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As iron ore price climbs, buyers rush for cargoes

Published 29/06/2017, 05:02 pm
© Reuters.  As iron ore price climbs, buyers rush for cargoes

* Trading volumes on China, Singapore platforms biggest this year

* Spot iron ore price hits 5-week high above $60/tonne

* Iron ore has risen 9 pct in June after biggest rout in a year

* Follows rally in Chinese futures

By Manolo Serapio Jr

MANILA, June 29 (Reuters) - Traders and Chinese steel producers dashed to buy iron ore cargoes this week as prices bounced back from the biggest rout in a year, although some market participants doubted the futures-driven rally can last.

Combined daily volumes on the main physical iron ore trading platforms in China and Singapore topped 1 million tonnes on Wednesday, the highest level this year, traders said, as the price of the steelmaking raw material scaled a five-week peak above $60 a tonne.

That rally was largely driven by a surge in Chinese iron ore futures DCIOcv1 as investors piled back into a market they sold down in the past three months. Firmer steel prices also revived appetite for iron ore, traders said.

"Mills are buying because they need iron ore since they're running at full capacity and traders are taking positions because they think prices will continue to rise in the near term," said a Shanghai-based trader.

China's infrastructure push this year has spurred demand for construction steel, inflating producers' profits and encouraging mills to buy more iron ore, even as prices surged. traded on China's COREX platform reached 730,000 tonnes on Wednesday, the highest so far this year, said Lin Zhi Tong, spokesman for COREX.

The rally in China's iron ore futures boosted spot prices and "a lot of buyers stepped into the market," Lin told Reuters by phone.

At the globalORE platform in Singapore, volume on Wednesday reached 450,000 tonnes, also the most for a single-day this year, according to globalORE.

Iron ore futures on the Dalian Commodity Exchange DCIOcv1 extended their week-long rally on Thursday, climbing as much as 6 percent to a five-week high of 484.50 yuan ($72) a tonne.

That should lift spot iron ore prices further later in the day. The spot benchmark .IO62-CNO=MB hit $62.33 a tonne on Wednesday, also a five-week top, according to Metal Bulletin.

The spot price has risen more than 9 percent in June, after a three-month slide that saw it lose 17 percent in May, its steepest monthly fall in a year. traders said they were unsure the price gains will last given plentiful supply.

Stocks of iron ore at China's ports reached 141.45 million tonnes last week, the highest since 2004. SH-TOT-IRONINV

"While demand is strong, supply is also strong," said a trader in Beijing who last bought cargoes two weeks ago. "We're very cautious about rising prices."

($1 = 6.7790 Chinese yuan)

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