Spot iron ore prices extended gains on Wednesday as more
steel mills in China returned to the market to replenish stockpiles ahead of
the New Year, but a gloomy outlook for steel demand may limit the upside.
Spot prices have begun stabilising this week, with offers of
61.5 percent Pilbara fines being offered at $134-136/MT on Wednesday,
including cost and freight, compared with $132-134/MT from the previous day.
“More steel mills are making bookings before prices
rise further, driving up spot prices, but we are not sure how long this
recovery will sustain,” said an iron ore trader in Beijing.
Lower output and sluggish demand for steel during the winter
have forced mills and traders to remain cautious, and their reluctance to make
sizable bookings could limit the upside in prices.
“What I only expect is there will be a new wave of
price hikes in January, but I can't say for sure how much prices will be able
to rise as the macroeconomic situation hasn't changed fundamentally,” said
a second iron ore trader in Shenzhen city.
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