"Some mills have less than three weeks' worth of iron ore now; they need to procure," the trader said.
A Tianjin-based trader concurred, saying he received more buying inquires from Chinese mills today due to depleting inventories, with mainstream Australian material particularly in shortage.
Port stock levels of iron ore in China were also heard at low levels of about 68 million mt, market sources said, citing an industry report published last Friday. Although this was up from the 67 million mt level heard in late March, it still marks a huge fall from the 100 million mt level heard in the second half of 2012. Trade sources also said that there was a lack of mainstream Australian port stocks.
"The mills were mostly absent from the spot market the past two weeks, but there is a shortage of iron ore in the spot market; I have yet to find the iron ore my customers are requesting," said the Tianjin-based trader.
A Hong Kong-based trader said buyers were looking for spot shipments of ore as crude steel production was likely to sustain itself at current high levels for a while before any significant cuts take place, so there is still a need for them to stock up on the steelmaking raw material.
Sources said China's average daily crude steel output for the last 11 days of March weighed in at 2.072 million mt/day, according to estimates by the China Iron & Steel Association. This was up 0.4% from the second 10 days of March.
Most market participants also said that steel consumption was likely to pick up in the second quarter, which would "support crude steel production" and the need for spot iron ore.
Meanwhile, rebar futures gained as the most active October contract last traded up Yuan 37/mt from the last trading day (April 3) at Yuan 3,835/mt ($612/mt), and settled Yuan 16/mt higher, also from the same trading date, at Yuan 3,806/mt Monday.
Physical prices of long steel products edged higher as the Tangshan spot square billet price rose Yuan 10/mt from last Friday to Yuan 3,250/mt ($518.75/mt), according to a steelmaker in the key production hub.
But not all market participants held that optimistic a view on stronger demand for iron ore.
A Shanghai-based trader said most of his customers were still cautious at the uncertainty of the steel and iron ore markets, so they were waiting it out on the sidelines and not committing to spot ore shipments at the moment.
A second Beijing-based trader added that Chinese mills were trying very hard to cut down on steel production in lieu of poor steel sales, so they would be wary of buying too much spot ore material.
BHP BILLITON SELLS SECOND SPOT MAC CARGO THIS YEAR
Australian miner BHP Billiton sold Monday at $137.88/dmt CFR China its second 61%-Fe Mining Area C (MAC) fines cargo on the spot market this year. The 80,000 mt shipment will load April 21-30.
Market participants were surprised at the level that the MAC fines shipment traded at, indicating that the repeatable trading range for such a cargo was at $136-137/dmt CFR China.
The first MAC fines shipment the miner offered and sold this year was concluded February 22 at $150/dmt CFR China. That 90,000 mt shipment loaded February 28-March 9.
Fellow Australian mining giant Rio Tinto sold 64.5%-Fe South African Palabora Mining Co. concentrate (PMC) at $141.53/dmt CFR China, through a spot tender that it first issued Friday night, according to traders who received the tender. The 75,000 mt cargo will load over April 22-May 1.
GBG Price at posting:
20.0¢ Sentiment: Buy Disclosure: Held
