(Reuters) - Slow buying from top consumer China kept iron ore spot prices steady on Tuesday, with the market seen extending its lull as well-stocked steel mills weather weaker demand.
Chinese steelmakers had been banking on a resurgence in construction activity in the second quarter to boost demand for steel but tighter liquidity, thanks to Beijing''s inflation-taming campaign, has slowed down property projects, traders said.
"This quarter should be the best time for steel demand because a lot of construction work happens during this period. But the actual situation is not as good as we had expected," said a Shanghai-based iron ore trader.
China''s massive steel sector is expected to bear the brunt of worsening power shortages this summer, but the supply glut in the sector will not ease in the months ahead, the country''s steel industry association said on Monday.
"People are not in the mood to buy iron ore. We heard some mills will not buy iron ore before June because they have enough stocks," said the Shanghai trader.
That means spot iron ore prices, which hit record highs near $200 a tonne in mid-February, are likely to languish at current levels around $180.
Indian ore with 63.5 percent iron content was quoted at $184-$187 a tonne, including freight, on Tuesday, little changed from $185-$187 the previous day, Chinese consultancy Umetal said.
But deals in the physical market were scarce, even for lower-grade material.
"We got some offers yesterday but they are still high, with 59/58 grade at $159. We think that should be sold at around $150-$152. The quote for 56/56 was $142 and we feel that should be around $140," said a trader in Shenzhen.
Indian miners, which sell most of their iron ore via the spot market, are hoping fewer cargoes from India during the monsoon season, which starts in about two weeks, will support prices.
The imminent monsoon rains could limit the sales window for exporters from India''s Karnataka state, which will start issuing iron ore shipment permits this week, more than a month after an export ban was lifted.
Iron ore indexes, which global miners use in deciding quarterly contract prices, mostly slipped on Monday.
Platts 62 percent iron ore index IODBZ00-PLT dropped 50 cents to $181 a tonne and a similar benchmark by Steel Index .IO62-CNI=SI eased 30 cents to $178.50.
Metal Bulletin''s 62 percent gauge .IO62-CNO=MB was nearly flat at $178.38.