IRON ORE MOVES UP
SINGAPORE, TUESDAY, Feb 21 (Reuters) - China steel futures rose
for a second day on Tuesday, tracking gains in other commodities
after Greece secured a long-sought financing deal which injected
cautious optimism in a market still wary about the outlook for
steel demand.
The Greek bailout deal, which involves 130 billion euros in
new financing for Greece and for Athens to work to cut its debt
to 121 percent of GDP by 2020, sent the euro up.
The most-traded May rebar contract on the Shanghai Futures
Exchange jumped 1.2 percent to close at the day's peak
of 4,228 yuan a tonne, the highest in nearly a week.
"The problem is whether steel can sustain the upward trend.
And with the demand side remaining largely weak we are not
really sure about it," said an iron ore trader in Shanghai.
Slow steel demand in China, the world's biggest producer and
consumer, has curbed the appetite for iron ore and sent the raw
material's prices down more than 2 percent so far this year
after falling nearly 19 percent in 2011.
China's move to cut banks' reserve requirement ratio for the
first time this year helped Shanghai rebar futures end a
seven-day slide on Monday and iron ore to snap a nine-day losing
streak.
Iron ore with 62 percent iron content .IO62-CNI=SI rose
0.6 percent to $135.10 a tonne, according to reference price
provider the Steel Index.
CAUTIOUSLY OPTIMISTIC
Iron ore forward swaps <0#SGXIOS:> also jumped and the
market stayed brisk on Tuesday, traders said, although the
physical market remained sluggish.
"The RRR cut won't be good enough, we have to see
construction activity in China resume to support iron ore demand
going forward," said a Singapore-based trader.
But recent sale tenders with prices concluded at firmer
prices are infusing some degree of optimism into the market.
Top iron ore miner Vale sold a capesize cargo of
65-percent grade material at $150.05 per tonne at a tender on
Tuesday, traders said. That compared to Vale's recent sale of
64-grade ore at $141 a tonne.
Third-ranked iron ore producer BHP Billiton
sold 62.7-grade Newman fines at $138.55 a tonne versus a
previous sale of $137.50, and 57.5-grade Yandi fines at $127.15,
marginally higher than at a previous tender.
"Some traders in China are now cautiously optimistic and
have started withholding their offers," the Steel Index said.
China's daily crude steel output rose 1.9 percent to 1.705
million tonnes in the first 10 days of February, data from the
China Iron & Steel Association showed on Monday, as traders
replenished stockpiles following the Lunar New Year holiday.
But steel output in China has remained at less than 1.7
million tonnes a day over the past three months following a
decline in demand brought about by a slowdown in construction
over the winter.
"A stronger and more widespread recovery in (end-user)
demand will be needed to see outright growth return to the
Chinese steel sector," Commonwealth Bank of Australia said in a
note, adding that while the RRR cut will help, the lagged effect
of the move points to a relatively muted market in the near
term.
Shanghai rebar futures and iron ore indexes at 0717 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 4228 50.00 1.20
PLATTS 62 PCT INDEX 136.5 0.00 0.00
THE STEEL INDEX 62 PCT INDEX 135.1 0.80 0.60
METAL BULLETIN INDEX 136.32 0.69 0.51
* China cuts bank reserve requirement ratio
* RRR cut seen unlikely to sharply boost steel demand
* Iron ore may drop more, fell for 9th day on Friday
By Manolo Serapio Jr
SINGAPORE, Feb 20 (Reuters) - China's efforts to boost
lending lifted Shanghai steel futures by half a percent on
Monday after seven straight days of losses, but the modest gain
suggests steel demand will remain weak until Beijing eases
property market curbs.
China on Saturday said that it would cut the amount of cash
banks need to keep with the central bank, joining global
counterparts in stimulating economic growth.
The 50-basis point cut, estimated to free up between 350-400
billion yuan ($55.6-$63.5 billion) in additional liquidity, was
the second reduction in Chinese banks' reserve requirement ratio
(RRR) since November and takes effect on Feb. 24.
The most-traded May rebar contract on the Shanghai Futures
Exchange closed up 21 yuan at 4,178 yuan ($660) a tonne,
off a session high of 4,192 yuan.
The RRR cut confirms that the "Chinese authorities are
comfortable that inflation and property prices are under
control", Commonwealth Bank of Australia said in a note, adding
it should support commodity demand and prices.
But some traders said the rate cut would do little to spur
steel demand.
"The key thing that will push up steel prices sharply would
be demand from the housing property market, and we believe that
the Chinese government will not loosen its grip on the market,"
said a physical iron ore trader in Singapore.
China's daily crude steel output rose a modest 1.9 percent
to 1.705 million tonnes in the first 10 days of February from
late January, data from the China Iron and Steel Association
showed.
Slower steel demand in China, the world's biggest consumer
and producer, has weighed on demand for raw material iron ore.
Traders say spot prices could drop further this week before
reaching a level that would lure buyers back into the market,
with steel producers' margins getting squeezed.
Iron ore with 62 percent iron content .IO62-CNI=SI fell
1.8 percent to $134.30 a tonne on Friday, according to Steel
Index, the lowest level since Dec. 20.
