March 1, 2012 / 4:26 AM / 5 years ago

Iron Ore-Upturn stalls, Shanghai rebar slips

 * China 2012 iron ore imports may fall 14 pct-mining group
 * China official PMI at 5-month high, HSBC PMI weak
 * Shanghai rebar falls after four-day rise
 * China daily steel output stays low in mid-Feb

 (Adds China steel output, updates rebar price)	
 By Manolo Serapio Jr	
 SINGAPORE, March 1 (Reuters) - Iron ore steadied on
Thursday as investors took a breather from a recent rally and
assessed whether China's steel demand would bounce back enough
to warrant more buying of the raw material.	
 Offer prices for imported iron ore in China were little
changed on Thursday after rising $4-$5 a tonne since late last
week, as Shanghai steel futures dropped for the first time in
five sessions.	
 Iron ore with 62 percent iron content .IO62-CNI=SI was
flat at $143 a tonne on Wednesday, according to Steel Index,
after a seven-day rally that lifted the price to three-week
highs.	
 "Many of the small- to medium-sized mills are still not
ready to take cargo above $140, unless steel prices rise
strongly," said an iron ore trader in Shanghai.  	
 While spot steel prices have come off recent lows, demand
from China, the world's biggest steel consumer and producer,
remained sluggish, threatening demand for iron ore.	
 A Chinese mining group said the country's iron ore imports
may fall up to 14 percent this year as domestic output ramps up,
possibly deflating prices that have been mostly driven higher by
demand from the world's top buyer.	
 The higher output, combined with abundant stocks of imported
ore at Chinese ports, should cut the country's imports in 2012
to around 590 million to 650 million tonnes, said Wu Rongqing,
chief engineer of the China Mining Association at an industry
conference in Beijing this week. 	
 Last year, China imported a record 686 million tonnes of
iron ore, up 11 percent from 2010, with nearly half sourced from
Australia.	
 	
 LOW STEEL OUTPUT     	
 But others say iron ore prices may have further room to move
up in the near term.	
 "There should be a modest rise in iron ore prices in March
as steel demand picks up, but I don't expect any big spikes
before August due to uncertainties in China's economy," said an
iron ore trader in the country's coastal city of Dalian.	
 "The problem is there is no sign of any strong rebound in
steel demand right now."	
 Reflecting slow demand, China's steel production
has been mostly steady at low levels since the year started. 	
 Daily crude steel output stood at 1.699 million tonnes from
Feb. 11-20 versus 1.696 million tonnes in the previous 10 days,
latest data from the China Iron & Steel Association (CISA)
showed. 	
 On an annualised basis, the latest daily rate comes to 620
million tonnes, below last year's output of 683 million tonnes. 
  	
 China's daily output has been hovering below 1.7 million
tonnes since November, after hitting nearly 2 million tonnes in
mid-2011 amid a construction boom. CISA revised its figure for
Feb. 1-10 from 1.705 million tonnes earlier.	
 The most-traded October rebar contract on the Shanghai
Futures Exchange dropped 0.3 percent to 4,281 yuan
($680) a tonne at the close.	
 China's factory activity grew more than expected in February
as new export orders for big firms bounced back, a government
survey showed, while a private-sector report portrayed a
different picture of smaller companies lagging behind the
rebound. 	
    	
  Shanghai rebar futures and iron ore indexes at 0739 GMT
                                                                            
  Contract                          Last    Change  Pct Change
  SHANGHAI REBAR*                   4281    -14.00       -0.33
  PLATTS 62 PCT INDEX              144.5      0.50        0.35
  THE STEEL INDEX 62 PCT INDEX       143      0.00        0.00
  METAL BULLETIN INDEX            141.15      1.50        1.07
                                                                            
  *In yuan/tonne
  #Index in dollars/tonne, show close for the previous trading day
 ($1=6.2936 Chinese yuan)	
	
 (Additional reporting by Ruby Lian in SHANGHAI; Editing by
Sugita Katyal)	
 

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