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PrintReuters reported that Spot iron ore prices climbed to their highest since October 2011 as Chinese steel mills replenished stockpiles but the steep rates and a pullback in Shanghai steel prices may curb further purchases.
Shanghai steel rebar futures slumped more than 3% to 1 month lows on Thursday February 21st swept along in a broad based commodities sell off after minutes of the US Federal Reserve’s January meeting suggested it may slow or halt its stimulus Programmeme sooner than expected.
The most briskly traded October rebar contract on the Shanghai Futures Exchange fell 3.2% to a session low of CNY 4,048 a tonne its weakest since January 17th. It closed down 2.3% at CNY 4,085.
Traders said that “That may sour interest in the iron ore market where prices have risen since the Chinese came back from a week long Lunar New Year break to rebuild inventories in anticipation of a pickup in steel demand from March.”
An Iron Trader said that “Because rebar prices dropped heavily mills may hesitate to bid for cargoes. But I don’t think prices will drop that much because there’s limited supply in the spot market and quite a number of mills still need to buy some material.”
China’s crude steel output averaged 1.989 million tonne in the first 10 days of February the highest since mid October and up 4.4% from the preceding 10 days industry data showed.
Benchmark 62% grade iron ore for delivery to China rose 0.6% to USD 158.90 a tonne on Wednesday February 20th its loftiest since October13th 2011 based on data from price provider Steel Index.
Iron ore prices have rebounded more than 83% since hitting a 3 year low below USD 87 in September but the steep jump is prompting caution among prospective buyers unsure whether steel demand in China will bounce back strongly enough to warrant more of the raw material.
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