Iron ore at one-month high, set for best week in 10 months-Shanghai Metals Market

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Iron ore at one-month high, set for best week in 10 months

Industry News 06:26:31PM Jun 27, 2014 Source:SMM

SINGAPORE, June 27 (Reuters) - Iron ore rose to its highest level in nearly a month and was on track for its biggest weekly increase since August as buying interest gained momentum after a 30 percent fall in prices this year.

Iron ore futures in top consumer China steadied after touching the highest in a month on Friday, but still gained almost 6 percent for the week, spurred by hopes that an improved outlook for the world's No. 2 economy may strengthen demand while supply has probably peaked.

"I think we've passed the bottom," said Mark Pervan, head of research at Australia and New Zealand Banking Group.

Most global miners have already hit their increased capacity so there is unlikely to be another substantial increase in supply, while Chinese mills that are running low on iron ore inventory may restock more in the second half of the year, he said.

Benchmark 62 percent grade iron ore for immediate delivery to China <.IO62-CNI=SI> climbed 1.7 percent to $95.30 a tonne on Thursday, its highest since May 29, based on data compiled by Steel Index.

Iron ore has gained 3.5 percent so far for the week, already its largest increase since mid-August.

"I think we'll probably reach $100 in the near term. It's not out of the question. We're coming from an oversold position and $100 is still a cheap market," said Pervan.

A decline in stocks of iron ore sitting at China's ports may boost prices further, he said.

Inventory of imported iron ore at 44 Chinese ports fell to 112.65 million tonnes as of Friday, from a record high 113.65 million tonnes the week before, according to Steelhome, which tracks the data. The 1 million tonne drop was the biggest weekly fall in stocks this year.

Iron ore, the top business for global miners Vale , Rio Tinto and BHP Billiton , has stayed below $100 since May 19, falling to a 21-month trough of $89 on June 16.

Prices have since recovered, helped by gains in Dalian futures amid renewed optimism on the Chinese economy after a survey on Monday showed factory activity expanded in June for the first time in six months.

Iron ore for delivery in September on the Dalian Commodity Exchange closed 0.1 percent lower at 707 yuan ($110) a tonne, after hitting a session high of 719 yuan earlier, its highest since May 28. For the week, the contract has risen 5.9 percent.


AGGRESSIVE BIDS

Prices for spot cargoes from Australia and Brazil rose this week in a flurry of deals with most of the shipments snapped up by traders, traders said.

"Some big trading companies in China need to pay their bank loans by the end of this month so they need to sell as much cargo as they can," said a trader in Shanghai.

"For them to ensure good value for their cargo they also need to ensure that the price doesn't go down, so they bid aggressively for cargoes on tender."

A cargo of Australian 61 percent grade Pilbara iron ore fines was sold at around $95.50 a tonne at a tender on Thursday, up from $93 earlier in the week, traders said.

"If this rally has legs, we will know when July starts next week and my suspicion is the rally won't sustain because market fundamentals haven't really changed," the Shanghai trader said.

Despite this week's gain, the benchmark iron ore price is still down by 29 percent this year.

BHP said this week it was looking at more job cuts at its Australian iron ore division to reduce costs as ore prices slump and pressure mounts to rein in spending. Smaller Australian miner Atlas Iron Ltd said on Thursday it has cut about 30 jobs. [ID:nL4N0P50MS] [ID:nL4N0P71YV]

The most-traded rebar contract for October delivery on the Shanghai Futures Exchange ended down 0.4 percent at 3,088 yuan per tonne, after peaking at 3,122 yuan, also its highest since late May.


Shanghai rebar futures and iron ore indexes at 0720 GMT

Contract Last Change Pct Change

SHFE REBAR OCT4 3088 -12.00 -0.39

DALIAN IRON ORE DCE DCIO SEP4 707 -1.00 -0.14

SGX IRON ORE FUTURES JULY 95.78 -1.53 -1.57

THE STEEL INDEX 62 PCT INDEX 95.3 +1.60 +1.71

METAL BULLETIN INDEX 95.72 +2.75 +2.96

Dalian iron ore and Shanghai rebar in yuan/tonne

Index in dollars/tonne, show close for the previous trading day

($1 = 6.2168 Chinese Yuan Renminbi)


(Editing by Muralikumar Anantharaman, Sunil Nair and Prateek Chatterjee)

((manolo.serapio@thomsonreuters.com)(+65 6870 3884)(Reuters Messaging: manolo.serapio.thomsonreuters.com@reuters.net))

Key Words:  MARKETS IRONORE/ 

Iron ore at one-month high, set for best week in 10 months

Industry News 06:26:31PM Jun 27, 2014 Source:SMM

SINGAPORE, June 27 (Reuters) - Iron ore rose to its highest level in nearly a month and was on track for its biggest weekly increase since August as buying interest gained momentum after a 30 percent fall in prices this year.

