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Cliffs Natural Resources Inc. Message Board

  • tim.texas12 tim.texas12 Dec 6, 2012 11:41 AM Flag

    UPDATE 1-Iron ore swaps firm, traders bet on post-new year spike

    Thu Dec 6, 2012 12:43pm IST

    * Spot iron ore prices bounce further off 6-week lows
    * Iron ore may rise to $130 after Chinese New Year-FIS

    (Updates rebar price in table)
    By Manolo Serapio Jr
    SINGAPORE, Dec 6 (Reuters) - Prices of iron ore swaps
    steadied near three-week highs on Thursday as traders bet demand
    for the steelmaking raw material would rise after the Chinese
    New Year break in February.
    Hopes are growing that China's economy will be in better
    shape in the first half of 2013 after its new leader, who takes
    over in March, announced his commitment to pro-growth policies,
    boding well for demand in the world's biggest steel consumer.
    Iron ore prices in the physical market turned higher this
    week after hitting six-week lows as traders began picking up
    cargoes for delivery over the next two months on expectations
    demand from top buyer China will recover.
    "What we're looking at now in the physical market are
    cargoes to be delivered mid-January to mid-February. So you've
    got a few traders taking some position cargoes ahead of the
    Chinese New Year," said Rory MacDonald, iron ore broker at
    Freight Investor Services (FIS).
    "While sentiment on December delivery was bearish, we're now
    looking at Jan-Feb delivery so the sentiment's better. There's
    always an expectation that you'll get a bit of a price spike
    after the Chinese New Year, so there is the same anticipation
    this time around."
    A fall in Chinese steel prices this month to levels last
    seen in September prompted iron ore buyers to limit spot
    purchases. That pushed down the price of benchmark 62-percent
    grade iron ore .IO62-CNI=SI to $115.30 per tonne on Monday,
    its lowest since Oct. 19.
    The price has since recovered to $117.90 on Wednesday, based
    on data from information provider Steel Index. Price offers for
    imported iron ore cargoes in China rose by $1-$2 per tonne on
    Thursday, according to Chinese consultancy Umetal.

    RISING OPTIMISM
    Chinese steel mills normally stock up on iron ore ahead of
    the week-long Lunar New Year break that falls in February next
    year, and buying extends after the holiday.
    MacDonald said he expects the price of iron ore to rise
    above $130 after the Chinese holiday. "We may even challenge
    $140," he added.
    The optimism is reflected in swaps, with the January
    contract holding at $117 in early deals in Asia,
    after settling at $117.19 on Wednesday, its highest since Nov.
    13.
    The first-quarter price was at $117.25 versus Wednesday's
    close of $117.06, traders said.
    But some Chinese traders say many steelmakers are still not
    too keen on buying forward cargoes, unsure of the outlook for
    future demand.
    "Many steel mills, which are not stuck in long-term
    contracts with miners, are not willing to make forward bookings
    and would rather buy for immediate use from the existing
    inventories at ports. And also they are trying to keep very low
    inventories," said a Beijing-based iron ore trader.
    Stocks of iron ore at Chinese ports fell below 80 million
    tonnes last week for the first time since December 2010,
    Commonwealth Bank of Australia has said.

    Shanghai rebar futures and iron ore indexes at 0704 GMT

    Contract Last Change Pct Change
    SHFE REBAR MAY3 3595 -24.00 -0.66
    PLATTS 62 PCT INDEX 119.5 +1.00 +0.84
    THE STEEL INDEX 62 PCT INDEX 117.9 +0.80 +0.68
    METAL BULLETIN INDEX 119.43 +1.56 +1.32

    Rebar in yuan/tonne
    Index in dollars/tonne, show close for the previous trading day

    (Additional reporting by Ruby Lian in Shanghai; Editing by
    Himani Sarkar and Miral Fahmy)

 
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