Spot iron ore prices stood firm on Thursday as low supplies of high-grade Indian ores encouraged miners to ask for higher prices, while Chinese steel mills were increasingly
reluctant to pay for costly purchases.
"We are trying to keep our inventories at the minimum level and I feel that other steel mills also don''t want to buy any more in the face of higher prices," said an iron ore purchasing official at a small-sized steel mill in China.
Restocking by top consumer China from early July has pushed up iron ore prices by nearly $10 to as high as $185 per tonne, including freight, prompting many steel mills to stop buying.
"The supply of high-grade iron ore is very low, driving Indian miners to raise offer prices even though many small Chinese steel mills are keeping away from the seaborne market," said Xu Guangjian, researcher with China industry consultancy Umetal.
Offers for Indian 63.5/63 ore rose $1 to $183-185 per tonne, including freight, on Thursday, Umetal said, while that for 62-grade Newman fines from Australia remained steady at $179-181 per tonne.
India''s southern Karnataka state has not yet issued permits to export iron ore, even though around three months have passed since a ban on shipments was lifted.
The state, accounting for a quarter of the country''s annual iron ore exports of around 100 million tonnes, has yet to allow exports to resume, leading to a supply shortage.
Two key iron ore indexes, which track spot prices in China, extended gains on Wednesday to reach their highest in more than two months.
Metal Bulletin''s 62-percent Fe iron ore index rose 23 cents to $175.26 a tonne, its highest since May 19, and the Platts index, a similar gauge, moved up 25 cents to $176.75 a tonne.
The Steel Index for ore with 62-percent iron content lost half a dollar to $175 a tonne, but remains close to its highest point in more than two months.
The world''s top steel producer ArcelorMittal said it expected apparent steel consumption in China to increase by more than 8.5 percent this year, despite monetary tightening.
Chinese crude steel output has remained at more than 1.9 million tonnes a day since February, compared with an average of around 1.7 million tonnes last year.
The most active rebar October contract on the Shanghai Futures Exchange rose 0.39 percent to 4,934 yuan ($766) per tonne, close to its highest level in more than two months on July 20.
Meanwhile, iron ore swaps cleared by the Singapore Exchange rose across the board, with August contracts posting the biggest rise of $1.31 per tonne to $174.81.