UPDATE 1-Iron ore steadies after slide, on track to end 6-wk rally

Fri Jan 18, 2013 1:09pm IST

* China Q4 GDP grows 7.9 pct, snaps 7-quarter slowdown
    * Shanghai rebar gains 1.4 pct on GDP data
    * China steel output rises in early Jan, Dec up 7.7 pct

 (Updates rebar price)
    By Manolo Serapio Jr
    SINGAPORE, Jan 18 (Reuters) - Spot iron ore stabilised on
Friday after a rout that slashed prices by more than 6 percent
this week as Chinese buying slowed.
    Further gains in iron ore, which touched 15-month peaks last
week, will hinge on Chinese steel prices. Shanghai steel rebar
futures rose more than 1 percent on Friday after data showed the
world's No. 2 economy snapped a seven-quarter slowdown in the
fourth quarter.
    Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI was flat at $145.40 a tonne on Thursday, after
falling nearly 5 percent the day before, based on data from
Steel Index.
    "Generally I think iron ore prices will stabilise at
$135-$140 in the first quarter. This is a good price level that
is acceptable to mills," said an iron ore trader in Singapore.
    Price offers were mostly steady on Friday, although trades
remained scarce, traders said.
    For the week so far, iron ore has lost 6.1 percent, ending a
six-week winning streak that had lifted prices by more than 80
percent above three-year lows hit in September. 
    An unusual move by world No. 3 iron ore miner BHP Billiton
 , which typically sells to Chinese steelmakers,
to buy a cargo on Wednesday helped stem a decline in prices,
traders said. 
    Chinese mills could also soon return to the spot market to
replenish stockpiles of the raw material with steel production
still in full swing.
    
    HAZY OUTLOOK
    China's crude steel output rose 7.7 percent from a year
earlier to 57.66 million tonnes in December, government data
showed. The country's average daily crude steel output stood at
1.944 million tonnes in the first 10 days of January, up 2.3
percent from Dec. 21-31, according to an estimate by an industry
association on Thursday.  
    Given the wild swings in iron ore prices over the past
months, many traders have been cautious in buying.
    The volume of iron ore stocks held by medium-sized iron ore
traders has fallen to 700,000-900,000 tonnes from around 1.5
million tonnes before prices slumped to below $90 a tonne in
September, said a trader in Rizhao in China's eastern Shandong
province.
    The caution is also partly due to a hazy outlook for steel
demand, with China's economic recovery likely to be tepid.
    Compared to iron ore's over 80 percent surge from September,
Shanghai steel futures have only gained by a quarter to hit
six-month highs last week.
    The most active rebar contract for May delivery on the
Shanghai Futures Exchange closed up 1.4 percent at
4,002 yuan ($640) a tonne.    
    That followed data showing China's economy regained speed in
the final quarter of 2012, after a post-global financial crisis
downturn that produced the slowest year of economic growth since
1999.    
    China's gross domestic product grew 7.9 percent in the
fourth quarter, slightly higher than market expectations,
although an uncertain global outlook means Beijing may need to
keep tweaking policy to support growth. 
            
  Shanghai rebar futures and iron ore indexes at 0718 GMT
                                                                                                         
  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY3                   4002    +56.00        +1.42
                                                     
  THE STEEL INDEX 62 PCT INDEX     145.4     +0.00        +0.00
  METAL BULLETIN INDEX            145.12     -0.28        -0.19
                                                                                                         
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.2160 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Tom Hogue and
Joseph Radford)
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

RBI Policy Review

RBI Policy Review

RBI keeps rates on hold, warns on inflation  Full Article 

Monsoon Season

Monsoon Season

India's 2014 monsoon ends with double-digit rain deficit .  Full Article 

Cleanliness Drive

Cleanliness Drive

Modi orders officials to clean loos on Gandhi's birthday.  Full Article 

Bid to Boost Trading

Bid to Boost Trading

RBI takes small steps to deepen markets.  Full Article 

Car Recall

Car Recall

Maruti Suzuki says to recall 69,555 cars.  Full Article 

China Factory Data

China Factory Data

China final HSBC PMI steady in September on stronger global demand but risks remain  Full Article 

Oil Demand

Oil Demand

India's thirst for oil grows even as China cuts back  Video 

EBay Divests PayPal

EBay Divests PayPal

EBay to spinoff PayPal in 2015  Full Article 

New 'Windows'

New 'Windows'

Microsoft names next operating system 'Windows 10'.  Full Article 

Reuters India Mobile

Reuters India Mobile

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