Iron-ore prices steadied near six and a half-month highs on Monday, supported by fewer Indian supplies and demand from Chinese steel mills.
The Steel Index 62% iron-ore benchmark stood at $166.50 a tonne, cost and freight in China, on Friday, versus $166,40 in the previous session.
The index hit $167 a tonne on Wednesday, its highest since May 13, and offers for Indian ore with 63,5% iron were expected to remain firm around $172 on Monday, traders said.
Chinese consultancy Mysteel said 63,5% grade Indian fines were offered at $170-$172 a tonne, C&F, on Monday.
"Iron ore prices are still witnessing a mild increase," said a trader in Rizhao in China's eastern Shandong province. "Chinese mills are still building stocks ahead of the new year and steel prices have been inching up."
China's daily crude steel output rose 0.4 percent to 1.607 million tonnes in the middle 10 days of November from the previous 10 days, data from the China Iron and Steel Association (CISA) showed.
Despite China's campaign to limit steel production from September to meet energy efficiency targets, crude steel output for the whole of 2010 was still expected to hit a record 624-million tons, CISA said last week, with apparent consumption up about 5,6% to 596-million tons.
PREMIUM STATUS
"Iron ore is regaining its premium commodity status, rebounding strongly over the past couple of months as confidence returns to the Chinese steel market," ANZ said in its November report.
ANZ also said the recent mild build in iron ore stocks at Chinese ports suggests traders are returning to the seaborne market "to satisfy higher and more normal domestic steel capacity levels."
Tight iron ore supplies should continue to aid prices with the cold snap in China likely to slow domestic iron ore production, adding to concerns over limited Indian cargoes, said ANZ.
An ongoing ban on iron ore exports from the southern Karnataka state in India also kept supplies of high-grade material limited, traders said. Karnataka accounts for a quarter of shipments from India, the world's third-largest exporter of the steelmaking ingredient.
India's Supreme Court on Friday issued notices to the Karnataka state government asking why it must not admit an appeal by a miner that challenged the ban.
The Karnataka High Court earlier this month upheld the ban which has been in place since July as part of a state crackdown on illegal mining.
Prices of forward swaps cleared by the Singapore Exchange eased modestly, with the December contract slipping 33 cents to $161,67 a tonne, while first-quarter contracts dropped below $160 as investors locked in recent gains.
January was down 75c at $157,33, February eased 33 cents to $156 and March also dipped 33c to $154,67.
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