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Platts IODEX and TSI 62% Fe: Jun. 4 - Sep. 5, 2012

By Annalisa Jeffries in London

Platts IODEX and TSI 62% Fe: Jun. 4 - Sep. 5, 2012

Iron ore market remains under pressure, steel tanking

Seaborne spot iron ore weakened once again September 5, tracking a continuous decline in steel billet and rebar futures.

As a result the Platts 62% Fe IODEX was assessed 25 cents/dry mt down at $88.75/dmt CFR North China.

Commentary continue below...

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The most active January rebar futures contract in Shanghai traded Yuan 54/mt lower on day at Yuan 3,228/mt ($508.33/mt), which impacted confidence and dampened ore buying appetite.

Physical billet prices dipped again in north China's Tangshan, dropping Yuan 70/mt from September 4 to Yuan 2,720/mt ex-stock, according to a mill source in the region. Tangshan-based Yanshan Steel awarded its weekly billet tender at Yuan 2,760/mt ex-works, down Yuan 230/mt from the previous week, alluding to weakness in demand.

"A sharp fall of Yuan 230/mt within a week illustrates clearly how weak the demand for steel is at the downstream," said a Shandong-based mill source.

A Hunan-based source said many mills who needed to restock were backing away from purchasing because of the fall in billet prices.

"Some mills thought the iron ore market would probably have reached the bottom yesterday," said the Hunan-based mill source. "But after the fall in iron ore coupled with a sharp decline in steel prices today, no one knows where prices will finally bottom out now."

While mills still needed to restock after running inventories way down, they were still not willing to commit too far ahead.

"Buyers are scared to take future cargoes," a Hong Kong-based trader said.

Rather, they preferred prompt material, which meant many favored port stocks available on quicker lead times and in lower volumes, sources suggested.

One Hebei-based source said his company has been inquiring about iron ore, but they have not been buying as they think it could be "some time before iron ore prices will bottom out."

Additional steel price charts:

Platts and TSI HMS 1&2 80:20 Turkish scrap; Platts Rebar FOB Turkey

Platts Midwest US scrap price and TSI Midwest US scrap price; Platts HRC Midwest and TSI HRC Northern Europe

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