Shanghai rebar slips on softer demand, puts pressure on ore

* Sellers cut iron ore price offers in China by $1/tonne
* Mills opting to buy small lots of ore at ports

By Manolo Serapio Jr
SINGAPORE, Nov 26 (Reuters) - China steel futures dropped on
Monday for a second session in three, weighed down by softer
demand in the world's top consumer amid colder weather, limiting
appetite for raw material iron ore.
Iron ore prices face more downward pressure after falling
more than 3 percent last week, as Chinese mills step back from
the spot market, while winter curbs demand for construction
steel products.
"It looks like the softer trend will continue with steel
prices still weak. Mills are not in a rush to buy," said an iron
ore trader in Shanghai, referring to the price of the raw
material.
The most traded rebar contract for May delivery on the
Shanghai Futures Exchange touched a session low of
3,543 yuan ($570) a tonne, not far off last week's two-month low
of 3,533 yuan. By the midday break, it was down 0.3 percent at
3,559 yuan.
Sellers cut price offers for imported iron ore cargoes by $1
per tonne on Monday, after the benchmark spot rate
.IO62-CNI=SI hit a one-month low of $118.70 last week.
The benchmark price was little changed at $118.90 on Friday,
according to data provider Steel Index, but fell 3.2 percent for
the past week, snapping a six-week rally.
Falling stocks of iron ore at Chinese ports show buyers
prefer to purchase smaller volumes at the ports. Stocks of iron
ore held at major Chinese ports have fallen to below 90 million
tonnes in recent weeks from around 95 million in late October,
traders said.
"Mills are buying in small lots from the ports instead of
buying new and bigger seaborne cargo, especially those who think
prices will drop some more this week," said another trader in
Shanghai.
But some traders are betting on a rebound in iron ore prices
in January as mills restock ahead of the Lunar New Year holiday
in the following month.
Top miner Vale on Friday sold two cargoes of
61.5-percent and 62.75-percent grade iron ore at $110.30 and
$117.55 per tonne, respectively, about $2 more than previous
deals, the first Shanghai trader said.
"The vessels are arriving in mid-January, so the price
increase shows some in the market are looking at a recovery in
January, ahead of the Chinese New Year," he said.

Shanghai rebar futures and iron ore indexes at 0358 GMT

Contract Last Change Pct Change
SHFE REBAR MAY3 3559 -12.00 -0.34
PLATTS 62 PCT INDEX 119.75 -0.75 -0.62
THE STEEL INDEX 62 PCT INDEX 118.90 +0.20 +0.17
METAL BULLETIN INDEX 119.91 -0.27 -0.22

Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1=6.2285 Chinese yuan)

(Reporting by Manolo Serapio Jr.; Editing by Clarence
Fernandez)