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-Spot at 9-mth top on tight supply; Rio output at record

Tue Jan 18, 2011 6:28am GMT, By Manolo Serapio Jr

SINGAPORE, Jan 18 (Reuters) - Spot iron ore prices touched near nine-month highs and offers remained strong on Tuesday, supported by firm Chinese buying and supply concerns in key producers Brazil and India.
There is market talk that India may lift export duty on iron ore to 20 percent from 5-10 percent currently, traders said, further tightening supply from the world's third-largest exporter where a key state Karnataka has already banned shipments since July.
India last raised the export tax on iron ore lumps in April 2010 to 15 percent from 10 percent, after slapping a 5 percent export duty on iron ore fines in December 2009.
Limited supplies from No. 2 exporter Brazil due to massive rains, Chinese stockpiling ahead of the Lunar New Year in early February and concerns over Indian exports could lift spot iron ore prices to $200 a tonne, a level last seen in 2008, traders said.
"We think it's going to stay strong and perhaps even touch $200 for 63.5/63 (grade) after Chinese New Year," said an iron ore trader in Shanghai.
"We are quite optimistic about the market at the moment," she said, adding she heard a deal was done for 63.5/63 grade at as high as $189 a tonne.
Offers for Indian ore with 63.5 percent iron content climbed to $186-$188 a tonne, including freight, on Tuesday, from $185-$187 the previous day, according to Chinese consultancy Mysteel.
The three major iron ore indexes, based on Chinese spot prices, on Monday rose to or stayed at their highest since late April 2010.
The Steel Index 62 percent benchmark .IO62-CNI=SI jumped 1.4 percent to $180.80 a tonne, and Metal Bulletin's 62 percent gauge .IO62-CNO=MB rose 1.2 percent to $176.75.
The Platts 62 percent iron ore index IODBZ00-PLT was steady at $182.50.
RECORD RIO OUTPUT
The rally may be far from losing steam, as prices for forward swaps <0#sgxios:> surged on Monday . The Singapore Exchange-cleared February contract jumped 4 percent to $181.37 a tonne, and March rose 3.4 percent to $177.75.
Strong iron ore prices are encouraging global miners to boost output. Rio Tinto , the world's second-largest producer, said iron ore output rose 6 percent to a record level in the fourth quarter.
For a table on Rio's quarterly commodity output, click:
Barring any major cyclones to hit Australia's Pilbara iron ore belt, Rio's iron ore production is likely to remain strong, James Wilson, analyst at Royal Bank of Scotland.
"The cyclones are an annual event. I don't think Rio had any problems last year and they try as much as possible to limit any loss of production," Wilson added.
"At the moment there's been nothing seriously affecting their iron ore output, but it remains to be seen what happens this season."
Market players are also eyeing a potential Indian court ruling on the Karnataka ban later this month which could help determine whether another Indian state would go ahead with its own ban on iron ore exports.
Orissa, the top iron ore producer in India, is looking at halting iron ore exports to increase availability of the raw material for local steelmakers.
"Whether Orissa will go ahead with the ban very much depends on what happens in Karnataka. If Karnataka removes the ban soon then Orissa will have no argument to push the ban," said the Shanghai-based trader.
Editing by Himani Sarkar source Reuters

Iron Ore May Jump to Record $250/Ton in 2011, Credit Suisse Says

By Jesse Riseborough January 07, 2011, 7:05 AM EST
Jan. 7 (Bloomberg) -- The price of iron ore, the key raw material for making steel, will average 21 percent higher this year and may jump to a record should anticipated supply growth be curbed, according to Credit Suisse Group AG.
The spot price of iron ore delivered to China including freight costs will probably average $178 a metric ton, Credit Suisse analysts wrote today in a report. That compares with the $147 a ton average for 2010, according to The Steel Index.

The world’s biggest iron ore exporters last year scrapped a custom of pricing cargoes in 12-month periods and switched most sales to quarterly contracts. A jump in prices this year will hurt steel producers already facing a surge in costs for coking coal, the other key raw material, as floods curb supplies in Australia.

“Supply-demand conditions look extremely tight” in the first half, Credit Suisse said. “Should supply failures occur, however, we could readily see iron ore spot prices spike through previous $200 a ton highs towards $250 a ton in the second quarter of 2011.”
The price rose 0.2 percent to $171.30 a ton yesterday, according to the Steel Index.
Quarterly sales contracts for some iron ore suppliers are calculated based on the average price over the preceding three months with a one-month lag.
The second quarter of 2011 will mark the peak in iron ore pricing as new supplies enter the market, particularly from the second half of 2012, Credit Suisse said. “However any delays to these expansions will further tighten markets,” it said.
Brazil’s Vale SA, Rio Tinto Group and BHP Billiton Ltd. are the world’s three-largest iron ore exporters. Rio and BHP both ship ore from operations in the Pilbara region of north Western Australia state.
Source: Bloomberg, Editors:Tony Barrett, Alastair Reed.Reporter: Jesse Riseborough in London.