Reuters reported that iron ore fell back below USD 100 a tonne after a three day rally prompting sellers to cut price offers on Thursday after a drop in Chinese steel prices pointed to a market still struggling with slow demand and oversupply.

According to industry consultancy Umetal Price offers for imported iron ore in top consumer China dropped by USD 2 to USD 4 per tonne after the benchmark 62% grade .IO62-CNI=SI fell 2.1% to USD 98.10 a tonne on Wednesday.

Iron ore prices surged more than 15% from Friday to Tuesday taking the rate to USD 100.20 this week, after China approval of CNY 1 trillion worth of infrastructure projects raised hopes for a recovery in steel demand. But those hopes quickly faded amid scant details of the projects that involve building highways, ports and airport runways which are also likely to take years.

An iron ore trader in Shanghai said "The fundamentals haven't really changed since that news came out. There's still so much supply of steel out there and demand is really slow."

The trader said "There are expectations supply of raw steel could rise again because a lot of the small and medium sized steel mills that closed for maintenance weeks ago have now restarted production."

Traders said many Chinese steel mills have cut prices again amid lean demand after raising them over the past few days.

Umetal said the price of steel billet in China key Tangshan area fell by CNY 160 to CNY 2,800 per tonne on Tuesday.

Iron ore traders have similarly cut back prices as buying interest swiftly thinned out.

Source - Reuters

(www.steelguru.com)