Iron ore price hits 8 month high on strong Chinese demand

SINGAPORE (Commodity Online): Spurred by the strong demand from top buyer China, coupled with tight supplies and concerns over the tropical cyclone in top exporter Australia boosted up the iron ore prices to fresh eight month high.

In tune with this price rise, some Chinese steelmakers have started reselling iron ore stocks back to the market to cash in on surging prices, reports Reuters.

The three major iron ore indexes, which track spot transactions in China, have risen between 1.4 percent and 3 percent so far this week, after touching their highest levels since late April to early May on Thursday.

The cumulative market forces will push prices to $200 a tonne, a level not seen since 2008, predicts traders and analyst.

With Chinese mills well stocked for the remainder of January and February, recent bookings at improved prices for March/April delivery suggest a bullish outlook on Chinese steel for the spring, the Steel Index (TSI) said in its daily report.

Traders holding high-grade Australian fines sold their cargo at rates as high $184 a tonne, cost and freight to China, on Thursday, up from $183 the previous day

Global miner BHP Billiton has begun auctions for spot iron ore shipments to Chinese steel mills, the China Securities Journal reported on Friday, as the world's third largest iron ore producer tries to cash in on surging prices. [ID:nTOE70D00R]

Shanghai rebar futures rose to two-month peaks on last Monday, showing that iron ore prices have room to keep recent gains as Chinese demand lifted key indexes to their highest since May.

In India Steel futures at NCDEX January contract is now trading at Rs.28330 per 10 MT, higher by 0.04 per cent. Today the contract traded in the range of Rs.28350-Rs.28210 in the morning session. Open interest of the contract is 40700 as of now.