Save
PrintChina steel futures steadied on Thursday, but posted their steepest monthly fall in eight months in May after losses fuelled by worries over weak steel demand in top market China that sent iron ore to its worst showing since October.
But this week's gains in steel prices, both spot and futures, have raised hopes iron ore prices may rise further as Chinese mills rebuild stockpiles after staying out of the market in recent weeks.
The most-traded rebar contract for October delivery on the Shanghai Futures Exchange closed nearly flat at 4,103yuan ($650) a tonne. On a continuous basis, the contract fell more than 4 percent in May, the most since September.
Spot iron ore prices edged higher and traders see more gains ahead.
"We believe further upside is possible because mills have not been buying for the past four weeks," said a Hong Kong-based iron ore trader.
"We are also seeing a jump in enquiries since this morning, looking for Australian material arriving into China in June."
A 100,000-tonne cargo of Australian 62-percent iron ore fines was traded on the GlobalOre platform at $137 a tonne, up from $134.50 on Wednesday when GlobalOre began trading, traders said.
GlobalOre, backed by top iron ore miners BHP Billiton, Vale and Rio Tinto and Chinese steelmakers including Baoshan Iron and Steel, began trading less than a month after China launched its first iron ore physical trading platform in a bid to boost its price-setting influence in its biggest commodity import by volume.
REVIVING APPETITE
BHP, Vale, Rio Tinto and Baosteel, along with other miners and steel producers, are also members of the China Beijing International Mining Exchange (CBMX) which runs the Chinese platform that debuted on May 8.
Traders said they have not heard of any deal so far on CBMX after two cargoes, one Australian and one Brazilian, were sold on the platform on Wednesday.
Since CBMX's debut, a total of 1.6 million tonnes have been sold on the platform, Dong Chaobin, president of the exchange, told an industry conference in Singapore.
Dong declined to say what kind of volumes CBMX expects to draw in the future but said: "We believe we will have satisfactory results."
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI climbed 1.7 percent to $134.80 a tonne on Wednesday, but is down more than 7 percent so far in May, its steepest decline since October.
Traders expect Chinese appetite for iron ore to revive, with steel mills still running at full capacity, which should keep daily crude steel output near record highs at around 2 million tonnes in June.
That could remain a drag on steel prices with demand slow to pick up.
"While the Chinese steel market has seen prices rallying over the past few days on Beijing's promises of stimulus, we do not see a fundamental turn in pricing in China as production is likely to continue to outpace demand," Steel Market Intelligence said in a note.
"We believe that Chinese steelmakers are unlikely to make meaningful production cuts with weaker raw material prices, reluctance to layoff trained workers, and 'hope' that Beijing will create demand."
To prevent a further slowdown, China announced a series of policy steps in recent months, including allowing banks to set aside less money as reserves and fast tracking approval for infrastructure projects.
Hopes are rising Beijing could unleash a massive stimulus budget, but the country's top policy advisers said the country does not need one since aggressive spending now could do longer-term harm.（Source: Reuters）
Copyright © 2013 Ferro-Alloys.Com. All Rights Reserved. Without permission, any unit and individual shall not copy or reprint!
- [Editor:editor]
Daily News
Research
Magazine
Company Database
Customized Database
Conferences
Advertisement
Trade
Tell Us What You Think