SINGAPORE: Iron ore futures in China and Singapore edged lower on Thursday as weak Chinese buying interest kept spot prices near their lowest level in almost six years.
Most Chinese buyers replenishing iron ore stockpiles ahead of the week-long Lunar New Year holiday that starts on Feb. 18 may have already completed their purchases, traders said.
"Restocking is almost done and it's too late to do any more now because it's very difficult to get LCs (letters of credit) with the holidays approaching," said an iron ore trader in Shanghai.
Iron ore for May delivery on the Dalian Commodity Exchange was off 0.2 percent at 478 yuan ($77) a tonne by 0305 GMT. The March iron ore contract on the Singapore Exchange slipped 0.8 percent to $62.44 a tonne.
Benchmark 62-percent grade iron ore for immediate delivery to China's Tianjin port was unchanged at $62.20 a tonne on Wednesday, according to The Steel Index. The price hit $61.10 last week, its lowest since May 2009.
"Weak steel prices in China have put intense pressure on steel mill margins - and the pain is being shared in raw material prices," Morgan Stanley said in a report, adding that an "unusually quiet period" ahead of Lunar New Year is a key contributor to the price weakness.
Morgan Stanley sees iron ore averaging at $79 a tonne this year and forecasts it would slip to $75 in 2016.
The price of iron ore has dropped a further 13 percent in 2015 after a 47-percent slide last year 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.
But the world's top three iron ore miners - Vale, Rio Tinto and BHP Billiton - appear to be entering the final phase of a fight to increase market share in China as massive expansions drive more high-cost rivals out of business.
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