China spot iron ore prices above $100/T

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Jul 2009

Benchmark spot prices of iron ore in China, the world's biggest consumer, surged above $100 a tonne on Thursday, driven by active buying, industry consultancy Mysteel said, marking a 74 percent jump from April lows. Ore of 63/63.5 percent iron content traded at $99-101 a tonne, including freight costs, Mysteel said in a client message. "Whether the prices will rise further or not depends on how soon Chinese steel mills announce a long-term price deal with overseas miners," said a trader based in the eastern province of Zhejiang, who asked to be unidentified. "Speculation in the market drives the prices up, without a specific market reference, as steel mills are muted," he added.
The prices have gained 74 percent from a bottom of $58 a tonne in April after slumping for months as demand weakened during the global financial crisis. They hit an all-time peak of about $150 a tonne during April and May last year in China.
The prices are also 33 percent higher than Australian long-term iron ore prices with freight costs to China, which stood at around $76 a tonne on Thursday.
The China Iron and Steel Association (CISA), the de facto negotiator for the country's steel mills in annual term iron ore price talks, is still holding out for a better deal than a cut of 33 percent earlier agreed by Japanese counterparts with Australian miner Rio Tinto . China's talks with BHP Billiton, Rio Tinto  and Vale were clouded this year by Rio's rejection of a further tie-up with Chinese aluminium firm Chinalco, and the country's detention of four Shanghai-based Rio employees for allegedly stealing state secrets. Some industry executives and analysts said CISA, seeking to salvage its pride, may announce a face-saving compromise such as a hybrid pricing solution at a meeting of Chinese steel executives this week in Beijing, as rising spot prices diminish chances for a bigger cut. The boost in spot iron ore prices in China was also aided by rising freight rates. The Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, rose 0.69 percent on Wednesday, with appetite for iron ore cargoes in China helping to keep rates stable.

Source: Reuters