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PrintChina steel futures came off three-week highs on Thursday, trimming early gains amid sluggish Chinese demand which kept appetite for raw material iron ore in check.
Price offers for imported iron ore in top buyer China were steady on Thursday after top miner Vale sold cargoes on Wednesday at levels that were not too far off recent deals, traders said.
The most active steel rebar contract for October delivery on the Shanghai Futures Exchange closed up 0.2 percent at 4,102 yuan ($640) a tonne, after touching a session peak of 4,130 yuan, its loftiest since May 14.
Rebar tracked early rises in other commodities, spurred by hopes European policymakers would take action to aid debt-stricken Spain and that the U.S. Federal Reserve would roll out measures to buoy a patchy U.S. economic recovery.
But oil, copper and grains have since given up gains and were slightly lower in afternoon trading in Asia.
Rebar's modest rise, coupled with largely steady spot steel prices in China, suggest demand in the world's biggest steel consumer may be far from a recovery.
"A lot of people are still puzzled about the direction of the steel market," said a Shanghai-based iron ore trader. "We are not really seeing big price moves because people are unsure where the market's headed."
Mirae Asset Securities has said it was not seeing signs of a recovery in steel demand in the second half of the year with banks keeping a cautious stance towards lending, which is key to China's fixed-asset investment growth.
Benchmark iron ore with 62 percent iron content IODBZ00-PLT was unchanged at $133 a tonne on Wednesday, according to Platts reference price index.
Vale sold 205,800 tonnes of 65.04-percent grade Carajas iron ore fines at $143.05 a tonne in a tender on Wednesday and another 80,000 tonnes of 63.14-percent grade Guaiba sinter feed at $132.56 a tonne, prices largely similar to recent deals, traders said.
Unless steel prices bounce back significantly, iron ore prices may struggle to rise.
"The iron ore market is generally softening but in a very slow pace," said another trader in Shanghai.
"The supply side continues to rise but the demand side is not that active because mills are still seeing slow demand for steel products, so they would not like to take risks by buying too much material."
Iron ore shipments to China from Australia's Port Hedland rose 17 percent to 17.42 million tonnes in May from the previous month, based on port data released on Thursday.（Source：Reuters）
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