Iron Ore Prices Rebound On Limited Supply Following Oct Rout
15 Novembre 2011 - 5:14PM
Dow Jones News
Iron ore prices continued to rebound Tuesday, boosting hopes
that a layer of support may be building following last month's
spectacular rout.
The spot price of iron ore delivered into China with 62% ferrous
content rose 5.8% Tuesday to $146.30 a metric ton, according to The
Steel Index, a London-based information provider. This represents
an increase of 15.8% on the week.
Price gains in recent days are in sharp contrast to heavy losses
throughout October and reflect a rising tightness of supply and
persistent demand, said analysts.
"With the miners largely out of the spot market over the past
weeks and traders reluctant to sell, availability of iron ore has
been very limited," said Oscar Tarneberg, a senior iron ore analyst
at TSI. "But traders and mills have been very keen to buy for some
time, and the sharply improved levels achieved on cargoes offered
today is a reflection of that pent-up demand," he added.
According to TSI, Tuesday saw several well-bid tenders for
higher grade iron ore taking place, with Australian miners selling
into the spot market "sharply above index levels."
On Oct. 28 prices of TSI's spot iron ore benchmark plunged to
$116.90/ton, the lowest level since December 2009 at the height of
the global economic crisis.
Prices slumped 32% in the month of October alone as a
deterioration in demand for steel put the price of iron ore--a key
steel-making ingredient---under pressure.
Although steel production cuts in Europe and China persist,
marginal costs of production and potential steel restocking by
China in the first quarter of next year should prove supportive of
iron ore prices and demand, said analysts at Credit Suisse.
Lakshmi Mittal, CEO and chairman of ArcelorMittal (MT), the
world's largest steelmaker, said a few days after iron ore hit this
year's low, that he expected $120/ton would be a floor price for
spot iron ore.
"We do believe that the current spot price of around $120 per
ton is well supported by industry costs," particularly in China, he
said. "Some of the [Chinese iron ore] producers have a much higher
cost than $120 and a poorer quality, inferior quality and they will
continue to import," he added.
-By Francesca Freeman and Alex Macdonald, Dow Jones Newswires;
+44 (0)20 7842 9412; francesca.freeman@dowjones.com
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