SINGAPORE, Aug 12 (Reuters) - Iron ore futures in China fell to their lowest in more than two weeks on Tuesday, reflecting sustained pressure from a well supplied market that has shaved spot prices by 29 percent this year and stunted any recovery. "The market is still under the shadow of oversupply," said an iron ore trader in Shanghai. "Demand is still growing but not as fast as before. That's the key issue." The most-active January iron ore contract on the Dalian Commodity Exchange fell to 664 yuan ($108) a tonne, its weakest since July 25, and was down nearly 1 percent at 667 yuan by midday. Iron ore for immediate delivery to China .IO62-CNI=SI dropped 0.4 percent to $95.30 a tonne on Monday, according to data compiled by Steel Index. Chinese traders cut their offers for iron ore cargoes stocked at ports by 5-10 yuan per tonne, Steel Index said, underlining lean demand. The benchmark spot price fell below $100 in mid-May and has languished below that level since, although it has rebounded from a 21-month trough of $89 reached in June. Morgan Stanley expects a global supply surplus of 79 million tonnes this year, 158 million tonnes in 2015 and 256 million tonnes in 2018. "Amid uncertainty surrounding China's property market, the key steel end-use sector, as well as credit and cash restraints, steel mills will continue to be reluctant to undertake any large-scale restocking," Morgan Stanley said in a report on Monday. "As a result, upward pressure on spot iron ore prices is likely to be subdued." Weaker steel prices have also weighed on iron ore with the January rebar contract on the Shanghai Futures Exchange down 0.7 percent at 3,063 yuan a tonne, after touching a one-week low of 3,052 yuan earlier. But some traders and analysts said supply of domestic iron ore concentrate in China has tightened after falling prices shut some high-cost producing mines. That has spurred demand for higher quality imported iron ore lump as Chinese mills increasingly use less pollutive raw material for steelmaking in compliance with Beijing's fight against pollution. Premium for iron ore lump has risen to more than 10 cents per dry metric tonne unit from 3-4 cents previously, said another trader in Shanghai.
Base metals finished lower on demand concerns after China’s industrial production and new credit grew less than forecast in July. Brent crude oil advanced on views that the reduction in prices over the last week was overdone as supply risks still remain. US WTI crude oil remained flat despite US crude oil inventories unexpectedly falling last week. Gold futures rose marginally on safe-haven demand, while iron ore fell by 0.9% to USD93.20/t (CFR China).
Indonesia’s Energy and Mineral Resources Ministry signalled that Indonesia’s mineral ore export ban will remain in place under the next government as the new mining laws implemented earlier this year have created USD18b of investment in downstream mineral processing by 2017. Currently, there are at least 64 downstream mineral processing facilities planned.
US crude oil inventories rose by 1.40mmbbl to 367.0mmbbl in the week ending 8 August, well above forecasts of a 1.63mmbbl decline. In the same week, US oil production rose marginally to 8.556mb/d, below 28-year highs of 8.592mb/d recorded a few weeks ago, while imports increased to 7.846mb/d. The US refinery utilisation rate fell from 92.4% to 91.6%.
According to China’s National Bureau of Statistics, China’s crude steel output rose by 1.5% y/y to 68.3Mt in July. From January to July, China’s crude steel output has lifted 2.7% y/y to 480.8Mt.
Iron ore miner, Vale, believes iron ore prices will fall to a lesser extent in 2H14 than 1H14 as market fundamentals remain more favourable. The company said that it is unlikely that markets will ever see a 100Mt increase in iron ore supply like that seen in 1H14 relative to 2H13. Vale believes iron ore prices will likely hold at ~USD110/t (CFR China) over the next few years.
SINGAPORE, Aug 13 (Reuters) - Spot iron ore prices fell to their lowest in almost three weeks as a softer steel market in top consumer China sapped buying interest for immediate cargoes, and weaker Dalian ore futures pointed to further losses.
Most commodities retreated on Wednesday with copper dropping to its weakest since June and Brent oil hit 13-month lows as geopolitical tensions from Iraq to Ukraine dimmed the outlook for the global economy.
China's daily crude steel output fell 4.6 percent to 2.20 million tonnes in July from a record 2.31 million tonnes in June, government data showed, as mills cut production during the lean summer season. Output last month totaled 68.32 million tonnes, down 1.4 percent from June.
Benchmark 62-percent grade iron ore for immediate delivery to China .IO62-CNI=SI fell 1.4 percent to $94 a tonne on Tuesday, the lowest since July 24, according to data compiled by Steel Index.
Tuesday's drop was the steepest for iron ore since it lost more than 2 percent on June 16 when it touched $89, its cheapest since September 2012.
