October 20, 2015 / 7:38 AM / 2 years ago

UPDATE 1-Iron ore holds up even as Shanghai steel extends losses

* Shanghai rebar hits all-time low
    * ANZ advises selling any short-term recovery in ore prices

 (Updates prices)
    By Manolo Serapio Jr
    MANILA, Oct 20 (Reuters) - Iron ore futures in China and Singapore edged
higher on Tuesday on expectations overproducing Chinese steel mills would
support appetite for the raw material, while Shanghai steel hit a fresh low on
weak demand.
    China's iron ore imports rose 16 percent from the previous month to 86.12
million tonnes in September, the highest this year, customs data showed last
week.
    The most-traded January iron ore contract on the Dalian Commodity Exchange
 closed up 0.4 percent at 371.50 yuan ($59) a tonne. On the Singapore
Exchange, the most-active November iron ore gained 0.7 percent to
$49.84 a tonne.
    Along with higher iron ore imports, China's steel exports surged to a record
11.25 million tonnes last month as producers shipped more overseas due to
falling demand at home.
    Swelling Chinese steel exports suggest steel mills are overproducing, ANZ
analysts said.
    "Strangely, this should keep imported volumes of iron ore high, particularly
with higher-cost Chinese supply being consolidated," they said in a note.
    "But excess Chinese steel output means lower steel prices. And with steel
mills running on paper-thin margins - lower steel prices ultimately means lower
iron ore prices."
    China's slowing economy - gross domestic product grew at its weakest clip
since 2009 in the third quarter - has hit industrial demand and shrunk steel
consumption.
    ANZ said it took profit on a short-term trade on a NYMEX January iron ore
swap, turning in a 5 percent return after closing out its position at
$45.81 a tonne, just a tad above its $45 target.
    The investment bank said it would "continue to advise selling any short-term
recovery in prices."
    Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI
slipped 0.2 percent to $52.50 a tonne on Monday, the lowest since July 28,
according to The Steel Index.
    The spot benchmark has fallen 26 percent this year and is headed for a third
annual drop amid a global glut and a slowdown in China's steel industry that
have forced miners to slash costs to survive.
    January rebar on the Shanghai Futures Exchange fell 1.1 percent to
end at 1,801 yuan a tonne. It touched 1,795 yuan earlier, the lowest for a
most-traded contract since the exchange launched rebar futures in 2009.
    State-owned Chinese steel trading firm Sinosteel said it would delay the
payment of interest to its bondholders due on Tuesday after extending the date
investors can start redeeming its bonds by a month. 
    
  Rebar and iron ore prices at 0707 GMT
                                                                   
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN6                   1801    -20.00        -1.10
  DALIAN IRON ORE DCE DCIO JAN6    371.5     +1.50        +0.41
  SGX IRON ORE FUTURES NOV          49.84    +0.34        +0.69
  THE STEEL INDEX 62 PCT INDEX      52.5     -0.10        -0.19
  METAL BULLETIN INDEX              53.3     -0.46        -0.86
                                                                   
                                                                   
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.3460 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Sunil Nair)

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