By Manolo Serapio Jr
SINGAPORE, Feb 5 (Reuters) - Spot iron ore prices rose to
three-week highs as traders and Chinese steel mills stocked up
ahead of next week's Lunar New Year holiday, although the upward
momentum may lose steam as market activity winds down.
Price offers for imported iron ore cargoes in China
increased by a dollar per tonne on Tuesday, but deals have been
'There aren't many buyers in the market right now, most of
them are already in a holiday mood,' a Shanghai-based physical
iron ore trader said. 'But we expect a strong opening for the
market after the holiday.'
Hopes that steel demand in China, the world's biggest
consumer and producer, will perk up after the Feb. 11-15 Spring
Festival pushed up steel prices to nine-month highs on Monday,
supporting appetite from producers for raw material iron ore.
Benchmark iron ore with 62 percent iron content rose 0.7 percent to $154.20 a tonne on Monday,
according to data provider Steel Index.
That was the highest price for iron ore since Jan. 14, and
just about $4 away from its 2013 peak, although traders and
analysts were unsure whether it can match or top that level as
early as this week.
'With Chinese New Year approaching, last week's panic buying
of ore is beginning to recede, although we believe that both
iron ore and steel warehouse stocks in China will require
further replenishing ahead of the March construction season,'
Standard Bank said in a note.
Apart from the seasonal boost, the Chinese economy is also
regaining momentum after seven quarters of slower growth as
evidenced by brisk manufacturing data for January, which bodes
well for steel demand.
But Shanghai steel futures eased on Tuesday after hitting
nine-month highs on Monday, while spot steel prices in China
were mostly steady.
The most actively traded May rebar contract on the Shanghai
Futures Exchange was down 0.4 percent at 4,183 yuan
($670) a tonne by the midday break. Rebar, used in construction,
hit an intraday high of 4,235 yuan on Monday, its loftiest since
May 2, 2012.
The iron ore swaps market was similarly subdued, with early
deals pointing to lower prices after recent steep gains.
The Singapore Exchange-cleared February contract
traded at $154 a tonne, after settling at $155.50 on Monday,
brokers said. The March contract slipped to $149 from
$153.33, they said.
Market participants seem to be taking stock of the situation
after recent gains and ahead of the long holiday in China, said
Jamie Pearce, head of iron ore broking at SSY Futures.
'Physical market has been fairly quiet. I think some traders
are holding out to post-Chinese New Year to make the next move,'
Volume cleared by the SGX, the world's top clearer of iron
ore swaps, fell to 757,500 tonnes on Monday from 1.575 million
tonnes on Friday, which was the highest single-day volume since
early September, based on data from the exchange's website.
Shanghai rebar futures and iron ore indexes at 0405 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 4183 -18.00 -0.43
THE STEEL INDEX 62 PCT INDEX 154.2 +1.00 +0.65
METAL BULLETIN INDEX 154.79 +1.45 +0.95
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2328 Chinese yuan)
(Editing by Himani Sarkar)
Keywords: MARKETS IRONORE/
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