The price of the raw material that is the top revenue earner for global miners Rio Tinto and Vale has fallen nearly 30 percent this year.
Offers of iron ore cargoes remain plenty, said an iron ore trader in Shanghai who is also selling shipments for Chinese steel mills that have excess stocks from their long-term contracts with miners.
"It's not easy to locate a buyer because there's a lot of competitors selling similar types of cargo in the market," he said.
The most-traded January iron ore contract on the Dalian Commodity Exchange fell to 660 yuan ($107) per tonne, also the lowest since July 24. It closed down 0.6 percent at 662 yuan.
Apart from plentiful supply, weaker steel prices have also been a drag on iron ore. The price of steel billet in China's key Tangshan area has fallen by 30 yuan per tonne from the weekend through Tuesday to 2,650 yuan, traders said.
Rebar for January delivery on the Shanghai Futures Exchange closed 0.6 percent lower at 3,044 yuan a tonne, just off the day's bottom of 3,042 yuan, its lowest since July 25.
"Speculation that the Chinese government won't introduce further stimulus this year and concerns over a weak construction sector seem to be renewing pessimism in steel," Australia and New Zealand Bank said in a note.
Beijing has introduced measures to stimulate the economy since April, including hastening construction of railways and public housing and allowing local governments to loosen property curbs.
But the world's No. 2 economy showed further signs of softening in July despite a burst of stimulus measures, suggesting more policy support may be needed to keep growth on track.
China's factory output rose 9 percent in July from a year earlier, in line with forecasts, while fixed-asset investment and retail sales grew less than expected and the cooling property market showed further signs of deterioration.
According to the World Gold Council (WGC), China’s gold consumption could fall ~16% y/y to 900-1,000t this year after the group estimated China’s gold demand fell 52% y/y to 193t in 2Q14. The fall in China’s gold consumption is said to reflect ongoing scrutiny on corruption, and to reaffirm the execution of President Xi Jinping’s anti-graft campaign.
Base metals and crude oil benchmarks finished mostly lower on demand concerns in Europe after Germany and France recorded slower economic growth than forecast in the June quarter. The weaker-than-expected data added to demand concerns stemming from disappointing Chinese industrial production and fixed asset investment growth in July. Crude oil benchmarks also fell after Libya announced it will re-open its largest oil export port within days. Gold futures rose marginally on views the Fed may keep lower interest rates for longer after US jobless claims rose more than expected last week. Iron ore remained unchanged at USD93.20/t (CFR China).
Brazilian iron ore miner, Vale, said it still remains unsure whether it will bid on the mining rights for the Simandou iron ore project in Guinea if the country does plan on a bidding process for the iron ore deposit. Vale had originally planned to build a 50Mtpa iron ore mine at the Simandou deposit.
Iron ore miner, Fortescue, has reduced its discount for its flagship 56.7% Fe Super Special Fines product from 15% in August to 13% in September. The company has kept its discount at 9% for its 58.3% Fe blend. The narrowing of the discount likely reflects an easing of the surplus concerns in low-grade iron ore markets.
US Henry Hub natural gas rose after US natural gas inventories rose by 78bcf last week, below forecasts of 82bcf increase.
Aug 14 (Reuters) - Chinese iron ore production in July slipped 1.9 percent on the month but was 11.4 percent higher compared to last year, with high-cost domestic miners still managing to maintain output levels despite a rapid fall in the price of imports.
Domestic miners produced a total of 136.7 million tonnes of iron ore in July, data from the National Bureau of Statistics showed on Thursday, defying analysts' expectations of widespread shutdowns.
China's high-cost and low-grade iron ore producers have been under heavy pressure as a result of falling global prices which have made foreign ore more competitive and driven imports up 18.1 percent to a record 456.8 million tonnes in the first seven months of the year.
Analysts have been watching for signs that marginal Chinese producers are being forced out of the market as a result of a concerted effort by global miners to ramp up supply, which has driven prices down by 30 percent this year.
So far, however, China's iron ore output figures have defied industry expectations and remained relatively high.
"I think the data is pretty unreliable and we don't use it," said Graeme Train, analyst with Macquarie in Shanghai.
"If you look at everything else, there are quite a lot of indications that domestic production is actually pulling back. Surveys of domestic mines show sharp contractions in utilisation rates, and Mysteel's steel mill survey on ore usage shows that the share of imported ore has gone up."
According to the latest Mysteel survey, domestic iron ore made up just 4.3 percent of total steel mill inventories by Aug 14, down from 28.6 percent in late February.
According to index prices compiled by the China Iron and Steel Association, domestic ores cost an average of 727.24 yuan ($118.2) at the end of July, compared to an average spot price of 695 yuan for imported varieties, putting domestic producers at a disadvantage.
