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Spot iron ore market continues to retreat on shaky sentiment

A News & Data Feature

Steel Raw Material Outlook

By Han Lu in Singapore

This data is from 2015: get the latest price information on steel and raw materials here.

March 14, 2016 - A weaker steel market continued to weigh on spot iron ore Monday, with Platts 62% Fe IODEX assessed $1.20/dry mt lower on day at $55/dmt CFR North China.

The IODEX has fallen for five straight days after last Monday's 20% hike.

Analysis continues below...

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Spot prices of square billet in Tangshan shed Yuan 80/mt from Friday to Yuan 1,820/mt ($280.38/mt) ex-stock, while Shanghai rebar futures also last traded Yuan 44/mt lower from Friday, at Yuan 2,041/mt, and settled Yuan 21/mt down at Yuan 2,087/mt.

Buyers continued to refrain from restocking, with sellers saying only floating price offers could garner any interest. "The fixed price market is absolutely quiet, port stock cargoes are also seeing thin liquidity. Offers for port stocks fell gradually, but also received very little buying interest," said a Beijing-based trader.

Cargoes of 61.5% Fe Australian Pilbara Blend fines in the port of Rizhao, northern China, were traded at Yuan 430/wmt ($57.21/dmt on an import parity basis) free-on-truck, including Yuan 27/wmt in port charges and 17% VAT.

An international trader said he did not "receive any firm bids" Monday and it was difficult for him to "offload cargoes at hand." Buyers were waiting for prices to fall further before making any move, he added.

"The acceptable price for end-users is too far from offers. This wide spread between bids and offers resulted in a muted market," a Shanghai-based trader said.

A Hebei-based procurement source said traders had many cargoes on hand so if mills were not looking to restock, sellers would not be able to keep prices unchanged.

"The volatile steel market is making it difficult for steel producers to offload their inventory. Mills operation is also not improving as much as the market expected in February. So, fundamentals do not support feedstock prices that much," the procurement source said.

Not everyone bearish

But a Singapore-based trader said iron ore spot prices will stay firm as steel enterprises would need to replenish soon.

"Steelmakers cannot stay away from restocking for too long, and port stock inventories are not that high currently. I believe there is demand from end-users which will support the feedstock market," the trader said.

China's crude steel output for January and February fell 5.7% on year to 121.1 million mt, according to the China Iron & Steel Association.

Platts analyzes other steel making raw materials in this feature: Iron Ore | Scrap | Ferroalloys

Next article: Spot iron ore sees biggest ever single-day gain

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