Spot iron ore prices in the world's biggest buyer China held steady at around $190 per tonne on Thursday, supported by the country's resilient steel output as well
as continued tight supply of the raw material from India.
Chinese steel demand, particularly for long products, is set to pick up in the peak consumption season over September and October, though the steel industry association has warned of little growth in demand for flat products in the second half.
"We haven't seen massive purchases (of iron ore) from Chinese steel mills yet, while market players are expecting consumption to improve with iron ore fundamentals remaining healthy," said an iron ore trader in Shanghai, which has long-term contracts with overseas miners.
China produced a daily average of 1.935 million tonnes of crude steel in August, data from the China Iron & Steel Association (CISA) showed, as several big steelmakers, producing mainly flat products, scheduled maintenance over the summer in response to the traditional demand weakness.
However, CISA warned that the country's steel output growth would decelerate in the second half, but yearly production was still on track to hit a fresh peak this year after the country produced a record 627 million tonnes last year.
While an uncertain economic outlook in the United States and Europe coupled with tightening policies in China have clouded long-term demand for steel products, raising concerns among Chinese steelmakers and iron ore traders, falling exports from India may limit potential price falls.
"Despite the potential for a U.S. and Europe slowdown, we expect China's steel production to remain robust driven by the social housing programme and the development of central and western provinces," the Commonwealth Bank of Australia said in a research note.
Offers of Indian iron ore fines with 63/63.5-perent grade were unchanged at around $188-190 per tonne, including freight, on Thursday, almost flat for the whole week, trading sources said.
"Iron ore has been rather steady this year as reduced supplies from India have offset the negative macro impact on iron ore prices," the trader added.
Global major iron ore indexes, used by top miners to peg quarterly contract prices, extended gains on Wednesday.
The Steel Index for 62-percent grade .IO62-CNI=SI climbed marginally by 10 cents to $181 a tonne on Wednesday, its highest since May 5, and the Platts Iron Ore Index for 62-percent grade IODBZ00-PLT rose 25 cents to $183 a tonne, a level last seen only on May 11.
The benchmark January rebar contract on the Shanghai Futures Exchange traded almost flat after touching an intraday high of 4,838 yuan per tonne on Thursday.