Chinese Iron Ore Staging a Comeback

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Chinese iron ore futures rebounded on Tuesday and were on course for their second-biggest daily gain this year, with traders saying some steel mills made a surprising return to the market, sensing that ore prices might be near the bottom.

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Some mills had started restocking even though trading is normally quiet ahead of the Lunar New Year holiday, which falls in mid-February. Some expect iron ore could find support at $60 after losing nearly half its value in 2014.

Chinese steel prices were mixed for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($134.41) and a low price of CNY 840.00 ($134.41) per dry metric ton. After hitting a 30-day low of CNY 2,570 ($411.23) per metric ton on Thursday, January 29, the price of Chinese HRC rose 1.6% on Monday. Chinese slab gained 1.3% to finish at CNY 2,390 ($382.43) per metric ton.

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The cash price of steel billet remained essentially flat at $500.00 per metric ton on the LME. The steel billet 3-month price continues hovering around $480.00 per metric ton on the LME for the fifth day in a row.

The spot price of the US HRC futures contract reached a 30-day low after decreasing 4.7% to $550.00 per short ton. Just off of a 30-day low of $560.00 per short ton, the US HRC futures contract 3-month price rose 1.8% on Monday.

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