By Manolo Serapio Jr
SINGAPORE, Jan 24 (Reuters) - Spot iron ore prices rose to
one-week highs as some Chinese steel mills continued to restock
ahead of the Lunar New Year holiday, although buying interest
Data showing activity in China's factory sector quickened to
its fastest in two years should back further gains in iron ore,
but steelmakers may only aggressively boost their inventories of
the raw material again if steel demand picks up pace.
The HSBC flash purchasing managers' index for China rose to
51.9 in January, the highest since January 2011, as
manufacturers received more local and foreign orders.
Shanghai steel rebar futures climbed to a seven-month high
on Thursday after the data, but soon surrendered gains to trade
lower. The most active rebar contract for May delivery on the
Shanghai Futures Exchange was down 0.8 percent at 4,020
yuan ($650) a tonne, after rising to 4,067 yuan, its loftiest
since June 26.
Benchmark iron ore with 62 percent iron content climbed 1.2 percent to $147.70 a tonne on
Wednesday, according to Steel Index. It was the highest level
since Jan. 15.
'Some mills are still replenishing, they still want cargo,
but they don't want the price to move up so much. That's why we
are seeing limited deals,' said an iron ore trader in Singapore.
Price offers for imported iron ore in China, the world's
biggest importer, were steady on Thursday.
'We have not bought any new cargoes. We're still clearing
all our stocks before Chinese New Year,' said a trader in
Shanghai, adding his company hopes to sell its remaining
40,000-50,000 tonnes of iron ore inventories at higher prices to
recoup losses from previous cargoes.
The reopening of Australian ports after a brief shutdown due
to a tropical storm will ease worries about supply in the spot
market, and could make this week's price gains fleeting.
Iron ore hit a 15-month top of $158.50 a tonne on Jan. 8 in
a rally that began in December as Chinese mills rebuilt
stockpiles. The price fell more than 8 percent before regaining
some ground this week.
More iron ore restocking by Chinese steelmakers just ahead
of the Lunar New Year holiday in mid-February could boost prices
further, although a sustained rise will hinge on the strength of
China's steel demand.
China's steel demand is expected to rise 3.1 percent in
2013, 0.6 percentage points higher than last year as the economy
recovers, the country's steel industry association said on
Shanghai rebar futures and iron ore indexes at 0401 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 4020 -33.00 -0.81
THE STEEL INDEX 62 PCT INDEX 147.7 +1.80 +1.23
METAL BULLETIN INDEX 148.99 +0.92 +0.62
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2180 Chinese yuan)
(Editing by Miral Fahmy)
Keywords: MARKETS IRONORE/
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