[miningmx.com] — News that global miners Rio Tinto and BHP Billiton have abandoned a planned $116bn joint venture is unlikely to hit the steel market, with the proposal focused on a $10bn cost saving, not increasing production, analysts said.
Iron ore price offers remained firm on Monday, with the benchmark index holding at close to five-month highs last week, supported by reviving Chinese demand, although inquiries from buyers have thinned.
“I’m not sure there will be any impact on iron ore prices,” said Tim Barker, portfolio manager at BT Investment Management.
“The whole point of the (BHP Billiton/Rio Tinto) joint venture was such that it was designed around them individually marketing their iron ore. All it means is that there will be no single management company producing the iron ore.”
Offers for imported ore in China with 63% to 63.5% iron content were steady at $157 to $159 a tonne, cost and freight on Monday, Chinese industry consultant Mysteel said.
“My feeling is that domestic iron ore prices are likely to fall a little bit today, as steel mills have already slowed down on purchasing both for domestic and imported ore because it will take some time to see demand pick up,” said an iron ore trader in China’s eastern province of Shandong.
The Steel Index (TSI) 62% iron ore benchmark stood at $152.70 a tonne, cost and freight to China, at the end of trade on Friday, unchanged from the previous day.
The index rose for an eighth straight day to its highest in nearly five months on Thursday, matching the length of a rally in early March that eventually carried it to a two-year high near $185 on April 23.
Chinese steel mills, which have restarted operations after government-enforced curbs, have been boosting stockpiles of the steelmaking raw material shortly after a week-long holiday in early October.
The TSI rose 5% last week but analysts said iron ore prices may have risen too fast too soon, and could prompt steel mills to go slow on their purchases, given the hazy outlook for steel demand as China continues to rein in property speculation.