UPDATE 1-China, Singapore iron ore futures slip; fewer spot deals

* Brisk supply still a threat for a market rebound – traders

* Iron ore may climb back to $100 next week – ANZ

(Recasts, adds spot cargoes and Singapore futures, updates

prices)

By Manolo Serapio Jr

SINGAPORE, July 9 (Reuters) – Iron ore futures in China and

Singapore fell on Wednesday after sharp gains in the previous

session and as ample supplies in the market made a recovery in

prices difficult.

Fewer spot iron ore cargoes were traded after a flurry of

deals on Tuesday, traders said. Spot iron ore prices have

struggled to bounce back above $100 a tonne after falling below

that level in mid-May and have been trading near their weakest

levels since September 2012.

Iron ore for September delivery on the Dalian Commodity

Exchange dropped 1 percent to close at 702 yuan ($110)

a tonne, after gaining more than 2 percent on Tuesday.

The August iron ore contract on the Singapore Exchange

fell 1.1 percent to $95.77 per tonne, after rising 1.6

percent in the previous session.

“In my opinion right now it’s 50-50, there’s not too much

downside, there’s not too much upside for the market,” said a

trader in Shanghai who has held off from buying iron ore until

stronger signs emerge on where prices are headed.

There is particularly an oversupply of lower grade iron ore

cargoes in the market, prompting most sellers to offer deep

discounts, traders said.

Miners making deeper cuts in prices for clients as

competition heats up include top producers Rio Tinto

and Fortescue Metals Group.

Reflecting excess supplies of low-grade material, the price

gap between high-grade and low-grade iron ore has widened to

about $16 a tonne in July from $10 in early May, based on the

62-percent and 58-percent price gauge compiled by Steel Index.

“Lower grades are definitely a problem right now. There’s

still demand for high-grade, but there’s a lot of lower grade

cargoes where a lot of discounting has been happening,” said

another Shanghai-based trader.

Benchmark 62-percent grade iron ore for immediate delivery

to China .IO62-CNI=SI rose 0.6 percent to $96.50 a tonne on

Tuesday, according to data compiled by Steel Index.

The price of the raw material that is the top revenue earner

for global miners Vale and Rio Tinto has gained 8.4

percent since falling to a 21-month low of $89 in mid-June. For

the year, however, it is still down 28 percent, among the

hardest hit in industrial commodities.

But a steady appetite for high-grade spot cargoes among

Chinese traders and mills has spurred optimism that prices may

stabilise and head higher.

Stronger buying interest, stable stocks at Chinese ports and

an improving economy could help lift iron ore to $100 by next

week, Australia and New Zealand Bank said in a note.

“However, prices are not expected to exceed $100 as

Australian supplies are forecast to remain strong in the

July-September quarter,” it said.

Stockpiles of imported iron ore at Chinese ports have held

above 100 million tonnes since February, hitting a record high

of 113.7 million tonnes last week.

In spot deals, a cargo of 62-percent grade Australian iron

ore fines was sold at $96.40 a tonne on the globalORE platform,

according to its website. The price was largely in line with

deals on Tuesday when five cargoes were sold.

Shanghai rebar futures and iron ore indexes at 0730 GMT

Contract Last Change Pct Change

SHFE REBAR JAN5 3095 -2.00 -0.06

DALIAN IRON ORE DCE DCIO SEP4 702 -7.00 -0.99

SGX IRON ORE FUTURES AUG 95.77 -1.04 -1.07

THE STEEL INDEX 62 PCT INDEX 96.5 +0.60 +0.63

METAL BULLETIN INDEX 96.51 +1.25 +1.31

Dalian iron ore and Shanghai rebar in yuan/tonne

Index in dollars/tonne, show close for the previous trading day

($1 = 6.1969 Chinese yuan)

(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin and

Anupama Dwivedi)

UPDATE 1-China, Singapore iron ore futures slip; fewer spot deals