Thursday, November 11,
Iron ore offers edged lower on Thursday as buyers stepped back after prices surged to near six-month peaks, weighing whether steel prices have advanced enough to support higher raw material costs.
Indian ore with 63.5 percent iron content was offered at around $164 a tonne, C&F China, on Thursday.
A jump in Shanghai steel rebar futures to 15-month peaks on Tuesday fueled a rally in iron ore prices, with The Steel Index iron ore benchmark rising $2 to $160.30 a tonne on Wednesday, cost and freight in China, the highest since May 18.
There’s no sufficient clarity yet as to whether physical steel demand is picking up to the degree that some people are suggesting or whether the surge in steel futures has been more speculative in nature, in which case, it may be more inclined to see retracements.
The lack of a sharp correction suggests rebar futures may have some more momentum to rise further as more funds finds their way into global commodities, an analyst said.
“People are buying commodities not only based on their demand-supply picture but also based on how much money they have,” said Judy Zhu, commodity analyst at Standard Chartered Bank in Shanghai.
“And they are trying to find a way to place their money from agricultural commodities to base metals to steel. I think we’re seeing a lot of speculative activity in the market right now.”
Some market players were expecting the bullish trend to continue if Shanghai rebar prices sustain recent gains, predicting iron ore spot prices to touch $170 a tonne, although others say that might turn off Chinese mills.
“I must say $170 is really high, Inventory at mills is still strong. I doubt if there will be any takers,” said an iron ore trader in Singapore.
Prices for iron ore forward swaps also retreated on Wednesday after recent sharp gains. The November contract cleared by the Singapore Exchange SGXIOc1 slid 4.5 percent to $156.60 a tonne and the December contract SGXIOc2 fell 3.7 percent to $157.90 a tonne.
Source: Reuters
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