Friday was iron ore's ninth straight day of decline. It fell
more than 7 percent during that period, its longest losing
streak since a 15-day slide in October when prices fell to
levels not seen since December 2009 because slower Chinese
demand curbed steel output.
In Japan, the world's No. 2 steel producer, output
fell the most in more than two years in January on weak exports,
marking the fifth straight month of decline.
The Baltic Exchange's main sea freight index, which
tracks rates to ship dry commodities including iron ore, fell
for a third day on Friday as weak cargo business on the capesize
and panamax markets battered sentiment.
Global miner BHP Billiton is holding a sale
tender for Newman and Yandi iron ore fines which is due to close
later on Monday and the market expects bids to remain low, in
line with the price drop at recent tenders, traders said.
Steady offer prices of imported iron ore in China on Monday
could mean spot rates may find a floor soon, said a
Shanghai-based trader.
Prices of forward swaps <0#SGXIOS:> also regained some
ground on Friday after recent losses.
In a bid to boost output, Rio Tinto is investing
$518 million in driverless trains for its Western Australian
rail network. The world's second biggest iron ore miner aims to
increase output to 353 million tonnes a year by 2015 from 220
million tonnes now.
Shanghai rebar futures and iron ore indexes at 0713 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 4178 21.00 0.51
PLATTS 62 PCT INDEX 136.5 -1.50 -1.09
THE STEEL INDEX 62 PCT INDEX 134.3 -2.50 -1.83
METAL BULLETIN INDEX 135.63 -1.57 -1.14
* Mills hesitating to buy more iron ore after recent rise
* BHP: China raw material demand growth may ease longer term
* Rio allots $3.4 bln to boost Australian ore mining
**************************
(Updates table)
By Manolo Serapio Jr
SINGAPORE, Feb 8 (Reuters) - Iron ore steadied on
Wednesday after a recent spike in spot prices spurred caution
among buyers who are worried a slow steel market in top consumer
China cannot justify sustained gains in prices of the raw
material.
Offers for imported iron ore in China were unchanged from
Tuesday, with Australian Pilbara fines quoted at $143-$145 per
tonne, Newman fines at $146-$149 and Yandi fines at $131-$133,
Chinese consultancy Umetal said.
"Steel mills are hesitant to buy more iron ore, given
lacklustre steel demand and prices," said a purchasing manager
for an iron ore trading firm in Shanghai.
Some Chinese steel producers, especially the smaller mills,
could be incurring losses with iron ore prices at current
levels, which were similar to spot rates in mid-October when
prices of some steel products, like billet, were around 200 yuan
($32) more than they are now, he said.
Iron ore with 62 percent iron content .IO62-CNI=SI was
nearly flat at $144.70 a tonne on Tuesday, according to the
Steel Index, after hitting a 2-1/2-month high of $144.80 on
Monday.
The Chinese have made a slow return to the market after the
week-long Lunar New Year break in late January, with a
winter-halted construction sector, a heavy steel user, also
feeding the sluggishness.
China's daily crude steel output fell 1.3 percent in the
middle of January to 1.669 million tonnes, compared to the
previous 10 days.
Shanghai rebar futures have risen a modest 3 percent so far
this year, with the most-active May contract gaining 1.5
percent to close at 4,337 yuan a tonne, tracking firmer Chinese
equities.
WEAK FUNDAMENTALS
"Fundamentals are pointing towards a weak steel market in
China, but there's a bit of tightness on supply of prompt
cargoes from Australia and Brazil due to weather issues, so
that's supporting iron ore," said a physical iron ore trader in
Singapore.
A seasonal cyclone period in Australia and heavy rains in
Brazil have disrupted some shipments from the world's two
biggest iron ore exporters, although traders don't foresee a
sustained boost to prices from those.
Iron ore shipments to China through Australia's Port
Hedland, one of the world's biggest export terminals, fell 15
percent in January from December, according to data released by
the port authority on Wednesday.
Australian miner BHP Billiton warned on
Wednesday the rate of China's demand growth for steelmaking
ingredients could slow as "underlying economic growth rates
revert to a more sustainable level."
BHP made the comment after reporting its first half-year
profit fall in two years as iron ore, copper and coal prices
dropped and costs rose.
Still, BHP, the world's No. 3 iron ore miner, said demand
fundamentals for the raw material remained strong in the short
to mid-term, a view evidently shared by second-ranked Rio Tinto
, which set aside $3.4 billion to expand iron
ore mining in Australia.
Shanghai rebar futures and iron ore indexes at 0727 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 4337 63.00 1.47
PLATTS 62 PCT INDEX 146.5 0.00 0.00
THE STEEL INDEX 62 PCT INDEX 144.7 -0.10 -0.07
METAL BULLETIN INDEX 144.48 0.26 0.18
********************
* Slow Chinese steel market limits ore buying
* BHP Billiton invests more on Australian iron ore business
* Vale says ship expansion plan on track despite China ban
By Manolo Serapio Jr
SINGAPORE, Feb 2 (Reuters) - Spot iron ore prices
steadied on Thursday, after spiking to two-month highs in the
previous session, with a slow steel market in China spurring
caution among buyers of the raw material.
