By Manolo Serapio Jr
SINGAPORE, Dec 19 (Reuters) - Spot iron ore prices dropped
to their lowest since the end of October as buying interest from
top importer China stalled amid sluggish steel demand that has
Slower steel demand along with tighter liquidity are
prompting some Chinese steel mills to sell iron ore cargoes back
into the market, aiming to turn stockpiles into cash before spot
prices fall further.
Benchmark 62-percent grade iron ore for immediate delivery
into China .IO62-CNI=SI fell for a sixth straight session on
Wednesday, down 0.7 percent to $133.40 a tonne - the lowest
since Oct. 31, according to data compiler Steel Index.
"Demand for steel is weak because of the cold weather and
some mills are selling some of their ore back in the spot market
but the price is not that cheap," said an iron ore trader in
Colder weather slows construction activity in China,
reducing demand from a major steel consuming sector.
The resale of iron ore cargoes is not unusual since mills
tend to unload some inventory back into the market every now and
then, but it shows how some cash-strapped steel producers are
coping with restricted availability of credit and softer demand.
China's benchmark seven-day bond repurchase contract rose
sharply on Thursday, pointing to tight liquidity in the banking
system, after the central bank declined to inject fresh funds
during open market operations.
The most-traded rebar for May delivery on the Shanghai
Futures Exchange closed nearly flat at 3,652 yuan
($601) a tonne on Thursday, after falling to a three-week trough
of 3,642 yuan.
Amid leaner steel demand, China's daily crude steel output
fell for the third straight 10-day period to a rate of 2.013
million tonnes in early December, the slowest pace since
mid-February, industry data showed earlier thi