OREANDA-NEWS. February 06, 2015. Oversupply continued to pressure spot prices February 2, with buyers in no rush to purchase given the amount of material on offer.

Platts assessed the 62% Fe IODEX 75 cents lower at \\\$61.25/dry mt CFR North China.

Surging supply was seen as the primary downward driver, with some sources citing the lack of weather related "This Chinese New Year procurement period is very different from past year," a Shanghai-based trader said.

"Nobody is in a hurry this year as there is no shortage of iron ore or steelmaking raw materials at all," he added, suggesting mills were carrying out maintenance on furnaces given the weak steel market.

Perhaps exacerbating the pervading bearishness, China's manufacturing activity saw a "fractional deterioration" in January, HSBC said January 30, with its PMI coming in at 49.7, down slightly from the earlier preliminary reading of 49.8, but up marginally from the final December reading of 49.6.

HSBC said this signaled a second successive monthly deterioration in the health of the manufacturing sector, but this was quite slight.

"Both new orders and new export orders saw downward revisions, but still signaled marginal expansion," said Hongbin Qu, HSBC's chief economist for China. "We think demand in the manufacturing sector remains weak and more aggressive monetary and fiscal easing measures will be needed to prevent another sharp slowdown in growth."

A Hong Kong-based trader called this PMI reading "worse than expected," dampening sentiment as the trading week opened.

In the meantime, an offer of \\\$70.60/dmt CFR Qingdao was placed on globalORE for 64.91% Fe Brazilian Iron Ore Carajas fines, for a 170,000-mt shipment arriving February, and containing 1.66% alumina and 2.62% silica.

Sources said this was likely the same IOCJ fines cargo Vale had sold January 29 at \\\$70.60/dmt CFR China on COREX.

The shipment was sold as a specific quantity of 170,573 mt and will pass Singapore February 9, was concluded as containing 1.66% alumina, 2.62% silica, 0.038% phosphorus, 0.39% manganese, 2.03% loss on ignition and 8.3% moisture. The identity of the buyer on that day was also unknown.

"[This] doesn't seem like a good sign to me," a second Singapore-based trader said. "[The buyer January 29] probably can't [resell] it bilaterally."

Australian miner Rio Tinto was heard to be offering 62% Fe Pilbara Blend lump at \\\$82.50/dmt CFR Qingdao on COREX, according to sources earlier notified by the miner.

The 70,000 mt PB lump cargo will load February 15-24.

Sources said Rio Tinto had offered this same PB lump cargo on COREX a few times last week, the last time January 30 when it was offered at \\\$84/dmt CFR China.

The futures markets remained largely stable February 2. Iron ore futures on the Dalian Commodity Exchange were rangebound, with the most actively traded May contract last trading at Yuan 472/dmt (\\\$77/dmt), down Yuan 2/dmt from January 30, and settling at Yuan 473/dmt, down Yuan 1/dmt on the day.

The most liquid May rebar contract in Shanghai last traded at Yuan 2,492/mt (\\\$406/mt), down Yuan 6/mt from January 30, and settled at Yuan 2,496/mt, down Yuan 4/mt from January 30.

The Tangshan billet spot price remained steady from January 30 at Yuan 2,020/mt (\\\$329/mt) ex-stock Tangshan.