* Steel demand bounce may lift iron ore to $140-$150 in H1
2013 -Mirae
* China steel capacity to top 1 bln tonnes this year -CISA
(Updates rebar price)
By Manolo Serapio Jr
SINGAPORE, Nov 15 (Reuters) - Spot iron ore prices hovered
at their highest in nearly four months, supported by firming
steel demand in top market China that some traders say could
sustain a recovery in iron ore through the early part of 2013.
Miners have mostly sold cargoes to China this week at prices
either slightly firmer or on par with previous deals, and price
offers steadied on Thursday, traders said.
Benchmark 62 percent grade iron ore .IO62-CNI=SI gained 10
cents to $122.40 a tonne on Wednesday, its loftiest since July
24, according to data provider Steel Index.
A recovery in Chinese steel prices from September lows
boosted profit margins of producers, spurring demand for iron
ore and fuelling its recovery from three-year troughs of below
$87 hit in early September.
But the modest uptick in iron ore -- prices have only risen
by over $2 since late October -- suggests miners are mindful
that Chinese steel demand remains fragile.
"It looks like the miners are treading carefully not to
overweigh the market or have such a negative effect on the
index," said Jamie Pearce, head of iron ore broking at SSY
Futures, citing the upcoming winter season in China which
normally dampens steel demand as construction slows.
"I think for the immediate future, it looks like $120-$125
will be the upper end of the range."
'SLOW AND VOLATILE'
Further forward, iron ore prices may recover to the
$140-$150 range in the first half of 2013 if China's steel
demand sustains its pickup, said Henry Liu, head of commodity
research at Mirae Asset Securities in Hong Kong.
Prices of flat steel products in China which are mainly used
in the manufacturing sector, have risen by 16 percent since
early September, due to improved end-user demand, while prices
of long steel products, consumed by the construction industry,
have increased by 11 percent, Liu said.
"We believe the potential steel price increase from now to
the first half of 2013 will be slow and volatile given that
demand recovery will be slow and volatile," Liu said in a note.
Shanghai rebar futures have rebounded 13 percent
from their lowest point in September, but had been trading in a
narrow range of between 3,600-3,700 yuan ($580-$590) per tonne
since late October.
Steel rebar, used in construction, closed nearly flat at
3,644 yuan on the Shanghai Futures Exchange.
Despite firmer steel prices, the excess capacity in China's
steel sector will keep a lid on any improvement in margins.
Crude steel output in China, which produces nearly half the
world's steel, is expected to top 700 million tonnes this year,
although excess capacity is nearly 300 million tonnes, according
to industry group China Iron and Steel Association.
"This year, steel capacity for the whole year will probably
exceed 1 billion tonnes, and overcapacity is where the real
predicament in the sector lies," said Wang Xiaoqi, vice
secretary general of the association.
Shanghai rebar futures and iron ore indexes at 0712 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3644 +2.00 +0.05
PLATTS 62 PCT INDEX 124.25 +0.00 +0.00
THE STEEL INDEX 62 PCT INDEX 122.4 +0.10 +0.08
METAL BULLETIN INDEX 122.85 -0.06 -0.05
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2252 Chinese yuan)
(Additional reporting by David Stanway in Beijing; Editing by
Miral Fahmy and Joseph Radford)
2013 -Mirae
* China steel capacity to top 1 bln tonnes this year -CISA
(Updates rebar price)
By Manolo Serapio Jr
SINGAPORE, Nov 15 (Reuters) - Spot iron ore prices hovered
at their highest in nearly four months, supported by firming
steel demand in top market China that some traders say could
sustain a recovery in iron ore through the early part of 2013.
Miners have mostly sold cargoes to China this week at prices
either slightly firmer or on par with previous deals, and price
offers steadied on Thursday, traders said.
Benchmark 62 percent grade iron ore .IO62-CNI=SI gained 10
cents to $122.40 a tonne on Wednesday, its loftiest since July
24, according to data provider Steel Index.
A recovery in Chinese steel prices from September lows
boosted profit margins of producers, spurring demand for iron
ore and fuelling its recovery from three-year troughs of below
$87 hit in early September.
But the modest uptick in iron ore -- prices have only risen
by over $2 since late October -- suggests miners are mindful
that Chinese steel demand remains fragile.
"It looks like the miners are treading carefully not to
overweigh the market or have such a negative effect on the
index," said Jamie Pearce, head of iron ore broking at SSY
Futures, citing the upcoming winter season in China which
normally dampens steel demand as construction slows.
"I think for the immediate future, it looks like $120-$125
will be the upper end of the range."
'SLOW AND VOLATILE'
Further forward, iron ore prices may recover to the
$140-$150 range in the first half of 2013 if China's steel
demand sustains its pickup, said Henry Liu, head of commodity
research at Mirae Asset Securities in Hong Kong.
Prices of flat steel products in China which are mainly used
in the manufacturing sector, have risen by 16 percent since
early September, due to improved end-user demand, while prices
of long steel products, consumed by the construction industry,
have increased by 11 percent, Liu said.
"We believe the potential steel price increase from now to
the first half of 2013 will be slow and volatile given that
demand recovery will be slow and volatile," Liu said in a note.
Shanghai rebar futures have rebounded 13 percent
from their lowest point in September, but had been trading in a
narrow range of between 3,600-3,700 yuan ($580-$590) per tonne
since late October.
Steel rebar, used in construction, closed nearly flat at
3,644 yuan on the Shanghai Futures Exchange.
Despite firmer steel prices, the excess capacity in China's
steel sector will keep a lid on any improvement in margins.
Crude steel output in China, which produces nearly half the
world's steel, is expected to top 700 million tonnes this year,
although excess capacity is nearly 300 million tonnes, according
to industry group China Iron and Steel Association.
"This year, steel capacity for the whole year will probably
exceed 1 billion tonnes, and overcapacity is where the real
predicament in the sector lies," said Wang Xiaoqi, vice
secretary general of the association.
Shanghai rebar futures and iron ore indexes at 0712 GMT
Contract Last Change Pct Change
SHFE REBAR MAY3 3644 +2.00 +0.05
PLATTS 62 PCT INDEX 124.25 +0.00 +0.00
THE STEEL INDEX 62 PCT INDEX 122.4 +0.10 +0.08
METAL BULLETIN INDEX 122.85 -0.06 -0.05
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.2252 Chinese yuan)
(Additional reporting by David Stanway in Beijing; Editing by
Miral Fahmy and Joseph Radford)
