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UPDATE 1-China iron ore futures stop rout but recovery seen unlikely

Published 24/09/2015, 06:08 pm
© Reuters.  UPDATE 1-China iron ore futures stop rout but recovery seen unlikely

* Dalian iron ore futures inch up 0.3 percent

* Trade in decline ahead of next week's holiday

* Chinese spot steel prices still under pressure (Updates prices)

BEIJING, Sept 24 (Reuters) - Chinese iron ore futures were largely flat on Thursday after four consecutive days of declines, with little prospect of any upturn ahead of the week-long National Day holiday starting Oct. 1.

This week's annual steel raw materials conference in the Chinese port city of Qingdao, attended by giant state steel mills and global mining firms, is normally a chance for iron ore traders to strike deals, but it has seen very little activity.

"The number of attendees is down really significantly this year because the market is so poor," said one trader at the event. "There are fewer and fewer people coming."

Iron ore for January delivery on the Dalian Commodity Exchange DCIOcv1 ended at 378 yuan ($59.24) a tonne on Thursday, up 0.3 percent amid thin trade. January rebar on the Shanghai Futures Exchange SRBcv1 ended up 0.1 percent at 1,893 yuan.

Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI dipped 0.5 percent on Wednesday to $56.8 a tonne. The price remains 28.8 percent higher than the low of early July, but that rebound is expected to be short-lived.

ANZ Bank said in a note that the restocking rally was now "petering out". In a separate statement, the bank recommended selling January 2016 swaps, noting that the recent price recovery was "overdone" and was driven by supply disruptions from Brazil, rather than any spike in demand.

Rising freight rates on the Brazil-China route suggest that supplies are back on the increase, it said.

"It will be hard to avoid further downward pressure on iron ore prices," said an analyst with China's Sinolink Securities, noting that supplies were rising and steel mill utilisation rates in China were expected to fall as a result of persistently weak prices.

According to industry consultancy Mysteel, hot-rolled steel in Shanghai MYSTL-H475-SHAN is currently selling at 1,910 yuan per tonne, approaching the record low of 1,890 yuan set in early July and down 37.2 percent since the start of the year.

Rebar and iron ore prices at 0732 GMT

Contract

Last

Change Pct Change SHFE REBAR JAN6

1893

-1.00

+0.11 DALIAN IRON ORE DCE DCIO JAN6

378

+1.00

+0.27 THE STEEL INDEX 62 PCT INDEX

56.8

-0.30

-0.53 METAL BULLETIN INDEX

55.3

-0.91

-1.62

Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3813 Chinese yuan)

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