BHP buying ore Thu Jan 17, 2013 1:42pm IST
* Iron ore fell 5 pct on Wednesday, biggest drop in 14months * Many China mills have ample ore stocks, no rush to buy By Manolo Serapio Jr SINGAPORE, Jan 17 (Reuters) - Offers for foreign iron orecargoes in top importer China fell for a fourth day running onThursday, a day after the benchmark price fell the most innearly 14 months amid thin demand. Cargoes from top suppliers Australia and Brazil dropped by$5-$9 per tonne, according to Chinese consultancy Umetal,reflecting poor buying interest among steelmakers. The steelproducers had previously been stocking up on the raw materialsince December, pushing prices to 15-month highs last week. Benchmark iron ore with 62 percent iron content.IO62-CNI=SI slid 4.9 percent to $145.40 a tonne on Wednesday,the steepest single-day drop since Nov. 28, 2011, based on datafrom Steel Index. It was the lowest price since Jan. 2. "A lot of mills are not in a hurry to buy more cargo. Somehave enough iron ore to feed their furnace until the end of theChinese New Year," said an iron ore trader in Shanghai,referring to the week-long holiday in February. "We heard several mills have 30-40 days of inventory rightnow. At the end of December up to early January, the averagestocks at mills was just two weeks." Amid Wednesday's steep decline in prices, BHP Billiton , the world's No. 3 iron ore producer, bought a100,000-tonne cargo in a rare move that traders said may havebeen made to stem the price fall. The more than 80 percent rebound in iron ore prices fromthree-year lows in September is a boon for miners such as BHP,but the recent rally has also taken the market by surprise andturned off many Chinese buyers, triggering a decline in pricesfrom late last week. BHP purchased the cargo of 62-percent grade Australian ironore fines for February delivery at $145.50 a tonne via theGlobalOre trading platform on Wednesday, traders said. "This is very unusual. Maybe BHP wants to support pricesbecause there's no reason for it to buy the cargo, it's aproducer," said another Shanghai-based iron ore trader. BHP declined to comment on the transaction. The benchmark price could slip further before it stabilises,the first Shanghai trader said. While Chinese mills have notcancelled shipments yet, they could do so if prices slide somemore as they did four months ago when iron ore dropped to below$90 a tonne, he said. "The price needs to go below $140 for mills to becomeprofitable. They're still losing about 100 yuan per tonne sinceiron ore prices have far outpaced steel," said the first trader. Potential buyers sought lower prices on Thursday for threecargoes of Australian iron ore fines on trading platformGlobalOre, with 90,000 tonnes of 62-percent grade iron ore finesbid at $139 a tonne, over $6 less than BHP's purchase price onWednesday. Shanghai rebar futures and iron ore indexes at 0733 GMT Contract Last Change Pct Change SHFE REBAR MAY3 3946 +12.00 +0.31 THE STEEL INDEX 62 PCT INDEX 145.4 -7.50 -4.91 METAL BULLETIN INDEX 145.4 -5.02 -3.34 Rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day