Posted by Hustle > 2012-10-09 08:54 | Report Abuse

UPDATE 1-Shanghai steel hits near 2-mth top after break on demand hopes



Mon Oct 8, 2012 3:36am EDT

* Iron ore prices seen rebounding as Chinese restock
* China slowdown may get worse and last longer -World Bank
* India top court bans iron ore transport in Goa

(Updates rebar price; adds Goa transport ban, Aquila project)
By Manolo Serapio Jr
SINGAPORE, Oct 8 (Reuters) - Shanghai rebar steel futures
rose nearly 2 percent on Monday to the highest in almost two
months as Chinese traders returned from a week-long break armed
with hopes demand in the world's top consumer will pick up as
the economy stabilises.
Steel's rise suggests prices of raw material iron ore are
likely to rebound this week, with Chinese mills also expected to
return to the spot market to replenish stocks.
The most active rebar contract for January delivery on the
Shanghai Futures Exchange hit a session high of 3,668
yuan ($580) a tonne, its loftiest since Aug. 17. It closed up
1.6 percent at 3,656 yuan.
Rebar outperformed other China-traded commodities, including
copper and rubber, which drifted lower as a poor global economy
cast doubts on the outlook for raw material demand.
The World Bank cut its economic growth forecasts for the
East Asia and Pacific region and said there was a risk the
slowdown in China, the world's No. 2 economy, could get worse
and last longer than expected.
But a private sector survey showed China's services sector
activity rebounded in September after hitting a one-year low in
August.
Rebar is taking its cue from gains in spot steel prices in
China during last week's National Day break as traders look to a
bounce in demand.
The price of steel billet in China's key Tangshan area had
increased to 3,340 yuan per tonne last week from 3,150 yuan
before the holiday, said a Shanghai-based trader.
"The steel market had picked up during the holidays. People
are looking at an improvement in demand so we have this upbeat
sentiment at the moment," the trader said.

POST-HOLIDAY RESTOCK
Price offers for iron ore cargoes from top exporter
Australia rose between $1-$3 per tonne on Monday, according to
Chinese industry consultancy Umetal.
"People are pushing up prices hoping the market will be
good. Steel prices are up and some mills are bound to restock
after the long holiday," said another trader in Shanghai.
"It will be a good start for the iron ore market this week,
but whether the gains will be sustained I'm not sure."
Benchmark iron ore with 62 percent grade iron content
.IO62-CNI=SI steadied at $104.20 a tonne for all of last week,
but the second Shanghai trader said there's a chance the price
could hit $110 today.
A cargo of Australian 57.7-percent grade Yandi iron ore
fines is on offer at a tender closing later on Monday, a Hong
Kong trader said. The 210,000-tonne shipment was offered at the
GlobalOre platform on Friday at $106 a tonne, with the best bid
at $101, he said.
The Yandi grade was last sold at $99.50 per tonne before the
Chinese holiday, traders said.
Also likely to support prices, India's Supreme Court on
Friday suspended transport of iron ore in Goa, the country's top
exporting state, part of government efforts to address illegal
mining.
Goa exports nearly all of its annual output of more than 50
million tonnes.
India remains the third biggest exporter of iron ore to top
market China after Australia and Brazil, although export and
mining curbs have slashed shipments between January and August
by nearly half from a year ago.
Iron ore prices struck a three-year low of $86.70 last month
as Chinese steel demand cooled, prompting miners to review
expansion plans. Aquila Resources is scrambling to cut
planned spending on an Australian iron ore project after cost
estimates jumped by a quarter to A$7.4 billion ($7.6 billion),
putting the investment at risk.

Shanghai rebar futures and iron ore indexes at 0703 GMT

Contract Last Change Pct Change
SHFE REBAR JAN3 3656 +59.00 +1.64
PLATTS 62 PCT INDEX 107 +0.00 +0.00
THE STEEL INDEX 62 PCT INDEX 104.2 +0.00 +0.00
METAL BULLETIN INDEX 106.46 +0.00 +0.00

Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day

($1 = 6.2849 Chinese yuan)
($1 = 0.9767 Australian dollar)

(Editing by Himani Sarkar)