Iron ore prices rose in Asia from a week ago despite a fall in steel and freight prices as investors made purchases ahead of holidays in China, traders said on Thursday.
Iron ore of Indian origin was quoted at $88-$90 a tonne for ores with 63.5 percent iron basis C&F, higher than last week's $83-$85.
Prices had slipped on a sudden lack of buying from China since touching a near one-year high at $115 in August. "The market has been picking up for a week or so," said Dhruv Goel, managing partner at SKTC, a trading firm in India's eastern state of Orissa. "All miners in the east have increased prices citing short supply."
China, the world's biggest steel maker, breaks for an eight-day holiday starting October 1 for its National Day and Mid-Autumn festival for which there is some urgency in buying stocks for immediate requirement, traders said.
"We have not seen any sharp decline in iron ore deliveries yet," said a dealer in Shanghai.
Traders in China feared a deliberate holding of stocks by sellers that would push prices higher, specially as the next fiscal year's price negotiations are on the anvil.
"Indian iron ore price could return to $100 a tonne next month as overseas miners want to squeeze the market ahead of the negotiations," the Shanghai-based dealer said.
Chinese steel mills are expected to unofficially kick off the iron ore price negotiation for 2010/11 starting April next month, while the China Iron and Steel Association holds a key annual conference in northern Chinese coastal city of Qingdao.
But some doubts persisted about the sustainability of iron ore's bounce back as steel and freight prices were down.
China's Hebei, world's fourth largest steelmaker cut steel rebar prices by 10 percent on Wednesday amid persisting oversupply.
The Baltic Exchange's main sea freight index that tracks rates to ship dry commodities including iron ore, fell to a four month low on Wednesday signifying weak demand.
Source: Reuters
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