Iron ore steady near $112, Chinese mill buyers limited

2014-03-28

Spot iron ore prices held near $112 a tonne on hopes China will act to boost a slowing economy, although buying appetite among Chinese mills remains limited amid risks steel production may drop if demand does not pick up strongly.

Shanghai steel rebar futures steadied on Thursday after a two-session gain and Dalian iron ore futures came off their highest level in almost three weeks.

"Some traders are betting that the market will recover on expectations for some stimulus to the economy," an iron ore trader in Shanghai said.

"Traders are buying most of the spot cargoes and there is little buying interest from the mills. Mills are very cautious in buying material and at what cost because there's still some risks that they can shut down their furnaces in view of weak demand and tighter liquidity."

China's daily crude steel output was nearly flat at 2.096 million tonnes between March 11 and 20 versus the previous 10-day period, the China Iron and Steel Association said.

Iron ore for immediate delivery to China was up 10 cents at $111.90 a tonne on Wednesday, according to data compiler Steel Index.

The steelmaking ingredient has risen almost 7 percent since hitting a 17-month low of $104.70 during a March 10 rout, but remains 16.6 percent lower so far this year.

'INCONSISTENT DEMAND'

Global miner BHP Billiton is offering a 100,000-tonne cargo of 57.6-percent grade Australian Yandi iron ore fines at a tender on Thursday, traders said.

The cargo may be sold at below $100 a tonne, below current market offers of around $101 and $102, the Shanghai trader said.

The most-traded rebar for delivery in October on the Shanghai Futures Exchange was little changed at 3,269 yuan a tonne against Wednesday's settlement of 3,271 yuan.

Rebar climbed more than 2 percent on Tuesday as hopes for stimulus in China grew a day after a survey showed manufacturing activity there contracted in the first quarter of 2014. It has since struggled to add to those gains amid a still shaky outlook for demand.

"Market jitters remain evident, given inconsistent demand conditions and an ongoing desire to improve cash holdings, as well as further news of defaults, this time in Jiangsu's banking community," Standard Bank commodities strategist Melinda Moore said in a note.

Police in the rural Chinese city of Yancheng in Jiangsu province have detained a person suspected of spreading rumours that sparked a three-day bank run, security officials said on Thursday.

At the Dalian Commodity Exchange, the most-active September iron ore contract closed up 0.3 percent at 757 yuan a tonne, paring gains after hitting a high of 770 yuan, its loftiest since March 7.

Source from : Reuters

HEADLINES