Reuters reported that spot iron ore prices were steady near three month highs though the upward momentum slackened this week as restocking by Chinese steel mills slowed.

Iron ore prices are on track for a fourth straight week of gains, but the rise this week could be less than half a percent compared to gains of at least 3% in the previous three weeks as Chinese steel mills have slowed their buying when prices broke above USD 130 per tonne.

Steel Index data showed that Benchmark 62% grade iron ore .IO62-CNI=SI stood unchanged from the previous day at USD 132.10 per tonne on Thursday. Iron ore last traded above this level on April 30.

However, traders expected prices to be sustained at the current high levels in the coming weeks as steel demand in the world's top consumer China stays firm, despite a stagnant economic recovery.

An iron ore trader in Shanghai said that the temporary stall in prices does not mean the fundamentals have changed essentially. Steel mills' order books are still strong, while the low availability of iron ore cargoes suggests that the raw material can stay at not far from USD 130 in near future.

Traders said that iron ore availability in the spot market has been reduced because miners have supplied more quantities to steel mills with which they have long-term contracts. Improving orders and falling inventories have pushed up steel prices by more than 4% in July, encouraging mills to build up iron ore inventories worth about one month's use. But the restocking pace is slowing somewhat now.

They said that the sentiment seems less strong than last week and iron ore prices are likely to ease next week, but steel demand remains firm and mills' margins are rising, so I expect the downside for iron ore is limited.