Reuters reported that sluggish demand kept pressure on spot prices of raw material iron ore and further weakness is expected before the start of any recovery.
Iron ore, down about 17% this year, reached its cheapest level in 2-1/2 years as Chinese steel mills limited spot purchases as they awaited a rebound in steel prices.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI eased 1.1 percent to USD 114.90 per tonne on Wednesday, according to Steel Index, falling for a fifth straight day. That is the lowest level since December 29, 2009.
Meanwhile, miners this week managed to sell cargoes at prices not far from recent deals and in line with market offers, suggesting the market could soon find a bottom, traders said.
BHP Billiton sold 90,000 tonnes of 57.7 percent grade Australian Yandi iron ore fines at USD 107.23 a tonne at a tender on Tuesday, against USD 107.50 last week. Vale sold a 147,000 tonne cargo of 64.08 percent grade iron ore at USD 121.97, a level similar to recent deals
Unless steel demand picks up, however, traders say iron ore prices are unlikely to recover strongly and could even slip further if more Chinese producers curb output.
Deutsche Bank said in a note "We expect that downward pressure in global and Chinese steel prices will likely continue but show a decelerating trend over the next month or so. We therefore expect the demand for iron ore cargoes to continue to erode."