Goldman Sachs said in a research note in late July that while production from China would inevitably fall, it would not be enough to absorb the additional supplies on the global market.
"In our view, the closure of high-cost mines in coastal provinces will not be sufficient to fully absorb the growing surplus, leading to greater competition among seaborne producers going into 2015," it said. (1 US dollar = 6.1520 Chinese yuan) (Editing by Anupama Dwivedi and Muralikumar Anantharaman)
The benchmark iron ore price may have fallen to a 55-day low, but most signals suggest the price will rebound over coming months.
Australia’s most lucrative export commodity was fetching $US93.20 a tonne on Thursday, having fallen on each of the past four trading days.
Iron ore prices have been weighed down in 2014 by a huge increase in seaborne supply, but the past week’s price weakness was also thought to be affected by weak lending statistics in China.
Bloomberg reported that China’s broadest measure of new credit was significantly weaker than expected and weaker than previous periods.
China is the bigger buyer of seaborne iron ore, and there are fears the weak credit statistics will flow through to iron ore price weakness.
Iron ore futures measured by the Dalian commodity exchange fell to their lowest level since June 20, but in a positive sign for iron ore producers, the futures were predicting an iron ore price for January delivery that was equivalent to $US106.25 a tonne at current exchange rates.
That figure is about 14 per cent higher than the current iron ore price, and UBS commodities analyst Daniel Morgan also said he expected the price to rise.
''I think prices should see stability in the months ahead, with some modest upside,'' he said. "The surge in supply out of Australia in early 2014 looks largely complete, with flows set to now hold in [the second half of] 2014.''
UBS expects the iron ore price to average about $US100 a tonne in the second half of 2014 to deliver a full-year average price of $US106 a tonne.
The bank expects the benchmark iron ore price to average $US103 a tonne during the 2015 calendar year.
Daily crude steel output at China’s CISA (China Iron and Steel Association) member steel mills rose 3.6% to 1.82Mt/day over 1-10 August relative to the 10 previous days. CISA member steel mills account for 80-85% of China’s total crude steel output.
Base metals and crude oil benchmarks finished mostly higher on demand hopes after US factory orders grew faster than forecast in July, and at their fastest pace in five months. Crude oil benchmarks also rose on stronger geo-political risks as tensions escalated in Ukraine. Gold futures fell on signs of weaker investor demand before paring back losses as the increasing tension in Ukraine spurred safehaven demand. Over the last week, thermal coal rose to USD69.9/t (FOB Newcastle), while alumina lifted marginally to USD316/t (FOB Australia). Iron ore rose by 0.2% to USD93.40/t (CFR China).
The total number of drill rigs deployed onshore in the US rose from 1,908 to 1,913 last week. Rigs deployed in oil plays advanced from 1,588 to a record high of 1,589, while rigs deployed in gas plays increased from 316 to 321.
South African state rail operator, Transnet, said it is planning to lift iron ore rail capacity from 60Mtpa to 82.5Mtpa by 2018, and signalled intentions to reach 105Mtpa.
SINGAPORE, Aug 15 (Reuters) - Shanghai rebar steel futures dropped to near record lows on Friday on weak demand that has spurred Chinese producers to cut production, with the benchmark price of raw material iron ore set for its biggest weekly fall in two months.
Steel stocks in the world's biggest consumer fell to 12.78 million tonnes last week, according to industry consultancy Mysteel, the lowest since December 2012 as traders continued to run down inventory in response to seasonally slow demand.
"Traders are still destocking and I expect this will continue until the end of August. It's the weak season and construction is really slow," said Helen Lau, analyst at UOB-Kay Hian Securities in Hong Kong.
Lau said weak financing conditions are also discouraging any restocking. A gauge of money flowing into China's economy fell to the lowest since October 2008.
The most-traded rebar contract for delivery in January on the Shanghai Futures Exchange touched a low of 3,014 yuan ($490) a tonne, before paring losses to end nearly flat at 3,031 yuan.
Construction-use rebar fell to 3,010 yuan on June 17, the lowest for a most-active contract since the bourse launched rebar futures in 2009.
For the week, rebar fell 2.1 percent, its biggest weekly loss since mid-May.
Slower demand had prompted Chinese mills to curb production last month, with crude steel output dropping to 2.20 million tonnes a day in July from a record 2.31 million tonnes in June.
'PRICE RISK'
Buying interest for spot iron ore cargoes was tepid this week and supplies remained high, traders said. Top miner Vale is selling a cargo of 64.08 percent grade Brazilian iron ore fines at a tender on Friday, they said.
Benchmark 62 percent grade iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI was unchanged at $93.20 a tonne on Thursday, according to data compiled by Steel Index. That level, first reached on Wednesday, was the lowest since June 20.
