Reuters reported that spot iron ore rose more than 1% as Chinese buyers, encouraged by firmer steel prices, picked up cargoes and helped the raw material recover further from a sharp fall earlier this month.

According to data provider Steel Index, iron ore for immediate delivery to China .IO62-CNI=SI climbed 1.2% to USD 111.80 per tonne on Tuesday. The steelmaking raw material has risen nearly 7% after falling to a 17 month low of USD 104.70 two weeks ago but remains 16.7% lower so far this year.

Traders said that but buyers were largely timid with many still wary of stocking up on iron ore at a time when steel demand in the world's largest consumer is under threat from a slowing economy. Chinese steel rebar futures gained for a second day on Wednesday although the increase was just a fraction of the 2.5% jump in the prior session.

An iron ore trader in Tianjin said that "I see some buyers coming into the market, but there are still a lot of offers around. And the sellers don't have too much confidence in the market because they're quite open to negotiating prices further after they make an offer. We'll probably see this rebound last only for two or three days."

Mr Jeffrey Landsberg MD at Commodore Research and Consultancy said that "Some smaller Chinese miners are being priced out of the market due to the ongoing iron ore production expansion in Australia and Brazil which has been responsible for overall spot iron ore prices being a good deal lower this year.

We anticipate that low iron ore prices will continue to put pressure on iron ore production growth in China this year and that Chinese iron ore import growth will finish the year well above growth in Chinese iron ore production."