SINGAPORE, Nov 25: Spot iron ore prices are likely to stay between $135 and $137 a tonne for a fourth week, supported by Chinese mills replenishing winter stockpiles although ample supplies could cap gains.
Slow steel demand in top consumer China has trapped iron ore prices in narrow ranges this month, with producers not aggressively building stockpiles as the weather gets colder.
‘There’s still some demand although in previous years, buying was much stronger around this time. Some of the mills we’ve spoken to only have inventory for about two weeks and that’s quite short, so we expect them to replenish,’ said a Shanghai-based iron ore trader.
Benchmark 62-percent grade iron ore <.IO62-CNI=SI> gained 0.1 percent to $136.50 a tonne on Friday, according to data provider Steel Index.
‘Restocking activity is driving the current strength but with high levels of inventory at port and light demand from the construction sector in China, we expect prices to edge lower towards year-end,’ Australia and New Zealand Banking Group said in a note.
Since the start of November, iron ore has peaked at $137.10 from a low of $135.30.
‘We are not in a hurry to take cargo because profit margin is too small to justify any risk in holding cargo at this point,’ the Shanghai trader said.
Global miner Rio Tinto sold a cargo of 61.4-percent grade iron ore via tender on Friday at $135.50 per tonne, up from $134.90 earlier in the week, the trader said.
Chinese mills tend to rely more on imported iron ore during winter when domestic production slows down, but lean steel demand has curbed that appetite.
The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was little changed at 3,629 yuan ($596) a tonne by midday on Monday. Rebar, a construction steel product, is down slightly for the month, after falling more than 5 percent in September and October.
At the Dalian Commodity Exchange, iron ore for May delivery was unchanged at 932 yuan a tonne. Shanghai rebar futures and iron ore indexes at 0408 GMT
(AGENCIES)
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