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PrintSpot iron ore prices in top consumer China fell on Monday, reflecting limited interest among steel mills in restocking the raw material ahead of next week's public holiday given the uncertain outlook for steel demand.
Price offers for imported iron ore cargoes in China dropped between $2-$4 a tonne, traders said, after the benchmark rate slid by more than 2 percent on Friday in line with weaker Chinese steel prices.
Iron ore with 62 percent iron content .IO62-CNI=SI, the industry benchmark, dropped 2.5 percent to $106.40 a tonne on Friday, declining for a third day running, based on data from price provider Steel Index.
"The market has become soft again and traders have also slowed down amid lots of uncertainty about the outlook," said a Shanghai-based iron ore trader.
Iron ore has rebounded from a near three-year low of $86.70 reached earlier this month, on hopes that China's approval of more than $150 billion worth of infrastructure projects would boost steel demand.
But the recovery has been unconvincing so far, with prices facing resistance past $100, amid signs end-user demand for steel remains weak despite a recent spike in steel prices.
The Chinese usually restock raw materials ahead of long public holidays, including next week's National Day break. But many mills may have replenished enough at this point.
"Most of the restocking activity's already occurred, so you'd probably see Chinese physical traders dipping out of the market," said Mark Pervan, global head of commodity research at ANZ.
Stockpiles of iron ore among small Chinese steel mills showed a stabilisation of levels over the past fortnight, investment bank Macquarie said, citing data from industry consultancy Mysteel.
The inventory now sits at 17.3 days worth of consumption, rising slightly from 17 days as of Sept. 7, Macquarie said, although still much smaller than the 27-30 days over the past year.
Weaker steel demand and wild swings in iron ore prices had prompted Chinese producers to keep smaller inventories of iron ore this year.
"Iron ore prices are likely to fall further before the holiday and I don't expect any turnaround in the near future," said a trader in China's eastern Shandong province.(Source: Reuters)
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