Spot iron ore prices for 63.5/63-percent grade in China were steady at $190 per tonne on Wednesday, as some steel mills suspended purchases of raw material until
they see a decisive lift in steel prices first, traders said.
"A few mills have started buying iron ore for the winter season, while most are still on the sidelines, waiting for a bigger profit margin from steel prices," said a Shanghai-based trader.
"Iron ore prices have been stable at these levels since last week and look likely to stay that way for a few days," he added.
The Steel Index for 62-percent grade .IO62-CNI=SI rose $0.40 to $180.90 a tonne on Tuesday, while the Metal Bulletin Iron Ore Index .IO62-CNO=MB for the same grade gained $0.61 to $180.95 a tonne.
The Platts Iron Ore Index for 62-percent grade IODBZ00-PLT stands at $182.75 a tonne.
Although few mills are buying at the moment, most of them seemed optimistic about steel consumption in the coming months, some analysts said.
"Although traders have shied away from stockpiling due to credit liquidity problems, and are largely responsible for the current high volume of port stock," Mirae Asset analyst Henry Liu noted.
Iron ore stocks at Chinese port stood at 97.9 million tonnes by Aug. 26, according to Chinese industry consultancy Umetal.
Liu also said in a research note on Tuesday that steel mills are ramping up production capacities, especially in long steel.
"At least 80 million tonnes of new capacity will be added by the end of 2011, with another 80 million to come on stream by the end of 2012," he said.
"I think steel production may hit another record high in August like in April. We don't know if this will cause iron ore prices to spike, but it will at least prevent prices from slipping too much," he added.
The most active January rebar futures on the Shanghai Futures Exchange rose 0.46 percent to 4,816 yuan ($754) a tonne by the midday close, and have moved within a range of 100 yuan since mid August.