Iron Ore-Spot holds near 6-month highs, buyers hesitant

* Shanghai rebar slips to near two-week lows
* Offer prices for imported ore in China unchanged
* Interest in low-grade Indian ore ahead of monsoon season

(Adds Rio Tinto, updates rebar price)
By Manolo Serapio Jr
SINGAPORE, April 17 (Reuters) - Spot iron ore prices in top
consumer China steadied on Tuesday with steel mills hesitating
to buy more of the raw material used to make steel as benchmark
rates hovered around six-month highs.
Worries over slowing Chinese economic growth, which may hurt
steel demand, also limited interest in iron ore, although the
impending monsoon season in key exporter India that could shut
ports was likely to support demand for lower grade material.
Offer prices for imported iron ore in China were unchanged
on Tuesday, with Australian Pilbara fines quoted at $148-$149 a
tonne, Yandi fines at $135-$136 and Indian 63.5/63-grade fines
at $150-$152, said Chinese consultancy Umetal. All prices
include freight costs.
"The mood has turned slightly sceptical in the market after
prices hit six-month highs. Mills are not very sure if this is
the right level to buy," said a physical iron ore trader in
Shanghai.
Benchmark iron ore with 62 percent iron content
.IO62-CNI=SI stood at $149.30 a tonne on Monday, from Friday's
$149.40, which was the highest level since Oct. 18, based on
data from the Steel Index.
"Steel mills are now digesting their high inventories at
ports and that has slowed purchases," another Shanghai-based
iron ore trader said.
"I don't expect any big uptick in May as the economic
slowdown will continue to weigh on the market."
Stockpiles of imported iron ore at major Chinese ports rose
1 percent to 97.63 million tonnes last week.
China, which buys around 60 percent of the world's iron ore,
saw its economy expand at the slowest pace in nearly three years
in the first quarter, with annual growth coming in at 8.1
percent.

RIO TO BOOST OUTPUT
But global miners have remained confident Chinese demand for
iron ore will stay strong.
Rio Tinto , the world's No. 2 iron ore
producer, said it was looking to lift output this year to 250
million tonnes from nearly 245 million tonnes in 2011, despite
first-quarter production dropping from the fourth quarter due to
bad weather.
A blurry outlook for Chinese demand has kept steel prices
trading in narrow ranges, with traders saying spot prices of
rebar steel, used in construction, had eased slightly to
encourage buying.
The most-active October rebar contract on the Shanghai
Futures Exchange closed down 0.2 percent at 4,322 yuan
($680) a tonne, just off the session trough of 4,318 yuan, the
lowest since April 5.
There was more market interest for lower grade Indian iron
ore cargoes, particularly those coming from Goa, traders said,
ahead of India's monsoon season which usually disrupts
shipments.
"With Goa probably closing in a month's time, some traders
might like to stock up on low-grade cargoes from Goa right
away," said the first Shanghai trader who sells mostly Indian
shipments to Chinese mills.
India is the world's third-largest iron ore exporter after
Australia and Brazil, although shipments to top market China
have fallen 41 percent in the first two months of the year as
the authorities clamp down on illegal mining.
Last week, India's Supreme Court asked companies in the
southern Karnataka state to push on with land clean-up before it
removes a mining ban and set April 20 as the next date for a
review.

Shanghai rebar futures and iron ore indexes at 0727 GMT

Contract Last Change Pct Change
SHANGHAI REBAR* 4322 -7.00 -0.16
PLATTS 62 PCT INDEX 151 -0.25 -0.17
THE STEEL INDEX 62 PCT INDEX 149.3 -0.10 -0.07
METAL BULLETIN INDEX 148.55 -0.17 -0.11

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

($1 = 6.3150 Chinese yuan)

(Editing by Himani Sarkar)