From Reuters:
* Ore recovery seen fragile on lean China steel demand
* Shanghai rebar gains 2.9 pct on week, ore swaps jump
(Updates rebar price)
By Manolo Serapio Jr
SINGAPORE, Dec 2 (Reuters) - Iron ore bounced back
strongly after more than a week of losses as falling prices
encouraged some steel mills in China to return to the market,
although sluggish steel demand in the world's biggest consumer
may limit the recovery.
Iron ore with 62 percent iron content rose more than 2
percent to $133.60 a tonne on Thursday, cost and freight
delivered to China, said the Steel Index .IO62-CNI=SI.
"Some steel mills have started buying ore marginally which
could support iron ore prices for a while, but it will be a weak
rebound because fundamentally, steel demand remains weak," said
Henry Liu, head of commodity research at Mirae Asset Securities
in Hong Kong.
With construction activity in China normally slowing in
winter and credit access for steel mills not improving sharply,
"it's very unlikely to see iron ore prices surging above $150,"
he said.
Highlighting slow demand for steel in China, also the
world's biggest producer, average daily output of crude steel
stood at 1.664 million tonnes over Nov. 11-20, unchanged from
the previous 10 days, according to data from the China Iron and
Steel Association on Tuesday.
Liu said it still remains to be seen whether China's move to
cut bank reserve requirements would boost liquidity enough to
benefit steel mills faced with tight loan access and poor steel
demand.
"The question is will this additional liquidity reach the
real end-users? Are the banks willing to lend money?," he asked.
China's central bank cut reserve requirements for commercial
lenders on Wednesday for the first time in three years, a policy
shift to ease credit strains and shore up an economy running at
its weakest pace since 2009.
The half percentage point cut takes effect on Dec. 5.
SWAPS SURGE
A steep rise in prices of iron ore forward swaps <0#SGXIOS:>
on Thursday reflected market expectations for a further increase
in spot rates, with all contracts rising, and by as much as $8 a
tonne. Volume cleared by the Singapore Exchange, where bulk of the
globally traded swaps are cleared, rose to 409,000 tonnes from
294,500 tonnes on Wednesday.
Offer prices to sell imported iron ore in China rose for a
second day on Friday as traders and miners upped rates with
inquiries picking up.
Australian Pilbara iron ore fines were quoted at $134-$136 a
tonne, C&F, up $2 from Thursday while Newman fines also rose $2
to $138-$140, said Chinese consultancy Umetal.
Indian 63.5/63-percent grade iron ore fines increased a
dollar to $144-$146 a tonne, said Umetal.
"We can only say the market seems to be better, but the
buying activity is still low and steel mills will need to repay
bank loans by year-end," said an iron ore trader in Beijing.
The most-traded May rebar contract on the Shanghai Futures
Exchange eased 0.3 percent to close at 4,163 yuan a
tonne.
For the week, rebar rose 2.9 percent after rising the most
in three weeks on Thursday following China's bank reserve cut.
It was rebar's best weekly gain since the last week of October
AI
