Singapore: Spot iron ore prices in China stayed firm on Tuesday, aided by tight Indian supplies and higher Chinese steel prices.
Steel mills in China, the world’s top iron ore buyer, have been gradually building stockpiles, worried prices may go up further in the new year and in anticipation of a recovery in steel demand.
Baoshan Iron & Steel , China’s biggest listed steelmaker, on Monday raised prices of its key products by up to 260 yuan ($39) per tonne for January bookings, its first price hike in three months.
Indian ore with 63.5% iron content was being offered at $173 to $175 a tonne, cost and freight, on Tuesday, said Chinese consultancy Umetal, although traders said there was an offer as high as $176 with deals done at $172-$173.
The Metal Bulletin’s iron ore 62% index jumped $2.60 to $167.17 a tonne on Monday, its highest since 13 May.
A similar 62% gauge by the Steel Index rose $1.20 to $166.90 a tonne on Monday. It hit a 6-1/2-month top of $167.80 in late November.
“There are only few high-grade Indian cargoes available in the market and the increase in steel prices in China is encouraging mills to buy ore,” said an iron ore trader in Singapore.
“They don’t want to book too much right now because it’s the year end and they don’t want to carry high stocks in their books, but they also don’t want to lose the opportunity to buy cheaper in December in case prices rise further in January.”
Steel rebar futures in Shanghai eased modestly on Tuesday after touching one-month highs in the previous session.
India’s eastern port of Paradip has temporarily stopped shipping iron ore as heavy rains made it impossible to handle the commodity which tends to absorb moisture, a port official said on Friday.
Bad weather and a continuing ban on iron ore exports from the southern Karnataka state has constricted shipments from India, the world’s third-largest iron ore exporter. The bulk of India’s shipments go to China.
Karnataka has banned exports of the steelmaking ingredient since July and a court upheld the ban last month. An industry official said on Monday exports from Karnataka were likely to fall 67% in the year to March 2011 because of the ban.
Commonwealth Bank of Australia said in a note on Tuesday that Maoist rebels attacked and delayed shipments at a facility owned by NMDC, India’s top iron ore miner.
India has 316 iron ore mines and 556 coal mines, several of which operate in the country’s central and eastern regions, where Maoist rebels prowl.
Adding to supply worries, top iron ore supplier Australia has cut its 2010/11 export forecast by 0.7% to 410.8 million tonnes.
Anticipating further price rises, investors continued to bid up iron ore forward swaps. The January contract , cleared by the Singapore Exchange, rose $1.60 to $170.50 a tonne on Monday and the February contract climbed $2.32 to $169.62.
Volume at SGX jumped to 181 lots, or 90,500 tonnes, from 30 lots, or 15,000 tonnes in the previous session.