Iron ore hits 3-month high in slow climb, firm China buying

Tue Nov 6, 2012 5:09am GMT
 

* Vale has sold 1.8 mln T iron ore to China since Oct.
29-trader
    * Port Hedland shipments to China up 16.5 pct in Oct
    * China iron ore port stocks fall for 4th week in a row

    By Manolo Serapio Jr
    SINGAPORE, Nov 6 (Reuters) - Benchmark iron ore touched
three-month highs of above $120 a tonne on sustained buying
interest from Chinese steelmakers refilling raw material
inventories, although the slow increase in prices suggests mills
were in no rush to stock up.
    Market participants were keen on what China's leadership
change, which is happening later this week, has in store for the
economy and its vast steel sector, with some hoping for
pro-growth measures to be introduced to boost demand in the
world's biggest steel consumer.
    Iron ore with 62 percent iron content .IO62-CNI=SI, the
industry benchmark, gained 0.3 percent to $120.50 a tonne on
Monday, the highest since July 24, based on data from Steel
Index.
    The price first hit three-month peaks on Thursday, before
slipping on Friday and regaining ground on Monday, reflecting a
largely stable market backed by Chinese buying.
    "We're seeing a balanced market. Buyers are in no rush to
buy but they will take cargoes if the prices are not too high,"
said an iron ore trader in Shanghai.
    "On the other side, it's difficult for miners to push up
prices in a big way given how fragile demand is at the moment."
    Price offers for imported cargoes in China were unchanged,
although traders say some mills are snapping up fresh seaborne
shipments versus cheaper port stocks.
    "There could be a temporary shortage of certain iron ore
grades at the ports, that why even if there's a $1-$2 gap
between new cargoes and port stocks, the buying interest for
seaborne is higher," said another Shanghai-based trader.
    Inventories of iron ore at major Chinese ports fell last
week for a fourth week running, standing at 93.3 million tonnes
SH-TOT-IRONINV, data from Chinese consultancy Steelhome
showed.
    Top iron ore miner Vale has sold several cargoes
on the spot market, totalling 1.8 million tonnes since late
October, the second trader said.
    Vale is selling two more on Tuesday - a 176,000-tonne cargo
of 64-percent grade iron ore pellets and 146,000 tonnes of
62.8-percent iron ore fines, traders said.
    Most of those shipments, including cargoes from BHP Billiton
  and Rio Tinto , were sold at
prices either slightly firmer than previous tenders or little
changed, traders said.
    Iron ore shipments to China from Australia's Port Hedland
rose 16.5 percent to 17.63 million tonnes in October from
September, port authority data showed. 
    "We have sold almost one third of our stocks," said the
first trader whose company has slightly more than 200,000 tonnes
of iron ore cargoes at Chinese ports.
    "We are still staying away from new purchases. We want to
see what happens to China after the leadership change."
    Ahead of China's leadership transition, investors were also
exercising caution before Tuesday's U.S. presidential election,
with most commodity prices, including Shanghai steel, trapped in
narrow ranges.
    Shanghai rebar futures were down 0.3 percent at
3,631 yuan ($580) a tonne by the midday break.   
    
  Shanghai rebar futures and iron ore indexes at 0450 GMT
                                                                                 
  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY3                   3631    -10.00        -0.27
  PLATTS 62 PCT INDEX                122     +0.00        +0.00
  THE STEEL INDEX 62 PCT INDEX     120.5     +0.40        +0.33
  METAL BULLETIN INDEX            121.66     +0.23        +0.19
                                                                                 
  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 
($1 = 6.2454 Chinese yuan)

 (Editing by Miral Fahmy)

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