Iron ore held at its weakest level in more than five years in a well-supplied market, with analysts not expecting Chinese steel demand to pick up during the winter, when cold weather slows activity in the construction sector.

Iron ore for immediate delivery to China's Tianjin port <.IO62-CNI=SI> slipped 0.3 percent to $69.50 a tonne on Wednesday, according to The Steel Index.

The price of the steelmaking raw material dropped to $68 last week, its lowest since June 2009.

A jump in the iron ore output of big, low-cost miners such as Vale and Rio Tinto this year has added to the supply glut at a time when the Chinese economy is slowing.

"I think the market would stay around $70 in the short term with winter cutting construction activity," said a Shanghai-based iron ore trader. "Physical trades picked up this week although there's still a lot of supply in the market."

Among the deals done this week, an Australian cargo of 61 percent grade Pilbara iron ore fines sold at $68.39 a tonne, down from a sale above $70 for the same grade earlier, traders said.

A Brazilian cargo of 64.2 percent grade iron ore was sold at $77.60 a tonne, traders said.

While China's manufacturing sector remained weak, surveys on Wednesday showed that its service sector grew slightly faster in November. [ID:nL3N0TN16P]

"It would appear from recent data that October-November has been the bottom in this current slowdown cycle, although the country's steel industry will not benefit much until March from any significant lift in services, given winter, while property oversupplies still weigh on steel consumption patterns," Standard Bank analyst Melinda Moore said in a note.

In the futures market, the most traded May iron ore contract on the Dalian Commodity Exchange rose 4 percent to hit its upside limit of 496 yuan ($81) a tonne.

It was tracking gains in other commodities traded in China, which were given a lift by a further strong rise in Chinese share prices.

The rise in Dalian helped lift iron ore futures in Singapore, with the January contract on the Singapore Exchange climbing nearly 3 percent.

Rebar and iron ore prices at 0413 GMT

Contract Last Change Pct Change

SHFE REBAR MAY5 2562 +44.00 +1.75

DALIAN IRON ORE DCE DCIO MAY5 489 +12.00 +2.52

SGX IRON ORE FUTURES JAN 71.31 +1.99 +2.87

THE STEEL INDEX 62 PCT INDEX 69.5 -0.20 -0.29

METAL BULLETIN INDEX 69.25 -1.42 -2.01

Dalian iron ore and Shanghai rebar in yuan/tonne

Index in dollars/tonne, show close for the previous trading day

($1 = 6.1495 Chinese yuan renminbi)