Iron ore edges up in slow market as China holiday looms
* Baosteel halts ops at Shanghai plant amid slowdown * China infrastructure boost may have limited impact -Baosteel * Vale sees iron ore prices hovering between $100-$120 By Manolo Serapio Jr SINGAPORE, Sept 27 (Reuters) - Spot iron ore prices ticked higher in a slow market on Thursday, with most Chinese steel mills nearly through with restocking the raw material ahead of a week-long holiday. Benchmark iron ore with 62 percent iron content .IO62-CNI=SI rose half a percent to $104.20 a tonne on Wednesday, according to data provider Steel Index. "There are very few inquiries and deals as the holidays approach. Many mills have already finished with their restocking, although a few are still in the market," said an iron ore trader in the port city of Rizhao in China's eastern Shandong province. Chinese markets are shut all of next week for the National Day break. Iron ore prices fell to three-year lows at below $87 a tonne earlier this month as waning steel demand in China cut appetite for the steelmaking ingredient. Prices have since bounced back to above $100, though they remain 30 percent off this year's peak as Chinese steel mills curb output. "I think iron ore prices have hit the bottom, but a stronger recovery depends on steel demand which remains sluggish so far," said Henry Liu, head of commodity research at Mirae Asset Securities. Baoshan Iron and Steel Co, China's biggest listed steelmaker, said it had suspended production at a loss-making plant in Shanghai, in a sign of the intense pressure on the sector. Baosteel is one of the first major Chinese mills to publicly disclose it is suspending production, but with the world's second-biggest economy cooling and banks restricting lending to an industry that built up $400 billion of debt during years of double-digit growth, more suspensions are likely. The more than $150 billion of infrastructure projects that the Chinese government approved recently will have minimal impact on steel demand in the world's biggest consumer, a Baosteel official told an industry conference. Shanghai steel rebar futures have dropped more than 14 percent this year on slower Chinese demand, slashing appetite for iron ore, the biggest revenue earner for top miners Vale , Rio Tinto and BHP Billiton . On Thursday, the most-traded January Shanghai rebar futures rose 1.3 percent to 3,571 yuan ($570) a tonne, but its gains were mostly driven by a jump in Shanghai equities. The hardest hit among industrial commodities this year by China's slower economic growth, iron ore prices have lost about a quarter this year, although Vale said it would push ahead with all its projects. Vale expects prices to hover between $100 and $120, depending on how fast low cost production comes onstream, said Jose Carlos Martins, executive director for ferrous and strategy. Shanghai rebar futures and iron ore indexes at 0535 GMT Contract Last Change Pct Change SHFE REBAR JAN3 3571 +44.00 +1.25 PLATTS 62 PCT INDEX 106 +0.50 +0.47 THE STEEL INDEX 62 PCT INDEX 104.2 +0.50 +0.48 METAL BULLETIN INDEX 106.59 +0.27 +0.25 Rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day ($1 = 6.3020 Chinese yuan) (Reporting by Manolo Serapio Jr.; Editing by Joseph Radford)
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