Monday, November 01,
A key iron ore price index slipped to near three-week lows on lean demand from top buyer. China even as tight supplies of higher grade material kept price offers firm on Monday.
The Steel Index 62 percent iron ore benchmark dropped 50 cents to $149.10 a tonne, cost and freight delivered in China, on Friday, it’s lowest since Oct. 11.
But offers for Indian ore with 63-63.5 percent iron content stayed at $156-$158 a tonne on Monday, C&F China.
“Chinese near-term demand remains muted but supply is tight,” Commonwealth Bank of Australia said in a note.
“If Chinese mills try to increase stocks ahead of winter, spot prices will be supported over the next few months.”
Recent deals in the physical market suggest Chinese mills were slowly building stocks with output of domestic mines usually slowing in winter which lasts through February, traders said.
“Mills are building stocks but they dislike the current price,” said an iron ore trader in China’s northern city of Hangzhou.
“Prices rose too quickly last month and they were not mentally prepared for that. Maybe they would like the price to fall by $5 to $10 from current levels or if the price stabilizes and they get used to it, more mills will buy ore,” he said.
Deals last week include 50,000 tonnes of 62/61 Indian fines sold at $148 a tonne, C&F, he said. Indian iron ore exporter Sesa Goa sold 90,000 tonnes of 58/58 grade at $122 per tonne, C&F, he added.
“Deals are hard to conclude at this time and negotiations usually last three or four days,” the trader said.
Prices of forward swaps jumped on Friday ahead of the data, reflecting expectations prices will bounce back in the remaining months of the year.
The Singapore Exchange-cleared November contract SGXIOc2 rose $3.50 to $147.62 a tonne, and the December contract SGXIOc3 climbed $3.25 to $145.50 a tonne.
Source: Reuters
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