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Iron ore holds up even as Shanghai steel extends losses
October 20, 2015 / 3:30 AM / 2 years ago

Iron ore holds up even as Shanghai steel extends losses

* Shanghai rebar near all-time low
    * ANZ advises selling any short-term recovery in ore 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 languished near record lows 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 was up 0.5 percent at 372 yuan 
($58) a tonne by 0305 GMT. On the Singapore Exchange, the
most-active November iron ore climbed 1.2 percent to
$50.10 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, 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
0.8 percent to 1,807 yuan a tonne. It touched 1,800 yuan on
Monday, 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 0305 GMT
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN6                   1807    -14.00        -0.77
  DALIAN IRON ORE DCE DCIO JAN6      372     +2.00        +0.54
  SGX IRON ORE FUTURES NOV          50.1     +0.60        +1.21
  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 = 6.3624 Chinese yuan)

 (Reporting by Manolo Serapio Jr.)

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