Fri, 22 Nov 03:46:00 GMT
* Limited Chinese buying interest as stockpiles rise
* Dalian iron ore set for third weekly loss
By Manolo Serapio Jr
SINGAPORE, Nov 22 (Reuters) - Spot iron ore prices are on track for a modest decline for the week, after three weeks of gains, on limited buying interest from Chinese mills that are wary steel demand is unlikely to perk up anytime soon.
Steel prices in China, the world's biggest consumer and producer, have fallen more than 5 percent in the past two months and have remained weak in November. Industry pricing leader Baoshan Iron and Steel <600019.SS> had kept prices flat for December, suggesting it was not confident demand would recover.
"Mills are not running slim on inventory and I feel that prices should drop because fundamentals are quite weak," said a Shanghai-based iron ore trader.
Benchmark 62-percent grade iron ore for immediate delivery in China's Tianjin port <.IO62-CNI=SI> eased 10 cents to $136.30 a tonne on Thursday, according to data compiler Steel Index.
Iron ore prices, down 0.4 percent so far this week, have been stuck in a tight $131-$138 since September.
"We are already overstocked because we have crossed half a million tonnes of cargo, but there's no need for us to panic given that the market's been really stable. So we're just waiting for better offers," said the Shanghai trader.
Inventories of imported iron ore at major Chinese ports rose last week to top 80 million tonnes amid higher seaborne supply, reflecting more output from main suppliers Australia and Brazil.
"In our view, it's entirely possible the combination of slowing Chinese domestic iron ore supply and the pre-winter steel mill iron ore restock cycle can support iron ore inventories at average-to-tight consumption ratios, hence supporting prices," Commonwealth Bank of Australia said in a note.
"But the creeping growth in seaborne supply over coming months cannot be ignored. It's for this reason we expect iron ore prices to ease gradually over coming months towards levels around $115-$125/tonne."
The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was nearly flat at 3,624 yuan
($595) a tonne by 0315 GMT, on course for a modest weekly gain.
At the Dalian Commodity Exchange, iron ore also for May delivery was off 0.2 percent at 933 yuan a tonne, heading for a third straight weekly drop.
Shanghai rebar futures and iron ore indexes at 0315 GMT
Contract Last Change Pct Change
SHFE REBAR MAY4 3624 +1.00 +0.03
DALIAN IRON ORE MAY4 933 -2.00 -0.21
THE STEEL INDEX 62 PCT INDEX 136.3 -0.10 -0.07
METAL BULLETIN INDEX 135.74 -1.59 -1.16
Dalian iron ore and Shanghai rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.0932 Chinese yuan)
(Editing by Himani Sarkar)
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