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PrintSpot iron ore prices stayed near their weakest level in more than five months, reflecting slow demand from top importer China where steel mills are in no rush to snap up cargoes amid a soft market.
Chinese iron ore futures bounced back slightly on Tuesday after plumbing a fresh contract low and Shanghai steel edged up but not far above a record trough reached last week.
Ore with 62-percent iron content for immediate delivery to China .IO62-CNI=SI was little changed at $130.90 a tonne on Monday versus Friday's $130.70, its weakest level since Aug. 5, according to data compiled by Steel Index.
High stockpiles of iron ore at Chinese ports after recent brisk shipments show there is limited appetite for the raw material among mills.
Inventories of imported iron ore at major Chinese ports stood at 91.4 million tonnes last week, up more than 2 million tonnes from the previous week, based on data from industry consultancy Mysteel.
Chinese mills have in past years restocked heavily on iron ore ahead of the week-long Lunar New Year break, sending spot prices to near $160 in January last year ahead of the holiday that fell in February. But traders say the appetite is more limited this year ahead of the holiday that begins on Jan. 31.
"There is still some restocking going on, but people are buying in small volumes of 5,000 to 10,000 tonnes," said an iron ore trader in Shanghai.
"Persistently high borrowing costs, lower winter construction demand, nervousness over property market changes and the upcoming Chinese holidays" are reducing demand for steel and iron ore in China, the world's biggest consumer of the commodities, Standard Bank said in a note.
China's interbank rates have eased from recent highs although banks remain uneasy with the approaching Lunar New Year holiday which puts massive pressure on cash supply.
The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was up 0.5 percent at 3,487 yuan ($580) a tonne by midday.
It touched a record low of 3,441 yuan on Friday amid weak demand for the construction steel product.
Baoshan Iron and Steel, China's biggest listed steelmaker, raised prices for its main products, mostly used in manufacturing, for February for a second month in a row.
UOB-Kay Hian Securities analyst Helen Lau said Baosteel's move was unexpected.
"Baosteel's price hike is considered bold and can boost market sentiment and confidence. Price hikes by other steel mills are expected to follow suit to test demand strength," she said, adding she had not seen any meaningful recovery in restocking demand.
On the Dalian Commodity Exchange, the most-active iron ore for delivery in May rose 0.2 percent to 874 yuan a tonne, after reaching a contract low of 866 yuan.
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