China's high steel output actually matches the overall solid demand in the country, as we can see that large steel inventories have been used up by downstream sectors," said Xu Xiangchun, analyst with industry consultancy Mysteel.com.

"But I am still cautious as the further tightening moves may continue to weigh on demand from industrial sectors, investment on property sector may slow down, while other industrial sectors may also see slower growth."

The most-active January rebar contract on the Shanghai Futures Exchange fell as low as 4,768 yuan a tonne, its weakest since Aug. 11. By 0412 GMT, it was down 0.6 percent at 4,773 yuan.

The tightening move could also constrain funding for steelmakers, said an iron ore trader in China's eastern Shandong province.

"This is not a good time to tighten liquidity ahead of the peak steel consumption season in September and October," he said.

Recent rises in China's steel prices, spurred by increased output as producers kept pace with strong construction steel demand, had encouraged mills to restock iron ore, the key raw material.

But iron ore price gains had been tepid as mills didn't want to buy aggressively amid uncertainties facing the global economy.

Spot iron ore with 62-percent iron content rose 70 cents to $179.64 a tonne on Friday, according to Metal Bulletin .IO62-CNO=MB. Two similar reference prices, Platts IODBZ00-PLT and the Steel Index .IO62-CNI=SI, were steady at $180.25 and $178.50, respectively.

Tight Indian supplies had helped support iron ore prices as monsoon rains, logistical problems and policy issues continued to disrupt shipments from the world's No. 3 supplier.

India's Supreme Court on Friday extended a ban on mining to two more districts in the iron-ore rich southern state of Karnataka. The mining ban in Tumkur and Chitradurga districts takes to three the number of districts affected by the ban after a similar imposition was made in Bellary.

Prohibition on mining in the three districts was recommended by a court-appointed panel on Aug. 19, as part of efforts to control illegal mining.

Karnataka introduced a ban on exports in July 2010 which it said aimed to curb illegal mining. The Supreme Court ordered the export ban lifted in April although the southern state has yet to issue export permits.

"The mining ban is supportive of prices but I think the market is already convinced there's still a long road to go before Karnataka can make any exports," said the Shandong-based trader.

Credit Suisse in first coking coal swap

Mon Aug 29, 2011

MANILA Aug 29 (Reuters) - Credit Suisse said on Monday it had completed the first ever coking coal swap transaction via a new over the counter contract cleared by the CME Group .

The contract was between Credit Suisse and an unnamed coal industry participant involving 60,000 tonnes of the steelmaking raw material and settled against the Platts Australian coking coal index, the investment bank said.

The Platts index stood at $289 per tonne, free on board Australia on Friday, Credit Suisse said.

The transaction comes more than three years after Credit Suisse and Deutsche Bank (DBKGn.DE: Quote) co-launched an over the counter iron ore paper market by offering cash-settled swaps settled against index-based reference prices.

"This is the missing piece of the jigsaw puzzle that enables mills to hedge all of their variable costs," Kristian Thunes, Credit Suisse's global head of freight and iron ore, said in a statement, adding the company expects the swap volumes to increase rapidly.

Officials at CME and Credit Suisse did not disclose the price, saying it was a private transaction.

Prices of hard coking coal are around $300 a tonne from about $200 a tonne a year ago, because of logistical bottlenecks and tighter supply due to flooding which hit top producer Australia earlier this year.

The size of the first swap trade "bodes well for future activity," said CME spokesman Jeremy Hughes.

The volume of iron ore swaps cleared globally rose to an all-time high of more than 4 million tonnes in July, valued at more than $700 million. The bulk of that, or 3.92 million tonnes, was cleared by the Singapore Exchange.

Spot iron ore prices climbed to record highs above $190 a tonne in mid-February, aided by booming demand from top steel producer China.

Iron Ore-Spot prices at 3-month high, Shanghai rebar slips

Fri Aug 26, 2011 | By Reuters

* China steel price dip may sap iron ore upturn
* Shanghai rebar falls for the first time in 3 weeks
By Manolo Serapio Jr

SINGAPORE, Aug 26 (Reuters) - Spot iron ore prices rose to fresh three-month highs on hopes China's steel production pace will remain high as mills keep up with firm construction demand.

