SHANGHAI Aug 24 Benchmark iron ore prices in China fell to $95 a tonne on Monday, easing 17 percent from its nearly one-year peak of $115 in early August, as traders said many Chinese steel mills stopped buying ore for future delivery.
Indian ore of 63/63.5 percent iron content for future delivery was quoted at $95-98 a tonne, including freight costs, while ores for immediate delivery were bid at about 780 yuan ($114) a tonne, industry consultancy Mysteel said on Monday.
Many steel mills in the largest producing country had been purchasing only ores for immediate delivery for at least one week due to the rising uncertainties in the steel market, which has weakened since early August, iron ore traders said.
"Everybody knows the Chinese market is a volatile market, so steel mills bought a lot when the steel market was booming and suspended purchasing as the market is fading," a Shanghai-based steel trader said on Monday.
"We should not underestimate the momentum. India iron ore prices are likely to fall to $90 tomorrow as some sellers are impatient now," said the trader, who works for a major private-sector iron ore trading firm.
Another trader predicted that iron ore prices in China would fall further, since many merchants had built up stockpiles when prices were hovering near $80 a tonne.
Iron ore prices in Chinese domestic markets have been following steel prices closely for months, partly because Chinese steel mills are setting up the volumes of iron ore purchases with their production schemes and cash positions, which are correlated with steel prices.
The surge of the iron ore prices in the Chinese market, which started in early July, was also triggered by the Chinese government's detention of four Shanghai-based employees of Australian miner Rio Tinto (RIO.AX)(RIO.L) on allegations of illegally obtaining commercial secrets and bribery.
China claimed a small victory after it reached a slightly cheaper iron ore price with Australian miner Fortescue (FMG.AX) this week, but talks with major iron ore suppliers Rio, BHP Billiton (BHP.AX)(BLT.L) and Vale (VALE5.SA) are still deadlocked.
The China Iron and Steel Association (CISA), the industry group and the de facto negotiator represents Chinese steel mills in the price talks, have said excess imports was a hindrance in talks. However, a report by the China Business Journal said on Saturday that some industry experts and steel mill officials had urged the central government to replace some CISA's executives who are leading the iron ore negotiations.
They criticised CISA for its "foolhardiness" and lack of wisdom in the negotiations, and for missing several chances to settle the price due to its insistence on a 40 percent price cut, according to the Chinese-language newspaper. ($1=6.831 Yuan) (Reporting by Alfred Cang and Edmund Klamann; Editing by Ken Wills)