Iron ore spot prices extended gains on Monday, lifting the benchmark index to its highest in seven weeks, fuelled by tighter supplies and revival in Chinese demand. Market watchers had expected Chinese buyers to return after a week-long public holiday that ended on Thursday, with demand from the world's biggest iron ore importer seen revving up as many steel mills restart production after state-imposed curbs. Offers for Indian ore with 63-63.5 percent iron content climbed on Monday to $155-$157 a tonne, cost and freight delivered to China, from $151-$153 a tonne on Friday, according to Chinese industry consultant Mysteel. "Chinese steel mills have started to replenish stocks after the week-long break," said an iron ore trader in China's eastern Shandong province.
"How far iron ore prices will rise will depend on how steel prices move in the longer term." The Steel Index 62 percent iron ore benchmark .IO62-CNI=SI rose $1.20 to $145.30 a tonne, C&F on a landed China basis, at the end of trade on Friday, gaining 3 percent last week. Friday's level was the highest for the index since Aug. 25.
"What traders are banking on is that there will be more interest out of the mills to pick up physical iron ore this week," said Michael Gaylard, director of strategy at Freight Investor Services in Shanghai. "I don't expect it to rocket up but I do expect a continuing push for the index. The spot market seems quite tight in terms of physical cargo." While there is no official word yet from the Chinese government, market sources had said that production had resumed at several steel mills, including those in the production hub of Hebei province shut to help China meet its energy efficiency target. Reflecting the upbeat sentiment, Shanghai steel rebar futures jumped more than 2 percent on Monday, to stand at their highest in nearly a month. The most active May contract SRBc8 rose 2.1 percent to 4,508 yuan per tonne by 0303 GMT, off an early peak of 4,514 yuan, its highest since Sept. 13. In the forward swaps market, Singapore Exchange-cleared fourth-quarter forward swaps IOCS=SGX rose on Friday, resuming a rally after falling in the previous session, which followed four straight days of gains. The October contract SGXIOc1 rose 1.6 percent to $144.94 a tonne. November SGXIOc2 gained 2 percent to $144.19 and December SGXIOc3 climbed 1.6 percent to $142.56.
Source: Reuters
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