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UPDATE 1-Iron ore slips despite China rate cut, stockpiles rise

Published 26/10/2015, 06:46 pm
© Reuters.  UPDATE 1-Iron ore slips despite China rate cut, stockpiles rise

* Shanghai rebar not far from record low

* Iron ore stocks at China ports at highest since May (Recasts, updates prices, adds Hebei steel output)

By Manolo Serapio Jr

MANILA, Oct 26 (Reuters) - Iron ore futures in China and Singapore ticked lower on Monday, giving up early modest gains spurred by Beijing's latest interest rate cut, amid pressure from a weak steel market.

Shanghai rebar steel futures hovered near a record low.

"The market for steel products remains weak so mills are pushing to lower their cost," said a Shanghai-based iron ore trader.

The most-traded January iron ore on the Dalian Commodity Exchange DCIOcv1 eased 0.1 percent to close at 365.50 yuan ($58) per tonne, after peaking at 371.50 yuan.

On the Singapore Exchange, November iron ore SZZFX5 slipped 0.2 percent to $48.65 per tonne after hitting a session high of $49.

China's major financial markets, including stocks, bonds and currency, adjusted cautiously to the latest policy easing, but trading volumes were subdued, indicating some wariness over uncertain economic fundamentals. urn:newsml:reuters.com:*:nL3N12Q1ZU

China's central bank cut interest rates on Friday for the sixth time in less than a year, and again cut the amount of cash that banks must hold as reserves in a bid to jumpstart growth in its stuttering economy. urn:newsml:reuters.com:*:nL3N12N405

January rebar on the Shanghai Futures Exchange SRBcv1 rose 0.3 percent to end at 1,801 yuan a tonne, not far above an all-time low of 1,781 yuan reached on Friday.

Rising stocks of imported iron ore at China's ports reflect slow demand for the steelmaking commodity, said the Shanghai trader.

Inventory at China's major ports rose 750,000 tonnes to 83.95 million tonnes as of Oct. 23, the highest since late May, according to data tracked by consultancy SteelHome. SH-TOT-IRONINV

"Seasonality suggests there is still an upside in port stocks and a downside in iron ore prices," ANZ analysts said in a research note.

Benchmark 62-percent grade iron ore for delivery to China's Tianjin port .IO62-CNI=SI dropped 1 percent to $50.90 per tonne on Friday, based on data compiled by The Steel Index.

That was the lowest for the spot benchmark since July 24.

A breach of $50 would bring iron ore closer to this year's low of $44.10 - hit in July - the weakest since TSI began compiling data in 2008.

Soft demand and prices continued to discourage production in China's top steelmaking province of Hebei where crude steel output fell 2.5 percent to 14.87 million tonnes in September, data from the country's customs authority showed. urn:newsml:reuters.com:*:nL3N12F3AH

Rebar and iron ore prices at 0711 GMT

Contract

Last

Change Pct Change SHFE REBAR JAN6

1801

+5.00

+0.28 DALIAN IRON ORE DCE DCIO JAN6

365.5

-0.50

-0.14 SGX IRON ORE FUTURES NOV

48.65

-0.10

-0.21 THE STEEL INDEX 62 PCT INDEX

50.9

-0.50

-0.97 METAL BULLETIN INDEX

51.62

-0.56

-1.07

Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, shows close for previous trading day ($1 = 6.3508 Chinese yuan) (Editing by Tom Hogue and Gopakumar Warrier)

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