Spot iron ore prices fell to two-week lows, reflecting slow buying interest from top consumer China as mills sought cheaper cargoes and were in no rush to buy amid ample stockpiles at ports.
Iron ore prices have traded in a tight range between $135\\ and $137 a tonne this month with mills not aggressively snapping up cargoes on lean steel demand while sellers were also not keen on dropping prices too much as they anticipate steel producers to boost inventories for winter.
"We're trying to do some sales but it seems that mills are\\ quite selective at the moment and they want it cheaper," said a Shanghai-based trader. "There are also quite a lot of offers in the market."
Iron ore for immediate delivery in China's Tianjin port .IO62-CNI=SI dropped 0.4 percent to $135.90 a tonne on Tuesday, a level last seen on Nov. 12, according to data compiled by Steel Index.
Despite the decline, the price of the raw material used to make steel is up 3 percent so far in November during which it touched a two-month high of $137.10 and a low of $135.30.
Australian cargoes were sold at prices on par with market rates on Tuesday, with 61.4-percent grade Pilbara fines sold at as high as $135.70 a tonne and 57.7-percent grade Yandi fines trading at up to $122.80 per tonne, traders said.
Prices for those two grades are around $2-$3 a tonne cheaper at stockpiles in Chinese ports, said another Shanghai trader, amid growing inventories.
Iron ore inventory at major Chinese ports rose 1.5 million\\ tonnes to 85.5 million tonnes last week, according to Chinese consultancy Mysteel.
The most-active rebar contract for May delivery on the Shanghai Futures Exchange was off 0.2 percent at 3,651 yuan ($600) a tonne by midday on Wednesday.
The price of the construction steel product touched a near two-week high of 3,677 yuan on Tuesday after the closure of old steel plants in China's top producing province, Hebei, over the weekend.
The move, part of China's campaign to address pollution and overcapacity, cut Hebei's steel- and iron-making capacity by\\ more than 11 million tonnes, but some analysts say the impact may be limited given that the dismantled capacity was already idle.
At the Dalian Commodity Exchange, the most-traded May iron ore contract was down 0.3 percent at 936 yuan a tonne, after gaining almost 1 percent in the prior session.