SHANGHAI: Spot prices for iron ore to top buyer China extended gains for a fourth consecutive day as miners continued to raise offers to meet rising demand from Chinese steel mills, while traders remain wary over the short-term outlook for steel demand.
Steel mills are replenishing stockpiles of the raw material for production during the holiday season, encouraging miners to lift offers by about 4 percent over the week.
"My feeling is that this round of (iron ore price) rises can be sustained before the new year, but I can't say for sure after the holiday," said an iron ore trader in Shandong province. "As long as steel mills don't cut production, there will be no downward side for iron ore prices, but if steel prices fall, we won't see any sustainable gains in iron ore prices."
Iron ore index with 62 percent Fe grade extended gains on Thursday, the highest since Dec. 14.
The government is reported to have targeted construction of 7 million social housing units next year, which, while less than in 2011, could still drive up steel demand. Beijing has vowed to link construction to the performances of local governments in pushing the project ahead.
"The strength of steel demand from affordable housing construction next year remains uncertain," said a second iron ore trader in Beijing. "I expect iron ore prices to stay around $135 per tonne in the near future."
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