November 29, 2011 / 5:09 AM / 8 years ago

Iron Ore-Spot extends losses as China buying stalls

* Sellers cut iron ore offer prices by $2-$3 a tonne
    * Rio Tinto, BHP Billiton sell ore at lower prices
    * Iron ore to range between $120-$180 near term-Vale
    * China daily steel output steady in mid-Nov

 (Adds China mid-Nov steel output, updates table)	
    By Manolo Serapio Jr	
    SINGAPORE, Nov 29 (Reuters) - Sellers of iron ore
slashed prices further on Tuesday as spot rates fell the most in
a month, reflecting slack demand for the steelmaking ingredient
from top consumer China.	
    Sluggish Chinese steel demand has kept mills from buying
more iron ore after replenishing run-down inventories in the
first three weeks of November soon after spot prices fell to
22-month lows of below $117 a tonne.           	
    Iron ore with 62 percent iron content fell 6 percent to a
three-week low of $132 a tonne on Monday, according to the Steel
Index .IO62-CNI=SI, its steepest drop since Oct. 25 when it
slid 7.2 percent. Monday's fall marked the fifth straight day of
losses for iron ore.	
    "Most of the steel mills in China have finished restocking
last week, so now there's a lot of spot cargoes for sale," said
an iron ore trader in the port city of Rizhao in China's eastern
province of Shandong.	
    Highlighting slow demand for steel in China, the world's
biggest consumer and producer of the building material, average
daily output of crude steel stood at 1.664 million tonnes over
Nov. 11-20, unchanged from the previous 10 days, according to
data from the China Iron and Steel Association. 
  	
    	
    BIG HEADACHE	
    Global miners Rio Tinto  and BHP Billiton
sold material at lower prices via tenders on Monday, traders
said, fuelling expectations spot prices would fall further.	
    BHP Billiton, the world's No. 3 iron ore producer, sold
Newman iron ore fines at $137.50 a tonne, cost and freight, down
from $144 a week ago, the Chinese trader said.	
    Rio Tinto sold Pilbara fines at $132 a tonne, C&F, lower
than previous deals of between $136 and $137, he said.	
    "Rio had to postpone the tender earlier, due to low bids
from buyers, but prices will only continue to drop," said a
physical iron ore trader in Shanghai.	
    The trader said his company had decided to hold on to a
100,000-tonne cargo, including 80,000 tonnes of 64-percent grade
Brazilian iron ore fines purchased at $150 a tonne, because
prices had fallen to $140 or even lower.	
    "That's a big headache for us now," said the Shanghai
trader.	
    Offers for Pilbara fines in China dropped $3 to $132-$134 a
tonne, C&F, on Tuesday, while Newman fines were off $2 at
$137-$179, said Chinese consultancy Umetal.	
    But prices may recover next month when Chinese mills start
restocking for the winter, with the momentum likely to be
sustained just ahead of the Lunar New Year in late January, said
the Shandong-based trader.	
    Iron ore will continue to sell in the range of $120 to $180
in the near term as Asia builds its infrastructure and Western
steelmakers stagnate, said Jose Carlos Martins, executive
director for iron ore and strategy at top iron ore miner Vale
.	
    "For the bigger part of this year, the price was around
$180," he said. "I don't believe in the next year the price will
go above $180 or below $120. The scenario is moderate to good,"
Martins told Reuters. 	
     	
  Shanghai rebar futures and iron ore indexes at 0720 GMT
                                                                                    
  Contract                          Last    Change  Pct Change
  SHANGHAI REBAR*                   4125     41.00        1.00
  PLATTS 62 PCT INDEX              133.5     -3.50       -2.55
  THE STEEL INDEX 62 PCT INDEX       132     -8.40       -5.98
  METAL BULLETIN INDEX            135.86     -2.08       -1.51
                                                                                    
  *In yuan/tonne
  #Index in dollars/tonne, show close for the previous trading day
0 : 0
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