SINGAPORE, Oct 30: Chinese iron ore futures gained on Wednesday after a seven-day decline as Shanghai steel prices edged off four-month lows, although the modest increases suggest investors remain cautious on the outlook for demand amid a tepid steel market.
Appetite for iron ore cargoes for immediate delivery to China was limited on expectations prices could drop further, traders said, with spot rates drifting to their lowest level since mid-September.
The most briskly traded iron ore contract for May delivery on the Dalian Commodity Exchange was up 0.4 percent at 921 yuan ($150) a tonne by 0340 GMT. It touched 913 yuan on Tuesday, its lowest since the contract debuted on Oct. 18.
At the Shanghai Futures Exchange, the most-active May rebar rose 0.7 percent to 3,619 yuan a tonne, after falling to 3,575 yuan on Monday, its weakest since June 27.
‘These gains are largely in line with firmer equities, but demand for iron ore in the physical market remains weak,’ said a trader in China’s eastern Shandong province.
‘We’re only looking to buy Dalian when the price comes down to 900 yuan.’
Iron ore for immediate delivery in China’s Tianjin port <.IO62-CNI=SI> slipped 0.4 percent to $131.30 a tonne on Tuesday, the lowest since Sept. 17, according to data provider Steel Index.
‘The general feeling is that the market will continue to drop especially for lower grade cargoes of between 56-58 percent (iron content) where there’s plenty of supply,’ said a Shanghai-based trader.
Global miner BHP Billiton sold a cargo of Australian 57.7-percent grade Yandi iron ore fines at $119.20 per tonne at a tender on Tuesday, down from $123.66 at a sale in mid-October, traders said.
BHP is selling another 80,000 tonnes of 62.7-percent grade Newman fines at a tender closing later on Wednesday.
BHP last week increased its iron ore output target for fiscal 2014 to 212 million tonnes from a previous goal of 207 million tonnes, joining other major producers in expanding production in hopes of capturing more of a slower-growing Chinese market.
(agencies)
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