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Vale sees iron ore at $70-$79 in Q2, most of the year

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    Iron ore holds up, but weak China steel seen capping gains

    Wed Feb 11, 2015 9:00am IST
    * Iron ore rises to 1-1/2 week top above $62/tonne
    * Vale sees iron ore at $70-$79 in Q2, most of the year

    By Manolo Serapio Jr

    SINGAPORE, Feb 11 (Reuters) - Iron ore rose to a 1-1/2-week
    high above $62 a tonne after a recent drop to its lowest level
    in nearly six years spurred some buying interest in spot
    cargoes, although further gains are likely to be limited ahead
    of the Lunar New Year holiday.

    Slower steel consumption in top market China has prompted
    some large mills to scale back production, with output of big
    producers down from mid-January, according to estimates by the
    China Iron and Steel Association.

    "Steel sales are very poor and even if iron ore prices have
    gone down, most Chinese mills are still incurring losses," said
    a trader in Shanghai.

    Iron ore for immediate delivery to China's Tianjin port
    .IO62-CNI=SI rose nearly 1 percent to $62.20 a tonne on
    Tuesday, according to data compiled by The Steel Index (TSI).
    The price hit $61.10 last week, its lowest since May 2009.

    A flurry of buying activity helped push up the benchmark
    price with some Chinese traders shopping for cargoes arriving in
    March although there were few steel mills buying, TSI said.
    "The recent pick-up in prices is supported by March iron ore
    delivery when construction activity is expected to begin
    reviving following a seasonal slowdown," ANZ Bank said in a

    Top iron ore miner Vale expects iron ore to trade
    between $70 and $79 a tonne in the second quarter and to stay
    there for most of the year, the Brazilian company's chief
    executive, Murilo Ferreira, said.

    Despite lower iron ore prices, Ferreira said he did not
    expect any writedowns on Vale's assets.

    After falling 47 percent last year, iron ore has dropped a
    further 13 percent so far in 2015 amid a glut, as big, low-cost
    miners lifted output to ship more to China where steel
    consumption shrank last year for the first time since 1981.

    Trading activity in China is expected to slow down as market
    participants take off during the week-long Lunar New Year break
    that starts from Feb. 18.

    Rebar and iron ore prices at 0306 GMT

    Contract Last Change Pct Change
    SHFE REBAR MAY5 2484 -2.00 -0.08
    DALIAN IRON ORE DCE DCIO MAY5 479 +2.00 +0.42

    THE STEEL INDEX 62 PCT INDEX 62.2 +0.60 +0.97
    METAL BULLETIN INDEX 62.38 +1.18 +1.93

    Dalian iron ore and Shanghai rebar in yuan/tonne
    Index in dollars/tonne, show close for the previous trading day

    (Editing by Himani Sarkar)
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