SHANGHAI: Spot iron ore prices fell on Monday as steel mills in the world's top buyer China continued to stay out of the market on weak demand, but some traders expect prices could stabilise in the coming weeks.
Steelmakers are trying to keep inventories of the steelmaking raw material at their lowest levels amid the gloomy outlook for steel demand in early 2012, traders said. The likelihood that Beijing would maintain tightening measures to manage inflation also weighed on sentiment.
"The overall market remains very cautious, but I expect there should be a new wave of replenishing inventories by mills before the Spring Festival (Lunar New Year)," said an iron ore trader in the coastal province of Shandong.
"However, I expect iron ore prices will continue to fluctuate at current levels in the first quarter of next year."
Iron ore index with 62 percent Fe grade dipped 1.27 percent to $132.1 per tonne last Friday, hitting its lowest since Nov. 30.
China will maintain "prudent" monetary and "proactive" fiscal policies in 2012, and economists suggested Beijing is only ready to fine-tune economic policies, rather than swing into an outright monetary easing mode to aid economic growth.
"The overall market remains very cautious, but I expect there should be a new wave of replenishing inventories by mills before the Spring Festival (Lunar New Year)," said an iron ore trader in the coastal province of Shandong.
"However, I expect iron ore prices will continue to fluctuate at current levels in the first quarter of next year."
The most traded May steel rebar contract on the Shanghai Futures Exchange fell to 4,157 yuan ($650) per tonne on Monday, down 0.76 percent from the previous close.
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