Reuters reported that Shanghai steel futures ticked higher recently but posted a weekly loss for a third straight week amid slow Chinese demand, which has trapped iron ore prices in tight ranges over the past two weeks.

 

Despite sluggish steel demand in China, the world biggest consumer and producer, the country steel output remains high as mills tend to continue to produce more, even at thin margins, unless they see prices dropping sharply and on a sustained basis. That meant steady demand for raw material iron ore, keeping the price from falling sharply but the lean appetite also capped its upside.

 

The most active rebar contract for October delivery on the Shanghai Futures Exchange closed up 0.4% at CNY 4,256 per tonne after earlier hitting a two-month low of CNY 4,233. Despite the gain, construction-used rebar dropped 0.6% for the week.

 

A Singapore-based trader said "The fundamentals haven't really changed. There's still an oversupply of steel in the market and demand is far from stellar."

 

China daily crude steel output stayed above 2 million tonnes in mid-April based on estimates by industry group China Iron and Steel Association after hitting a record high of 2.031 million tonnes a day in the first 10 days of last month.

 

In the past two weeks, iron ore has ranged between USD 144 and USD 148 as buyers were cautious in building up stockpiles and prices at recent sale tenders by global miners have mostly either dropped or steadied from previous sales.

 

A purchasing manager for an iron ore trading firm in Shanghai said some Chinese steel mills prefer to buy material stockpiled at ports which is USD 4 to USD 5 per tonne cheaper than fresh seaborne cargoes. With no urgency among mills to stock up many find current market prices still steep.

 

The Shanghai manager said "We have almost cleared our stocks in ports, but we have not decided to buy any new shipment yet. It's really hard for us to make a decision to buy because it's very difficult to resell cargo at current price levels."

 

The manager said "If we know where the market is headed, we will probably be more decisive, but right now this market has no clear direction."

 

Traders said global miner BHP Blliton sold two cargoes at a tender on Thursday at prices that were mostly little changed from previous deals. BHP sold 90,000 tonnes of Newman iron ore fines at USD 149 a tonne up by 50 cents and 80,000 tonnes of MAC fines at USD 145 which was down 50 cents from a prior sale. Prices include freight costs.(Source: Reuter)