The price for benchmark iron ore with 62 percent iron content moved up 0.6 percent to $133.10 a tonne on Tuesday, marking its third straight day of gains. The rise came after iron ore slipped to a two-week low of $130.60 last week.
Spot prices also edged up in China, where buyers were paying $125 a tonne for Australian Yandi iron ore fines (58 percent iron). Pilbara fines (61.5 percent iron) were selling for $132 a tonne, also up slightly. China is the world’s largest consumer of iron ore, taking in 60 percent of global production.
The gains come after iron ore prices fell sharply in May as decreasing Chinese demand prompted the country’s steelmakers to slow production. Iron ore is a key component in steelmaking.
In May, China’s steelmakers produced an average of 1.98 million tons of steel a day, down from 2.02 million tons in April.
Even so, steel production was up 2.5 percent in May from a year earlier. Over the first five months of 2012, production increased 2.2 percent from the same period in 2011.
However, there is renewed concern that iron ore prices could again come under pressure on slowing Chinese steel demand. These worries are being fueled by the news that Baoshan Iron and Steel, the third-biggest steelmaker in the world, will cut its selling prices by about 4 percent in July in response to continued weak steel sales.