Spot iron ore rose more than 1 percent as Chinese buyers, encouraged by firmer steel prices, picked up cargoes and helped the raw material recover further from a sharp fall earlier this month.
But buyers were largely timid, traders said, with many still wary of stocking up on iron ore at a time when steel demand in the world's largest consumer is under threat from a slowing economy.
Chinese steel rebar futures gained for a second day on Wednesday, although the increase was just a fraction of the 2.5-percent jump in the prior session.
"I see some buyers coming into the market, but there are still a lot of offers around. And the sellers don't have too much confidence in the market because they're quite open to negotiating prices further after they make an offer," said an iron ore trader in Tianjin.
"We'll probably see this rebound last only for two or three days."
Iron ore for immediate delivery to China climbed 1.2 percent to $111.80 a tonne on Tuesday, according to data provider Steel Index.
The steelmaking raw material has risen nearly 7 percent after falling to a 17-month low of $104.70 two weeks ago, but remains 16.7 percent lower so far this year.
Australia, the world's top iron ore supplier, said it sees the price averaging at $110 this year and slipping to $103 in 2015.
The country's Bureau of Resources and Energy Economics cut its projected exports for the year ending June 30 to 631 million tonnes from 650 million tonnes in its previous forecast in December.
The revised export forecast comes amid expectations that global supply of iron ore would outpace demand from China where recent trade and manufacturing data has indicated slower economic growth.
The fall in iron ore prices this year has slowed production among higher cost miners in China with the country's output increasing by only 4.6 percent in January-February to 183.27 million tonnes compared to a 13.5 percent growth in the same period last year.
"Some smaller Chinese miners are being priced out of the market due to the ongoing iron ore production expansion in Australia and Brazil which has been responsible for overall spot iron ore prices being a good deal lower this year," Jeffrey Landsberg, managing director at Commodore Research and Consultancy, said in a note.
"We anticipate that low iron ore prices will continue to put pressure on iron ore production growth in China this year, and that Chinese iron ore import growth will finish the year well above growth in Chinese iron ore production."
The most-traded rebar for October delivery on the Shanghai Futures Exchange closed up 0.3 percent at 3,275 yuan ($530) a tonne. At the Dalian Commodity Exchange, the September iron ore contract gained 0.9 percent to 758 yuan a tonne.