Iron ore prices remain stable while China slumbers

SINGAPORE (REUTERS) - 

Spot iron ore prices were little changed on Friday with top buyer China out of the market for the Lunar New Year break, although hopes prices would rise next week kept Indian futures firm.

"Exporters from Orissa have started stockpiling material so they can sell at a higher price if the Chinese buying sentiment is good after the holiday," said Dhruv Goel, managing partner at iron ore trader Steelmint in India's eastern state of Orissa.

Restocking by Chinese steel mills and tight global supplies lifted spot-based indexes to record highs until Chinese buying stalled because of the week-long Lunar New Year holiday that began on Wednesday.

Chinese markets are scheduled to resume trading on Feb. 9.

The recent rally in spot prices is likely to push up second-quarter contract rates to a record $165 a tonne for Australian fines with 62 percent iron content, free on board, a Reuters poll showed.

The Steel Index 62 percent iron ore benchmark .IO62-CNI=SI was steady at $185.60 a tonne, cost and freight, on Thursday. Metal Bulletin's 62 percent gauge .IO62-CNO=MB was also unchanged at $183.36.

But expectations of further price gains in the spot market buoyed iron ore futures in India.

At 0622 GMT, 62 percent ore for March delivery on the Indian Commodity Exchange rose 0.6 percent to 8,061.50 rupees ($177) a tonne, including freight cost to northern China.

On the Multi Commodity Exchange, March 62 percent ore was up 0.3 percent at 7,496 rupees a tonne, free on board.

Volumes have yet to pick up since the two Indian exchanges introduced the world's first futures market for the steelmaking raw material, with trading limited to domestic players.

Indian exporters are eyeing a court ruling in mid-February on whether a ban on iron ore exports from the southern Karnataka state will be lifted.

Forward swaps also gained, with the Singapore Exchange-cleared February contract up 25 cents to $183.25 a tonne and March also 25 cents higher at $174.25.

($1 = 45.565 rupees)

(Reporting by Manolo Serapio Jr.; Editing by Michael Urquhart)