Spot iron ore firms on stronger Chinese economic data
By Celestyn Wong in Singapore
December 10, 2012 - Seaborne iron ore prices moved higher December 10 as market confidence was boosted by China's Central Economic Conference this week and Chinese economic data raised expectations of stronger demand going forward.
The 62% Fe Iron Ore Index assessment moved up $2.50/dry mt to $124.75/dmt CFR North China.
"The outlook in the steel and iron ore markets is [improving] because of positive economic data like the HSBC Purchasing Managers' Index pushing above 50, and expectations of the new Chinese leadership's potential to enhance growth," said an iron ore procurement source at an eastern Chinese mill.
The more bullish sentiment lent support to rebar futures, with the most active May contract in Shanghai settling up Yuan 53/mt to Yuan 3,682/mt ($590).
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The spot price of square billet in Tangshan also rose by around Yuan 50/mt from December 7 to Yuan 3,100/mt ex-stock, a Beijing based trader said.
Billet prices surged Yuan 90/mt over the weekend, but some major mills in the region shaved Yuan 40/mt off prices December10 afternoon, other sources said.
"With hot metal production still at a high and steel fundamentals not really improving, sentiment is not enough to bring about a prolonged boost for steel and iron ore," a Beijing-based mill source said.
Australian cargoes trade higher
Nonetheless, spot cargoes traded at higher levels December 10, as mills were heard to be looking for material to replenish low stocks, while traders were still taking positions.
Australian miner Rio Tinto sold 61% Fe Australian Pilbara Blend fines at $125/dmt CFR China on the CBMX platform December 10. The 165,000 mt cargo will load December 24-January 2.
The miner last sold two cargoes of PB fines, each 165,000 mt, at $123.12/dmt CFR China to state-owned trading company China National Building Materials December 6. Those cargoes will load over December 20-29.
Fellow Australian miner BHP Billiton sold 58% Fe fines at $114.20/dmt CFR Qingdao on the globalORE platform to a trader. The cargo will be delivered over January 1-31.
BHP Billiton also sold 62.4% Fe Australian Mining Area C lump to a mill at a premium of 13 cents/dmtu over the Platts 62% Fe IODEX assessment.
The cargo is co-loaded with a fines parcel, which is part of long-term contractual volume, and will load in the second half of December.
"Lump demand is pretty strong now due to a combination of supply and demand factors," a trader said. "The low supply of domestic pellet material in China has a lot to do with pushing up demand for lump cargoes."
Separately, Vale was absent from the spot market for a second consecutive trading day, after a sustained period of actively offering cargoes on a daily basis.
"Vale has probably run out of spot shipments scheduled to sail before January 1. Supply is going to tighten," a Singapore-based customer of the miner said.
Elsewhere, port stocks of 65% Fe Brazilian Iron Ore Carajas (IOCJ) fines in Qingdao, northern China, were heard to be trading at Yuan 900/wet mt ($127/dmt on an import-parity basis) free-on-truck, including Yuan 35/wmt in port charges and 17% value-added tax.
Capesize rates deteriorate
Iron ore freight rates continued to fall, with a Capesize heard fixed at $17.50/wmt from Brazil to China, down $1.50/wmt from December 7.
Rates from South Africa were also lower, with fixtures heard done at $12.70/wmt, down from $14/wmt December 7. Rates from Australia to China fell — down 20 cents to $7.30/wmt.
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