April 16, 2012 / 5:50 AM / in 7 years

Iron Ore-Shanghai rebar at one-week lows, ore gains shaky

* Rebar tracking broad-based losses in commodities
    * Benchmark ore at 6-month top, but offer prices steady

 (Updates rebar price)	
    By Manolo Serapio Jr	
    SINGAPORE, April 16 (Reuters) - Shanghai steel futures fell
to their lowest in more than a week on Monday, tracking losses
in other commodities triggered by slower economic growth in
China.	
    Slower growth could dent steel demand in top consumer China
and limit its appetite for imported iron ore, with prospective
ore buyers thinning as spot prices inched up to six-month highs.	
    The most-active October rebar contract on the Shanghai
Futures Exchange hit a session low of 4,327 yuan ($690)
a tonne, its weakest since April 5. It closed at 4,329 yuan,
down more than 1 percent, its biggest daily drop since Feb. 16.	
    Losses in rebar steel, used in construction, mirrored the
weakness in other commodities, with London copper at
three-month lows, as worries about the global economy from China
to Europe pushed investors out of risky assets. 	
    Data on Friday showing the Chinese economy expanded an
annual 8.1 percent in the first quarter, its slowest pace in
nearly three years, fuelled a sell-off across risk assets that
extended to Monday.	
    The China data amplified investor concerns about the global
economy, with rising Spanish bond yields renewing worries over
the debt-ridden euro zone and the U.S. economy also on shaky
ground with jobs creation slowing sharply in March.	
    "The market is on a wait-and-see. There's still some demand
for iron ore but that may fizzle out if we see steel prices
dropping," said a physical trader in Singapore.	
    Offer prices for imported ore in China were unchanged on
Monday, although the benchmark 62-percent grade iron ore
.IO62-CNI=SI rose 0.4 percent to $149.40 a tonne on Friday,
the highest since Oct. 18, based on data from the Steel Index.	
    Bids and offers were scarce on Monday, with most traders
away for a three-day industry conference in Qingdao in China,
said the Singapore-based trader, adding there could be some spot
shipments coming through to the market later in the week.	
    Spot rates are biased to head lower, with Shanghai rebar
futures down and prices of iron ore forward swaps <0#SGXIOS:>
mostly weaker. 	
    The Singapore Exchange-cleared June contract, for
instance, stood at $144.56 on Friday, well below the current
index-based spot price.	
    Despite recent gains, iron ore is still 18 percent down from
where it was a year ago when a construction boom in China
boosted demand for the steelmaking raw material.	
    Even with the record output of China's steel mills in March,
when production reached 61.58 million tonnes, actual end-user
purchases of steel remained soft, although that may start to
recover soon, according to investment bank Macquarie.	
    "We view the first quarter as the bottom of the cycle and
things are now noticeably improving on a sequential basis,"
Macquarie said in a note, citing a recovery in property
transactions and a surge in bank lending last month.	
        	
  Shanghai rebar futures and iron ore indexes at 0736 GMT
                                                                                          
  Contract                          Last    Change  Pct Change
  SHANGHAI REBAR*                   4329    -48.00       -1.10
  PLATTS 62 PCT INDEX             151.25      0.00        0.00
  THE STEEL INDEX 62 PCT INDEX     149.4      0.60        0.40
  METAL BULLETIN INDEX            148.72     -0.53       -0.36
                                                                                          
  *In yuan/tonne
  #Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.3030 Chinese yuan)	
	
 (Editing by Himani Sarkar)
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