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UPDATE 1-Iron ore at 1-week high as some China mills restock
January 24, 2013 / 7:25 AM / 5 years ago

UPDATE 1-Iron ore at 1-week high as some China mills restock

* Australian ports reopen after brief shutdown as storm
    * China HSBC flash PMI at two-year high
    * Shanghai rebar hits seven-month peak before falling

 (Adds Fortescue, updates rebar price)
    By Manolo Serapio Jr
    SINGAPORE, Jan 24 (Reuters) - Spot iron ore prices rose to
one-week highs as some Chinese steel mills continued to restock
ahead of the Lunar New Year holiday, although buying interest
was lean.
    Data showing activity in China's factory sector quickened to
its fastest in two years should back further gains in iron ore,
but steelmakers may only aggressively boost their inventories of
the raw material again if steel demand picks up pace.
    The HSBC flash purchasing managers' index for China rose to
51.9 in January, the highest since January 2011, as
manufacturers received more local and foreign orders.
    Shanghai steel rebar futures climbed to a seven-month high
on Thursday after the data, but soon surrendered gains to finish
lower. The most active rebar contract for May delivery on the
Shanghai Futures Exchange ended down half a percent at
4,032 yuan ($650) a tonne, after rising to 4,067 yuan, its
loftiest since June 26.
    Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI climbed 1.2 percent to $147.70 a tonne on
Wednesday, according to Steel Index. It was the highest level
since Jan. 15. 
    "Some mills are still replenishing, they still want cargo,
but they don't want the price to move up so much. That's why we
are seeing limited deals," said an iron ore trader in Singapore.
    Price offers for imported iron ore in China, the world's
biggest importer, were steady on Thursday.
    "We have not bought any new cargoes. We're still clearing
all our stocks before Chinese New Year," said a trader in
Shanghai, adding his company hopes to sell its remaining
40,000-50,000 tonnes of iron ore inventories at higher prices to
recoup losses from previous cargoes.
    The reopening of Australian ports after a brief shutdown due
to a tropical storm will ease worries about supply in the spot
market, and could make this week's price gains fleeting.
    Iron ore hit a 15-month top of $158.50 a tonne on Jan. 8 in
a rally that began in December as Chinese mills rebuilt
stockpiles. The price fell more than 8 percent before regaining
some ground this week.
    More iron ore restocking by Chinese steelmakers just ahead
of the Lunar New Year holiday in mid-February could boost prices
further, although a sustained rise will hinge on the strength of
China's steel demand.
    China's steel demand is expected to rise 3.1 percent in
2013, 0.6 percentage points higher than last year as the economy
recovers, the country's steel industry association said on
    Fortescue Metals Group the world's fourth-largest
iron ore miner, increased shipments by 32 percent in the
December quarter from a year ago to keep pace with demand from
China, its biggest customer.
    "Steel mills are readjusting their raw material stocks to
maintain more sustainable stock levels. With China's new
leadership starting to rejuvenate programmes of economic growth
and urbanization, steel demand is expected to increase and
support iron ore prices," the company said. 
  Shanghai rebar futures and iron ore indexes at 0710 GMT
  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY3                   4032    -21.00        -0.52
  THE STEEL INDEX 62 PCT INDEX     147.7     +1.80        +1.23
  METAL BULLETIN INDEX            148.99     +0.92        +0.62
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.2180 Chinese yuan)

 (Editing by Miral Fahmy)

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