Iron ore near 2013 peak on China steel demand hopes

Smaller producer Fortescue Metals Group expects the price of iron ore to settle around $120-$130 this year, with potential for it to be higher if Chinese demand remains strong.

'HIGH AND RISKY'

Rio Tinto's spot sale of a cargo of Australian 61 percent grade Pilbara iron ore fines at a higher than expected price on Monday helped propel the market this week as the Chinese returned from Spring Festival holidays.

Vale sold a cargo of 64.7 percent grade Brazilian Carajas fines at a tender on Tuesday at $168 per tonne, traders said.

A similar 64.48 percent grade Brazilian cargo traded at $161.61 a tonne in late January.

Traders said Vale is offering another 135,000 tonnes of the Carajas fines at a tender closing later on Wednesday.

A Shanghai-based trader said he is considering buying cargoes, but is hoping for prices to retreat first.

"Before the Chinese New Year, most medium-sized traders have all sold out cargoes so they are looking to buy, but some believe the prices are too high and risky," he said.

If steel prices sustain recent gains, that may prod these traders to chase iron ore cargoes, he said.

Demand for steel in China usually picks up after the Lunar New Year as construction activity resumes following the winter freeze.

Spot prices of steel rebar in Shanghai rose by 50-60 yuan to between 3,860 and 3,960 yuan per tonne on Tuesday, according to Chinese consultancy Umetal.

The most actively traded October rebar contract on the Shanghai Futures Exchange was steady at 4,190 yuan by the midday break, after hitting nine-month highs in early February

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