But a drop in China's steel futures for a second day on Friday could sap the upward momentum in prices of the steelmaking raw material.

"There are still buyers out there, but it's becoming difficult to push prices higher," said a shipping manager for an iron ore trading firm in Shanghai.

Two index-based spot prices hit their highest levels since mid-May on Thursday.

Iron ore with 62-percent iron content rose 0.1 percent to $178.50 a tonne, according to The Steel Index .IO62-CNI=SI, the highest since May 16.

Metal Bulletin's iron ore index .IO62-CNO=MB gained 0.4 percent to $178.94 a tonne, its loftiest since May 12. The Platts index IODBZ00-PLT was steady at $180.25.

Indian exporter Essel Mining sold 63.5/63 grade iron ore at $189 a tonne, cost and freight, this week, the highest so far for the grade in recent months, traders said.

"That grade is still unable to cross $190, which means not all the Chinese mills are willing to pay this kind of price," said the shipping manager.

Global miner BHP Billiton also sold three cargoes comprising 62-grade Newman iron ore fines and 58-grade Yandi fines at $183 and $159 a tonne, respectively, this week.

China's daily steel production has averaged more than 1.9 million tonnes since late February, up from last year's 1.7 million tonnes, spurring recent gains in both iron ore and steel prices.

But Shanghai steel futures eased for a second day on Friday, with the most-traded January contract slipping 0.3 percent to close at 4,800 yuan a tonne, in line with cautious trading in other commodities ahead of a speech by Federal Reserve Chairman Ben Bernanke later on Friday.

Shanghai rebar, which fell 0.3 percent on week, its first loss in three weeks, is down more than 2 percent so far in August.

Bernanke is expected to unveil a plan for the struggling U.S. economy at an annual central bankers conference in Jackson Hole, Wyoming, although market participants are not expecting him to announce aggressive measures like another round of bond buying.

"We still expect iron ore prices to be supported by tight supplies from India. There still aren't much new offers from both Indian traders and miners," said an iron ore trader in Shanghai.

"But mills might be cautious in buying more iron ore if prices continue higher."

Weaker prices for iron ore swaps <0#SGXIOS:> on Thursday suggested investors are unsure whether recent price gains in the physical market can be sustained.

Iron Ore-Spot at 3-month top on brisk Chinese buying

Thu Aug 25, 2011

* High China steel output on brisk construction demand
* Chinese buying could wane if ore prices rise further
* Shanghai rebar slips to two-week low
By Manolo Serapio Jr

SINGAPORE, Aug 25 (Reuters) - Spot iron ore prices rose to their highest in more than three months and offers stayed firm on Thursday as Chinese mills restocked amid brisk steel demand.

Strong construction demand has been behind the rapid pace in China's daily steel production, which has averaged more than 1.9 million tonnes since late February, up from last year's 1.7 million tonnes.

But analysts and traders said the upturn in iron ore prices could lose steam if steel prices in China, the world's biggest consumer and producer, fall sharply.

"It looks like Chinese restocking is still underway, they still seem happy to buy iron ore. But they're probably at a point where they could pull out any minute," said Greme Train, commodity analyst at Macquarie in Shanghai.

"So if there's any negative news flow in the next couple of weeks, like weak PMI or another rate hike, then you could see a pullback in buying."

Two index-based spot prices hit their highest levels since mid-May, with 62-percent iron ore rising 0.3 percent to $180.25 a tonne on Wednesday, according to the Platts index IODBZ00-PLT. A similar grade at The Steel Index .IO62-CNI=SI rose 0.2 percent to $178.30.

Metal Bulletin's iron ore index .IO62-CNO=MB gained 0.3 percent to $178.31 a tonne, the highest since Aug. 4.

Offers for Indian 63.5/63 grade ore held at $187-$189 a tonne, cost and freight, on Thursday, said Chinese consultancy Umetal. Australian 62 percent Newman fines were quoted at $182-$184, it said.

Chinese buying appetite could wane if prices continue to rise, traders said.

"This bull run can't continue for too long. I see a price drop in September for sure," said a Shanghai-based iron ore trader.

A drop in Chinese steel futures to two-week lows on Thursday could prompt some mills to step back from buying the steelmaking ingredient.