For the week so far, iron ore was down 2.6 percent, its biggest such loss since mid-June.
Despite a 30 percent decline in iron ore prices this year, China's output of the commodity rose 11.4 percent from a year ago to 136.7 million tonnes in July, suggesting high-cost Chinese miners continue to produce and adding to supply.
"We are not in a hurry to sell and we want to see where the market goes," said a Shanghai-based trader who has 700,000 tonnes of cargoes arriving over the next three months.
Those cargoes would probably be priced off the average spot rate for August or the month that they would arrive, "so right now I don't have a price risk", he said.
A cargo of 58-percent grade Australian iron ore fines was sold at $82 a tonne via the globalORE platform on Friday, up from $81.30 for the same grade on Thursday, according to the globalORE website.
At the Dalian Commodity Exchange, iron ore for delivery in January climbed 1.5 percent to end at 666 yuan a tonne after falling to an eight-week low of 651 yuan on Thursday.
Treatment and refining charges (TC/RCs) for standard-grade copper concentrates rose from USD85-95/t and US8.5-9.5c/lb at the end of July to USD110-115/t and US11-11.5c/lb last week. TC/RCs have lifted as copper concentrate volumes in the market have increased due to Freeport-McMoRan resuming exports from its Grasberg operation in Indonesia.
Base metals finished mostly higher on demand hopes after confidence amongst US homebuilders lifted in August. Aluminium also rose as LME aluminium inventories fell to their lowest level in 23 months. Crude oil benchmarks fell on easing supply risks after Iraqi and Kurdish forces seized back territory from militants in northern Iraq. Iron ore declined by 0.1% to USD93.30/t (CFR China).
According to the International Lead and Zinc Study Group (IZLSG), refined lead demand of 5.35Mt in the first half of the year exceeded supply by 0.03Mt. The group also estimated that refined zinc demand of 6.78Mt in 1H14 exceeded supply by 0.24Mt.
1,100 unionised workers at Shougang Hierro Peru’s 10Mtpa Marcona iron ore mine went on strike on Monday over working conditions and wages.
Operations at Brazil’s Port of Sudeste are scheduled to begin early in 4Q14. The port will have an initial capacity of 50Mtpa and service the iron ore producers in the region.
SINGAPORE, Aug 18 (Reuters) - Shanghai rebar steel futures fell to their lowest level on record on Monday as prolonged weakness in China's property sector darkened the outlook for demand, with Dalian iron ore prices retreating to a two-month trough.
Prices of new homes in China dropped in July from June, the third straight monthly decline, and the softness spread to more cities, despite efforts by many local governments to shore up the sector.
China's once-hot housing market has slowed this year as both sales and prices turned south in the biggest pull-back in two years, driven in part by the cooling economy and by a national government campaign to keep price rises in check.
"Demand for construction steel products hasn't really picked up despite efforts by local governments to ease restrictions on property purchases," said a trader in Shanghai. "We can see less new projects, which will be negative for steel demand."
The most traded rebar for delivery in January on the Shanghai Futures Exchange dropped to 3,006 yuan ($489) a tonne, the lowest for a most active contract since the bourse launched rebar futures in March 2009.
The price of rebar has fallen nearly 19 percent this year, on track for a fifth consecutive year of decline.
High supply of steel in China, the world's largest consumer and producer, is also weighing on prices.
China's large steel mills produced 1.812 million tonnes of crude steel a day on average in the first 10 days of August, up 3.6 percent from the last 11 days of July, data from the China Iron and Steel Association showed.
Iron ore futures in China also pulled back. Iron ore for January delivery on the Dalian Commodity Exchange fell 1.4 percent to end at the session's low of 650 yuan a tonne, its weakest intraday level since June 20.
A sustained drop in China's iron ore port stocks helped cap the losses in Dalian futures.
Stockpiles of imported iron ore at China's ports fell for the fourth straight week to 109.4 million tonnes as of Aug. 15, according to data tracked by industry consultancy SteelHome.
"From what we see on the ground, demand still looks quite good and mills continue to buy material, given that their production rate is still high," said another Shanghai-based trader.
"But I don't think we will see much impact on the price if the level remains above 100 million tonnes," he said.
In the year to date, the port stocks are still up more than 26 percent.
Iron ore for immediate delivery to China .IO62-CNI=SI gained 0.2 percent to $93.40 a tonne on Friday, but ended the week down by 2.6 percent, its biggest loss since mid-June.
Diversified miner BHP Billiton, which is relying on iron ore for the lion's share of fiscal 2014 earnings, has declared its preference for a demerger of its aluminium, manganese and nickel assets, setting the stage for the formation of a separate business that could be worth at least $12 billion.
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