* China daily steel output drops in July vs June
* Baosteel cuts prices for third time since June
(Updates rebar price)
By Manolo Serapio Jr
SINGAPORE, Aug 13 Sellers of foreign iron ore
cargoes to China slashed prices further on Monday as the
benchmark rate dropped to its lowest in more than 2-1/2 years,
with losses likely to deepen further as weak steel demand forces
mills to cut output.
Iron ore has fallen 24 percent from this year's peak near
$150 in April as demand from the world's top consumer sagged
along with its economy.
Chinese data last week, including a much
smaller-than-forecast growth in exports due to a faltering
European economy, suggested the slowdown in the world's No. 2
economy could well extend into the third quarter.
Price offers for imported iron ore cargoes in China fell by
$1-$2 per tonne on Monday, according to Beijing-based
consultancy Umetal, as buying interest remained thin.
That could further set back prices this week. Benchmark iron
ore with 62 percent iron content .IO62-CNI=SI fell nearly 1
percent to $113.80 a tonne on Friday, its cheapest since Dec.
29, 2009, based on data from Steel Index.
For the past 23 trading days since early July, iron ore
prices have only risen twice.
"We don't know where the bottom is, but a lot of people
believe $105 is a technical possibility," said a Shanghai-based
iron ore trader, who has held off from selling a cargo of about
100,000 tonnes for the past two months because of falling
"If there's iron ore buying it's primarily because steel
mills need to refill stocks. Otherwise they have little
A weak steel market had been curbing China's demand for iron
ore, with prices down 15 percent from this year's peak,
also reached in April. Shanghai's most-traded January rebar
futures fell 1 percent to close at 3,683 yuan ($580) a tonne.
Baoshan Iron and Steel, China's biggest listed
steelmaker, is not expecting demand to rebound any time soon,
even during the start of an otherwise seasonally brisk period
for steelmakers when construction usually picks up.
On Friday, Baosteel said it would cut prices of its products
for September, its third price cut since June.
China's daily crude steel output slipped 0.8 percent to 1.99
million tonnes in July from the previous month, government data
showed on Monday, as steelmakers scaled back output in the face
of sharply falling prices.
"I don't think a rebound will take place this week nor next
week," a Hong Kong trader said of iron ore prices, blaming the
decline on last week's poor Chinese data.
Ample iron ore supplies in the spot market are also weighing
on prices as miners, especially the big ones, continue to sell
cargoes. At current levels, iron ore prices are still nearly
three times their production cost.
Brazil's Vale is selling 150,000 tonnes of
65-percent grade iron ore at a tender closing later on Monday,
Shanghai rebar futures and iron ore indexes at 0701 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3683 -38.00 -1.02
PLATTS 62 PCT INDEX 115 -2.00 -1.71
THE STEEL INDEX 62 PCT INDEX 113.8 -1.00 -0.87
METAL BULLETIN INDEX 114.07 -3.31 -2.82
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3600 Chinese yuan)
(Editing by Miral Fahmy)