Iron Ore-Spot Near 3-Month Low, Traders Hold Cargoes
* Shanghai rebar gains after 4-day drop, but near recent low
* Bearish sentiment intact, traders see further decline
(Updates rebar price)
By Manolo Serapio Jr
SINGAPORE, May 17 (Reuters) - Spot iron ore prices fell to
their lowest in nearly three months on Thursday, knocked by
limited buying interest from Chinese mills adjusting to weak
steel demand, which has led to some traders holding cargoes
rather than selling.
Steel futures in top consumer China regained some ground
after falling for four straight days, though prices remained
within striking distance of 5-1/2-month lows hit on Wednesday.
The gain in Shanghai rebar futures followed a rebound in
other commodities, which are drawing some investor interest
after similarly sinking to multimonth lows this week.
"Fundamentally I still don't see any near trigger point that
will support steel prices, so I believe there's further room for
correction," said a Hong Kong-based iron ore trader.
The most-traded rebar contract for October delivery on the
Shanghai Futures Exchange rose 1 percent to 4,092 yuan
($650) a tonne at the close.
Rebar, used in construction, earlier hit a session low of
4,051 yuan, near the previous day's low of 4,050 yuan, a level
last seen on Nov. 28.
Spot steel prices have also been dropping, with billet in
China's key Tangshan area at 3,650 yuan per tonne on Wednesday
from 3,820 yuan in late March, traders said.
Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI dropped 0.6 percent to $135.10 a tonne on
Wednesday, according to the latest data from Steel Index. That
matched a low last seen on Feb. 20 and marked iron ore's seventh
straight day of decline.
WAITING
The sustained decline in iron ore prices has forced some
traders to stop selling cargoes.
"One of the big traders could not find good buyers at this
time so they have held some China-bound ships in Singapore for
several weeks," said a Shanghai-based trader.
"Because they can't get the price they want in the current
market and they probably don't want to take any losses at the
moment, so they choose to wait," he said, adding the capesize
cargoes include iron ore from Brazil and Africa.
Spot sales by miners this week have drawn little interest,
with prices either falling or cargoes being skipped.
Top miner Vale sold a 195,000-tonne cargo of
63.42-percent grade iron ore fines at $133.62 a tonne at a
tender on Wednesday, down sharply from a similar grade sale of
$139.05 previously, traders said.
Rio Tinto has offered 61.5-grade Pilbara
iron ore fines at $140 a tonne since Tuesday, but the Shanghai
trader said he has yet to hear whether the cargo has been sold.
BHP Billiton is selling around 190,000 tonnes
of Newman and MAC fines at a tender on Thursday, traders said.
"The general situation has not changed. Steel production is
still high and demand is still sluggish. Steel mills should
start cutting production to reduce supply of steel in the
market, then this will help steel prices to recover," said the
Shanghai trader.
On a daily basis, China's crude steel output topped 2
million tonnes in April versus 1.986 million tonnes in March,
based on the latest data from China's National Bureau of
Statistics.
Reflecting the weak market, there were no deals for a second
day on Wednesday on China's physical iron ore trading platform,
which debuted last week, according to the website of platform
operator China Beijing International Mining Exchange.
Shanghai rebar futures and iron ore indexes at 0710 GMT
Contract Last Change Pct Change
SHFE REBAR OCT2 4092 +42.00 +1.04
PLATTS 62 PCT INDEX 136.25 -1.00 -0.73
THE STEEL INDEX 62 PCT INDEX 135.1 -0.80 -0.59
METAL BULLETIN INDEX 134.87 -0.95 -0.70
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3222 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Chris Gallagher
and Daniel Magnowski)
SOURCES