Australian Pilbara iron ore fines were offered in China at
$141-$143 a tonne, cost and freight, and Newman fines quoted at
$144-$146, unchanged from Wednesday, according to Chinese
consultancy Umetal.
"There are a lot more inquiries, but few deals," said a
trader in China's eastern Shandong province. "Prices are a bit
high so some mills are choosing to wait before buying."
A weak outlook for steel demand in top consumer China has
trimmed appetite for iron ore, which has gained a modest 3
percent in the first month of 2012 after falling 19 percent in
2011.
Iron ore with 62 percent iron content .IO62-CNI=SI rose
0.3 percent to $142.80 a tonne on Wednesday, said Steel Index.
It was the highest level since Nov. 22, although further gains
are likely to be moderate unless Chinese buying picks up
strongly.
"The Chinese steel market is still slow, despite some
tentative price increases for some products, and mills say they
are reluctant to pay current levels for spot ore," the Steel
Index said.
Some mills will lose money if they buy iron ore and sell
steel products at current prices, especially the smaller
producers, said the Shandong-based trader.
The most-traded May rebar contract on the Shanghai Futures
Exchange edged up 0.8 percent to close at 4,318 yuan a
tonne, but still off the 3-1/2-month top of 4,347 yuan touched
on Monday.
Still, miners are confident that China's long-term demand
for iron ore will remain robust as the country continues to
invest heavily in infrastructure and housing, with the big
producers continuing to invest to boost shipments to China.
BHP Billiton , the world's third-biggest
iron ore miner, said it will spend a further $779 million to
expand its Australian iron ore business by constructing a new
outer harbor port and shipping facilities on the Indian Ocean.
BHP Billiton said the expansion will increase its annual
shipments from Australia's Port Hedland by 100 million tonnes.
Brazil's Vale said its plan to expand the world's
fleet of very large ore carriers nearly five-fold has not
changed since China banned the mega vessels in local waters to
protect its shipping industry.
Shanghai rebar futures and iron ore indexes at 0716 GMT
Contract Last Change Pct Change
SHANGHAI REBAR* 4318 33.00 0.77
PLATTS 62 PCT INDEX 144.5 0.50 0.35
THE STEEL INDEX 62 PCT INDEX 142.8 0.40 0.28
METAL BULLETIN INDEX 142.41 0.45 0.32
*In yuan/tonne
Index in dollars/tonne, show close for the previous trading day
******************************
IRON ORE CLOSES AT 3 MONTH HIGH
* Ample port stocks may limit iron ore price rise
* China steel output up 3.9 pct early Jan
By Manolo Serapio Jr
SINGAPORE, Jan 30 (Reuters) - Shanghai steel futures
rose to their highest level in 3-1/2 months on Monday as the
Chinese returned from a week-long Lunar New Year break, boosting
expectations steel producers may replenish iron ore stockpiles.
But the modest gain in steel futures, sizeable imported iron
ore stocks at Chinese ports and the likelihood that most buyers
may only return to the market later this month, suggest iron ore
may be in for a limited price rise.
The most-traded May rebar contract on the Shanghai Futures
Exchange rose 0.3 percent to 4,337 yuan a tonne by 0313
GMT, off an early high of 4,347 yuan, its loftiest since Oct.
13.
"That's a good sign for the spot market, for both steel and
iron ore ," said an iron ore trader in the port city of
Rizhao in China's eastern Shandong province.
"I'm very optimistic about steel prices next month, but I
don't see big gains which means iron ore prices will just
stabilise."
China was off to a slow start at the weekend after the
holiday, with steel billet in the key Tangshan area dropping 20
yuan to around 3,700 yuan a tonne, traders said.
"People are still trying to figure out where the market is
headed, and I don't expect a lot of deals until maybe later in
February," said an iron ore trader in Shanghai.
Offers for imported iron ore in China were steady on Monday,
with Australian Pilbara fines at $138-$140 a tonne, cost and
freight, and Indian 63.5/63-grade fines at $144-$147, said
Chinese consultancy Umetal.
"I hardly get any feedback from the market. I think steel
mills' inventories of iron ore are still sufficient," said the
Rizhao-based trader.
He added he was not in a hurry to sell an 80,000-tonne
Brazilian cargo and was waiting for a good offer.
Stockpiles of imported iron ore at major Chinese ports stood
at 98.41 million tonnes for the week ending Jan. 20, equivalent
to nearly two months' worth of Chinese imports.
Iron ore with 62 percent iron content .IO62-CNI=SI was
steady at $139.80 a tonne last week, according to Steel Index.
But firmer swaps prices last week point to a recovery in
spot rates in the near term, with nearby months keeping a
healthy premium over spot prices.
On Friday, the Singapore Exchange-cleared February contract
stood at $144.44 a tonne, March was at
$145.03 and April was at $144.56.
Investors are also keeping tabs on China's steel production
since slower growth in output late last year cut mills' appetite
for iron ore.
China's daily crude steel output rose 3.9 percent to 1.691
million tonnes in the first 10 days of January from late
December, the China Iron and Steel Association said on Sunday,
the highest level since late October.
