SHANGHAI, Dec 19: Spot iron ore was unchanged on Tuesday, holding at a more than five-month high that was hit after a two-week rally, although a slowdown in steel price gains this week in top consumer China may prompt buyers to curb new orders.
The swift rally in iron ore—up almost 13 percent in the last 10 sessions—may also dent buying interest for the steelmaking ingredient from Chinese mills.
The benchmark index for 62-percent grade iron ore stood unchanged at $132.2 a tonne on Tuesday, its highest level since mid-July that was first hit on Monday, according to data provider the Steel Index.
Iron ore prices have been boosted by an improved outlook for demand from China as growth revives in the world’s second largest economy, while worries supplies may be tight in the first quarter due to seasonal cyclones and rain in top exporters Australia and Brazil have also supported.
‘I think the rise is fairly speculative at the moment. Although the outlook has definitely picked up over the last month, we feel it does not justify the size of the rise in spot prices over the last couple of weeks,’ said Christopher Ellis, an analyst with Metal Bulletin Iron Ore Index, one of the three major global indices providers.
‘The gains have also been on the back of relatively thin transacted volumes in the spot market which tells us that only a limited part of the Chinese market is able or willing to buy at the relatively high prices,’ Ellis said.
Some market participants said the $135 a tonne level could be the ceiling for iron ore prices in the coming weeks. A drop off in steel price gains this week should also cap iron ore.
The most active May rebar contract on the Shanghai Futures Exchange was down 0.34 percent at 3,806 yuan ($610) a tonne by midday break on Wednesday. Rebar surged almost 8 percent over the last two weeks, but prices have risen only 1.7 percent so far this week.
Price offers for imported Australian ore cargoes with 62-percent iron grade in China, including freight, stood unchanged at $131-132 a tonne on Wednesday from Tuesday, said Beijing-based consultancy Umetal.
On Monday, a cargo of 165,000 tonnes of Australian fines with about 61 percent iron grade was sold at $135 a tonne, up $4 from last Friday.
‘Most steel mills still prefer to buy from the existing port inventories, and they are reluctant to make much forward bookings at surging prices,’ said an iron ore trader in Shanghai.
Spot prices of square billet, a semi-finished product to be rolled to steel products, dipped 30 yuan to 3,180 yuan a tonne in Tangshan, a main steel producing region in northern China, on Wednesday from Tuesday.
(AGENCIES)
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