The most-active January rebar contract on the Shanghai Futures Exchange fell as low as 4,788 yuan a tonne, before cutting losses to 4,806 yuan by 0317 GMT, down 0.3 percent.

But Macquarie's Train expects iron ore buying to intensify towards and into the fourth quarter when supply of domestic concentrates thins out as mining activity slows in winter.

"Risk reward is balanced at the moment in terms of where pricing can go from here, short-term, but at some point before the end of the year I think iron ore will probably be trading $10 higher than it is now."

(sourced Reuters)

Iron Ore-Spot rises on China steel output, tight supply

Wed Aug 24, 2011

* Shanghai rebar futures rise for third day
* Low-grade Indian ore prices up on limited cargoes
By Manolo Serapio Jr

SINGAPORE, Aug 24 (Reuters) - Spot iron ore prices remained firm on Wednesday, as strong steel output in top producer China kept buying interest for the raw material intact, with tight Indian supplies lending support.

Brisk construction demand has pushed Chinese mills to produce more than 1.9 million tonnes of crude steel since late February, up from last year's daily average of around 1.7 million tonnes.

"The Chinese continue to produce steel like crazy and Indian supplies are extremely tight at the moment," said an iron ore trader in Singapore, citing factors supporting prices.

Offers for Indian grades rose by a dollar on Wednesday, with the widely traded 63.5/63 grade quoted at $187-$189 a tonne, cost and freight, said Chinese consultancy Umetal.

Monsoon rains and logistical problems have been disrupting shipments from India, the world's No. 3 iron ore supplier after Australia and Brazil.

"It's very, very difficult to get cargo from India. Goa is closed because of the monsoon season and there is also a truckers' strike in the eastern side and that is adding to logistics problems," said a Shanghai-based trader who sells Indian material to Chinese mills.

Shipments from India's southern Karnataka state have yet to resume even after the country's top court ordered a ban, in place since July 2010, lifted in April.

LOW-GRADE ORE SHINES

There is also increased interest in low-grade Indian ore given limited supplies.

"I've sold a 55/54 cargo at $134 (a tonne, cost and freight), which I think is a record price," said the Shanghai-based trader.

"Typically this grade would be around $100 but now we're seeing absolutely crazy transactions happening in the market," he said.

Global miner BHP Billiton sold Newman and Yandi iron ore fines at $183 and $159 a tonne, respectively, at a tender on Tuesday, about a dollar higher than previous deals, said the Singapore trader. Newman fines are being offered on Wednesday at $185 per tonne, he said.

"Prices are not exploding, they're creeping up, but creeping up amid a very uncertain macro environment in the developed world.

"So if we do find stability in the macro environment, I'd see spot prices increasing significantly," he said.

Iron ore prices are mostly taking their cue from firmer steel prices in China. The most-active January rebar contract on the Shanghai Futures Exchange rose 0.2 percent to 4,832 yuan a tonne on Wednesday, rising for a third-straight day.

Iron ore with 62 percent iron content rose 10 cents to $177.90 a tonne on Tuesday, its highest since Aug. 8 and marking its sixth-straight session of gains, The Steel Index .IO62-CNI=SI shows.

Metal Bulletin's similar gauge .IO62-CNO=MB rose 44 cents to $177.77 a tonne and Platts index IODBZ00-PLT gained 25 cents to $179.75.

Export of iron ore from India to China

Tuesday, 23 Aug 2011

Mr Beni Prasad Verma minister of steel has said that the quantum of iron ore exported from India during the last two years and the price thereof is given below:

Indicative spot prices of 63.5/63% Fe iron ore fines for export to China

Year	Volume	April	July	October	January
2009-10	117.37	48	68	68	90
2010-11 (Provisional)	97.11	162	122	130	155

(Volume in million tonnes)
(Prices in USD per DMT FOB)
(Source: MMTC, Department of Commerce

Spot prices for shipments to China are for medium grade iron ore fines. These prices change on load port and transaction to transaction basis during the year.

In a written reply in the Lok Sabha Mr Verma said that the production of iron ore in the country is much more than that used by the domestic iron and steel industries and about 50% of the iron ore produced in the country is being exported.