Iron Ore Prices Today Gain as Trader Betting Demand

Mining commodity information, iron ore stretched gains today eyeing two month highs, as traders chased prices higher, betting demand from top user China could rise further as mills replenish stockpiles.

Offers for imported iron ore in China rose by another dollar per tonne today, with Australian Pilbara fines quoted at up to $145 a tonne, cost and freight, and Yandi fines at up to $133, industry consultancy Umetal said.

The firm offers followed higher than expected prices for two capesize cargoes sold by Australian miner BHP Billiton at a tender yesterday, traders said.
"We are not seeing crazy buying by the mills, but traders are quite bullish," said a Singapore-based physical trader.

"People are taking their cue from the BHP tender and pushing prices higher."

Iron ore with 62 percent iron content rose more than 1 per cent to $144.80 a tonne yesterday, according to the Steel Index, the highest since November.

"Demand from the mills is not that strong but there are still those requiring cargo to run their mills," said a trader in Shanghai.

"But I think they will start to be worried if bids continue to firm."

Mostly sluggish steel prices in China had curbed producers' appetite for raw material iron ore, with daily crude steel output falling 1.3 percent in the middle of January.

Slow Chinese construction through winter was blamed on the output slowdown.

China's industry ministry warned steel demand could remain low this year, and coupled with higher costs, may dent steelmakers' profits further.

"In 2012 the steel industry will face an even more severe test - on the one hand, weak demand will make the supply-demand gap even wider, and on the other hand, high prices of raw materials like iron ore will continue to put pressure on profits," China industry ministry spokesman Zhu Hongren said.

But miners remain optimistic China's demand for iron ore will remain robust in the longer term, with BHP Billiton as well as Rio Tinto and Vale investing to boost output and reach their biggest market.

This weekend, Vale will begin its iron ore distribution operations in the Philippines, from where the world's top miner of the raw material will transfer China-bound ore brought by big ships barred from Chinese ports.

Category: Iron Ore, iron ore commodity, iron ore demand, iron ore price 2012, iron ore trading