* No recovery seen yet for China steel, iron ore prices
* China iron ore imports probably fell in July
* Rio predicts rebound in Chinese economy later this year
* Iron ore shipments to China from Australian port down
(Adds Rio Tinto comment, updates rebar price)
By Manolo Serapio Jr
SINGAPORE, Aug 8 (Reuters) – China's steel futures slipped
for a fourth day in six on Wednesday, dogged by sluggish demand
that is keeping pressure on spot prices of raw material iron
ore, with both commodities likely to see more weakness before
any recovery begins.
Down more than 16 percent this year, iron ore is wallowing
near its cheapest in 2-1/2 years as Chinese steel mills, the
world's biggest buyers of iron ore, limit spot purchases until
steel prices rebound significantly.
The most-traded January rebar contract on the Shanghai
Futures Exchange closed down half a percent at 3,667
yuan ($580) a tonne. The contract hit an all-time low of 3,631
yuan on Friday, and is down 11 percent this year.
Spot steel prices were stabilising, although the market is
"still very weak," said an iron ore trader based in Shanghai.
"It's difficult to expect any meaningful recovery in both
steel and iron ore prices in the near term," the trader said.
A stuttering Chinese economy is limiting the country's
demand for raw materials. With abundant stocks at home, analysts
expect China's imports of iron ore and other commodities such as
copper and crude oil to drop for a second month in a row in
July. The data is due to be released on Friday.
But Rio Tinto , the world's No. 2 iron ore
miner, said it expects to see signs of improvements in China's
economic activity by the end of the year, sticking to its $16
billion spending plan for 2012, even as weaker prices dragged
first-half profits 34 percent lower.
Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI eased 0.3 percent to $116.20 per tonne on
Tuesday, according to Steel Index, falling for a fourth straight
That is just a dollar away from the $115.20 reached on July
30 – the lowest since Dec. 29, 2009 – at the end of a 14-day
Iron ore shipments to China from Port Hedland in top
exporter Australia fell 7.1 percent in July from the previous
month, although they were still up strongly from July last year,
port authority data show.
SHORT ON STOCK
But miners this week managed to sell cargoes at prices not
far from recent deals and in line with market offers, suggesting
the market could soon find a bottom, traders said.
BHP Billiton sold 90,000 tonnes of
57.7-percent grade Australian Yandi iron ore fines at $107.23 a
tonne at a tender on Tuesday, against $107.50 last week, the
Shanghai trader said.
Vale sold a 147,000-tonne cargo of 64.08-percent
grade iron ore at $121.97, a level similar to recent deals, he
"Some mills might be really short on stock, so they need to
replenish," said a Singapore-based trader.
But unless steel demand picks up, traders say iron ore
prices are unlikely to recover strongly and could even slip
further if more Chinese producers curb output.
China's crude steel production fell 2.2 percent to 1.949
million tonnes on average over July 21-31 from July 11-20, data
from the China Iron and Steel Association showed.
"We expect that downward pressure in global and Chinese
steel prices will likely continue but show a decelerating trend
over the next month or so," Deutsche Bank said in a note.
"We therefore expect that the demand for iron ore cargoes to
continue to erode."
Heavy rain in Shanghai could also dampen physical trading on
Wednesday, traders said.
Typhoon Haikui struck China on Wednesday, packing winds of
up to 110 km per hour (68 mph), prompting officials to evacuate
nearly 2 million people and grounding hundreds of flights to and
from Shanghai and other cities.
Shanghai rebar futures and iron ore indexes at 0741 GMT
Contract Last Change Pct Change
SHFE REBAR JAN3 3667 -20.00 -0.54
PLATTS 62 PCT INDEX 117.75 +0.00 +0.00
THE STEEL INDEX 62 PCT INDEX 116.2 -0.40 -0.34
METAL BULLETIN INDEX 118.72 -0.25 -0.21
Rebar in yuan/tonne
Index in dollars/tonne, show close for the previous trading day
($1 = 6.3664 yuan)
(Reporting by Manolo Serapio Jr.; Editing by Robert Birsel)