Reuters reported that spot iron ore prices rose to fresh three month highs on hopes China steel production pace will remain high as mills keep up with firm construction demand. But a drop in China steel futures for a second day on Friday could sap the upward momentum in prices of the steelmaking raw material.
A shipping manager for an iron ore trading firm in Shanghai said "There are still buyers out there but it's becoming difficult to push prices higher."
Traders said Indian exporter Essel Mining sold 63.5/63 grade iron ore at USD 189 a tonne, cost and freight this week, the highest so far for the grade in recent months
The shipping manager said "That grade is still unable to cross USD 190 which means not all the Chinese mills are willing to pay this kind of price."
Global miner BHP Billiton also sold three cargoes comprising 62 grades Newman iron ore fines and 58 grade Yandi fines at USD 183 and USD 159 a tonne respectively this week.
China daily steel production has averaged more than 1.9 million tonnes since late February up from last year 1.7 million tonnes spurring recent gains in both iron ore and steel prices.
But Shanghai steel futures eased for a second day on Friday with the most traded January contract slipping 0.2% to CNY 4,807 a tonne by 0333 GMT in line with cautious trading in other commodities ahead of a speech by Federal Reserve Chairman Ben Bernanke later on Friday.
Shanghai rebar, on course for its first weekly drop in three weeks is down more than 2% so far in August. Bernanke is expected to unveil a plan for the struggling US economy at an annual central banker’s conference in Jackson Hole, Wyoming although market participants are not expecting him to announce aggressive measures like another round of bond buying.
An iron ore trader in Shanghai said "We still expect iron ore prices to be supported by tight supplies from India. There still aren't much new offers from both Indian traders and miners. But mills might be cautious in buying more iron ore if prices continue higher."
(Sourced from Reuters)
