Iron Ore-More downside pressure for spot prices, support seen at $110

Mon Aug 6, 2012 12:53pm IST

* Iron ore down about 13 pct in July on weak China steel
demand
    * Steel demand may only pick up from September - trader

 (Updates rebar price)
    By Manolo Serapio Jr
    SINGAPORE, Aug 6 (Reuters) - Sellers of spot iron ore
cargoes to top importer China cut prices further on Monday,
pointing to more downside pressure for the commodity that slid
nearly 13 percent last month as Chinese steel demand soured.
    But iron ore, which hit a 2-1/2 year trough of $115.20 per
tonne last week, is unlikely to fall below $110, traders say, as
some Chinese mills could pick up cargoes to replenish run-down
stocks.
    "At current levels, there are still some mills willing to
take some cargoes because the lower prices mean they can reduce
their losses from weaker steel prices or at least break even,"
said a shipping manager for an iron ore trading company in
Shanghai. "I think it will be quite difficult to break $110 and
the market could stabilise at current levels."
    Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI eased 0.3 percent to $116.70 per tonne on Friday,
according to the Steel Index. It fell 7 percent last week, its
biggest weekly drop since late October.       
    That may slip further on Monday as price offers for some
iron ore cargoes in China, including from top supplier
Australia, dropped by $1-$2 per tonne, based on data from
Beijing-based consultancy Umetal.
    A slump in Chinese steel prices, reflecting sluggish demand,
has slashed appetites for raw material iron ore, forcing smaller
producers in the world's biggest steel market to step up
maintenance to curb output and losses. 
    The most-traded rebar contract for January delivery on the
Shanghai Futures Exchange closed up 0.3 percent at 3,682
yuan ($580) per tonne, after hitting a contract low of 3,631
yuan on Friday. 
    Rebar, or reinforcing steel bar, used in construction,
dropped almost 7 percent in July. 
    "I only expect steel demand to pick up from September
onwards since construction is still slow in China where the
weather is hot in some places and it's raining in some parts,"
said a Shanghai-based physical iron ore trader, whose company
has not bought any fresh iron ore shipments for the past month.
    "We are not feeling very confident about the market yet. We
are considering some offers but our management still feels the
market is weak."
    But miners continue to offer cargoes on the spot market. Top
producer Vale SA is selling two Brazilian iron ore
cargoes via tenders that close later on Monday, traders said.
    One is 167,000 tonnes of 64.55-percent grade iron ore lumps
and the other cargo is 156,000 tonnes of 62.62-percent grade
sinter feed, traders said.
    Vale last week sold 64.08-percent grade lumps at $122.10 per
tonne, said the Shanghai shipping manager. 
    "I think that the last deal was on the high side. Today's
cargo could be $115 or even lower," he said.
    
  Shanghai rebar futures and iron ore indexes at 0706 GMT
                                                                               
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN3                   3682    +10.00        +0.27
  PLATTS 62 PCT INDEX             117.25     +0.00        +0.00
  THE STEEL INDEX 62 PCT INDEX     116.7     -0.40        -0.34
  METAL BULLETIN INDEX            119.46     +0.27        +0.23
                                                                               
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.3727 Chinese yuan)

 (Editing by Chris Lewis and Himani Sarkar)
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Canonisation

Canonisation

Pope declares sainthood of two Indians, four Italians.  Full Article 

Stake Sale Strike

Stake Sale Strike

Coal India trade unions call off strike in victory for Modi.  Full Article 

Markets Weekahead

Markets Weekahead

Ride the bull with a finger on the ejector button.  Full Article 

Arms Purchase

Arms Purchase

India approves $2.6 bln mounted gun purchase - official.  Full Article 

Interview with Bulgari CEO

Interview: Bulgari CEO

Bulgari CEO: we shouldn’t have left India so we’re back  Full Article 

Formula One

Formula One

Hamilton takes second F1 title in style.  Full Article 

Available For Remake

Available For Remake

Bollywood finally wants to pay the price for remakes  Full Article 

Davis Cup

Davis Cup

Vintage Federer seals first Davis Cup for Switzerland.  Full Article 

Movie Review

Movie Review

"Happy Ending" is old wine in an older bottle  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage