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China iron ore cuts losses as weaker yuan seen lifting steel exports
August 12, 2015 / 4:42 AM / 2 years ago

China iron ore cuts losses as weaker yuan seen lifting steel exports

* Dalian iron ore recovers from near 2-pct drop, rebar
    * Recent gains in iron ore prices overdone -ANZ

    By Manolo Serapio Jr
    MANILA, Aug 12 (Reuters) - Dalian iron ore futures pared
losses on Wednesday on hopes demand for the steelmaking raw
material would remain high as China's steel exports get a boost
from Beijing's devaluation of the yuan.
    China allowed the yuan to fall sharply for a second straight
day on Wednesday, cutting investor appetite for risky assets
from equities to most commodities. 
    But Chinese iron ore futures dropped only marginally. The
most-traded iron ore for January delivery on the Dalian
Commodity Exchange was down 0.4 percent at 374.50 yuan
($58) a tonne by midday, after falling as much as 1.9 percent
    "Chinese mills will look to export more steel products with
the devaluation of the yuan. That will support demand for iron
ore," said a Shanghai-based trader.
    China exported 9.73 million tonnes of steel products in
July, up 21 percent from a year ago, and near the record high of
10.29 million tonnes in January.
    Shrinking domestic demand amid a slowing economy has fueled
brisk steel exports from the country, with some Chinese
steelmakers said to be selling output abroad at a loss, sparking
anger from producers elsewhere. 
    On Tuesday, iron ore for immediate delivery to China's
Tianjin port .IO62-CNI=SI slipped 0.7 percent to $55.90 a
tonne, according to The Steel Index, after scaling a one-month
high of $56.40 last week.
    "We believe the recent gains in iron ore prices are overdone
as supply builds further in the second half of 2015," ANZ Bank
said in a note.
    ANZ said it initiated a short position with iron ore
expected to test $50 in the short term amid slowing steel demand
in China.
    Adding to more supply from Australia and Brazil, India's top
iron ore exporting state of Goa resumed production on Monday
after nearly three years, led by Vedanta Ltd, India's
largest private miner. 
    The January rebar contract on the Shanghai Futures Exchange
 was up 0.2 percent at 2,064 yuan a tonne.
    But spot rebar prices remain higher, at around 2,300 yuan a
tonne in Shanghai, the trader said, on expectations of tighter
supply when Beijing curbs production to clear skies ahead of a
big parade in September to commemorate the 70th anniversary of
the end of World War Two.
    Global miner Rio Tinto will offer 100,000 tonnes of
61-percent grade Pilbara iron ore fines at a tender closing on
Wednesday, traders said.
  Rebar and iron ore prices at 0420 GMT
  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN6                   2064     +3.00        +0.15
  DALIAN IRON ORE DCE DCIO JAN6    374.5     -1.50        -0.40
  SGX IRON ORE FUTURES SEP         50.77     -0.39        -0.76
  THE STEEL INDEX 62 PCT INDEX      55.9     -0.40        -0.71
  METAL BULLETIN INDEX             56.22     -0.18        -0.32
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.4261 Chinese yuan)

 (Reporting by Manolo Serapio Jr.; Editing by Joseph Radford)

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