Iron ore futures in top consumer China steadied after touching the highest in a month on Friday, but still gained almost 6 percent for the week, spurred by hopes that an improved outlook for the world's No. 2 economy may strengthen demand while supply has probably peaked.

"I think we've passed the bottom," said Mark Pervan, head of research at Australia and New Zealand Banking Group.

Most global miners have already hit their increased capacity so there is unlikely to be another substantial increase in supply, while Chinese mills that are running low on iron ore inventory may restock more in the second half of the year, he said.

Benchmark 62 percent grade iron ore for immediate delivery to China <.IO62-CNI=SI> climbed 1.7 percent to $95.30 a tonne on Thursday, its highest since May 29, based on data compiled by Steel Index.

Iron ore has gained 3.5 percent so far for the week, already its largest increase since mid-August.

"I think we'll probably reach $100 in the near term. It's not out of the question. We're coming from an oversold position and $100 is still a cheap market," said Pervan.

A decline in stocks of iron ore sitting at China's ports may boost prices further, he said.

Inventory of imported iron ore at 44 Chinese ports fell to 112.65 million tonnes as of Friday, from a record high 113.65 million tonnes the week before, according to Steelhome, which tracks the data. The 1 million tonne drop was the biggest weekly fall in stocks this year.

Iron ore, the top business for global miners Vale , Rio Tinto and BHP Billiton , has stayed below $100 since May 19, falling to a 21-month trough of $89 on June 16.

Prices have since recovered, helped by gains in Dalian futures amid renewed optimism on the Chinese economy after a survey on Monday showed factory activity expanded in June for the first time in six months.

Iron ore for delivery in September on the Dalian Commodity Exchange closed 0.1 percent lower at 707 yuan ($110) a tonne, after hitting a session high of 719 yuan earlier, its highest since May 28. For the week, the contract has risen 5.9 percent.


AGGRESSIVE BIDS

Prices for spot cargoes from Australia and Brazil rose this week in a flurry of deals with most of the shipments snapped up by traders, traders said.

"Some big trading companies in China need to pay their bank loans by the end of this month so they need to sell as much cargo as they can," said a trader in Shanghai.

"For them to ensure good value for their cargo they also need to ensure that the price doesn't go down, so they bid aggressively for cargoes on tender."

A cargo of Australian 61 percent grade Pilbara iron ore fines was sold at around $95.50 a tonne at a tender on Thursday, up from $93 earlier in the week, traders said.

"If this rally has legs, we will know when July starts next week and my suspicion is the rally won't sustain because market fundamentals haven't really changed," the Shanghai trader said.

Despite this week's gain, the benchmark iron ore price is still down by 29 percent this year.

BHP said this week it was looking at more job cuts at its Australian iron ore division to reduce costs as ore prices slump and pressure mounts to rein in spending. Smaller Australian miner Atlas Iron Ltd said on Thursday it has cut about 30 jobs. [ID:nL4N0P50MS] [ID:nL4N0P71YV]

The most-traded rebar contract for October delivery on the Shanghai Futures Exchange ended down 0.4 percent at 3,088 yuan per tonne, after peaking at 3,122 yuan, also its highest since late May.


Shanghai rebar futures and iron ore indexes at 0720 GMT

Contract Last Change Pct Change

SHFE REBAR OCT4 3088 -12.00 -0.39

DALIAN IRON ORE DCE DCIO SEP4 707 -1.00 -0.14

SGX IRON ORE FUTURES JULY 95.78 -1.53 -1.57

THE STEEL INDEX 62 PCT INDEX 95.3 +1.60 +1.71

METAL BULLETIN INDEX 95.72 +2.75 +2.96

Dalian iron ore and Shanghai rebar in yuan/tonne

Index in dollars/tonne, show close for the previous trading day

($1 = 6.2168 Chinese Yuan Renminbi)


(Editing by Muralikumar Anantharaman, Sunil Nair and Prateek Chatterjee)

((manolo.serapio@thomsonreuters.com)(+65 6870 3884)(Reuters Messaging: manolo.serapio.thomsonreuters.com@reuters.net))

Key Words:  MARKETS IRONORE/