SINGAPORE/SHANGHAI, July 11 (Reuters) - Key China rebar futures hit a contract low on Wednesday, dogged by soft demand in the world's top steel consumer which has curbed appetite for raw material iron ore, keeping bids for spot cargoes weak.
Major miners such as Vale and BHP Billiton are offering several cargoes on the spot market, although traders expect the material to be sold at prices lower than previous deals.
"I don't think steel and iron ore prices have already hit bottom," said an iron ore trader in Shanghai.
"We should see some rebound in the latter half of this year, but gains will be limited as the economic growth remains low."
The most-traded rebar contract for January delivery on the Shanghai Futures Exchange fell as low as 3,906 yuan($610) per tonne, before closing down 0.3 percent at 3,928 yuan.
Demand for steel and iron ore in China is taking a hit along with the overall economy which likely grew in the second quarter at its slowest pace in three years. The government will release the April-June gross domestic product data on Friday.
"We are seeing more offers and bids today, but the bids suggest the mills are not in a hurry to buy. Some would buy if
the prices are acceptable to them," said another Shanghai-based trader.
Miner Rio Tinto is offering 61.5-percent grade Australian Pilbara iron ore fines at $137 a tonne via the platform run by the China Beijing International Mining Exchange, although one bid was just close to $135, the trader said.
Rio last sold Pilbara fines on the spot market at $136.21 per tonne on Monday, after initially offering them at $138, the
Vale is selling 175,000 tonnes of 65-percent grade Brazilian Carajas fines at a tender that closes later on Wednesday, with traders expecting the price to slip to around $146 from above $147 at a previous deal for the same grade.
BHP Billiton is offering 57.7-percent grade Australian Yandi fines and 61.5-percent MAC fines, with Yandi seen being sold at around $124 a tonne, about 50 cents less than a prior deal, traders said.
The majority of Chinese steel mills are still purchasing more iron ore from stockpiles at ports which are cheaper than
fresh cargoes amid uncertainty on when steel demand will pick up.
China, which buys around 60 percent of the world's iron ore, bought 8.7 percent less of the raw material in June than May, the fourth month-on-month decline in imports this year, data showed on Tuesday.
"Given that iron ore inventory is now already coming down at steel mills, we probably will see some strength in imports in the second half of the year from recent lows," said Macquarie analyst Bonnie Liu.
Shanghai rebar futures and iron ore indexes at 0704 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3928 -12.00 -0.30
PLATTS 62 PCT INDEX 136 -0.50 -0.37
THE STEEL INDEX 62 PCT INDEX 135.5 +0.00 +0.00
METAL BULLETIN INDEX 137.01 +0.74 +0.54
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3659 Chinese yuan)