February 23, 2010 / 6:17 AM / 10 years ago

Iron ore prices up at $136/T in post-holiday trades

SINGAPORE, Feb 23 (Reuters) - Spot iron ore traded 5 percent higher when Chinese players returned to the market after week-long holidays, market sources said on Tuesday.

Traders reported one Capesize cargo of 62 percent Pilbara iron ore changed hands on Monday at $136 a tonne on a Cost Insurance Freight China basis, while a 50,000-tonne cargo of Indian material grading 63.5 percent went at the same price.

“A very prompt cargo of 63.5 percent Indian ore went at $136 through an Australian trading house,” an iron ore trader said.

“It’s a floating cargo that was sold. It was one of the first trades after the New Year. We also had one yesterday — 170,000 tonnes of 62 percent Pilbara to a Chinese mill, also at $136.”

Analysts at FIS Singapore said the Indian cargo was equivalent to around $130 62 percent iron, but the jump in prices may not be accepted by the market as a sustainable level.

“Some remained cautious as to how much to read into this transaction level due to the prompt nature of the cargo and it being the first trade after the Chinese New year holidays,” they said in a note to clients.

“With Chinese mill margins said to be narrowing, doubts also remain concerning the ability of steel producers to pay such high rates for the raw material, though others argue that steel mills may be forced to buy in order to avoid shutdown costs as inventories run low.”

Spot iron ore benchmark quoted by the Steel Index .IO62-CNI=SI rose 70 cents on Monday to $128.90 after a week of stagnating at $128.20, while swaps contracts for the second quarter were pegged at $129-$131 and at $126-$129 for the third quarter. (Reporting by Nick Trevethan; Editing by Clarence Fernandez)

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