Benchmark Dalian iron ore futures were flat to slightly higher in early trade on Wednesday as shrinking inventory of the steelmaking raw material stocked at China's ports kept investors wary about supply prospects. The Dalian Commodity Exchange's most-traded iron ore contract <DCIOcv1>, with May expiry, rose as much as 0.8% to 671.50 yuan ($97.37) a tonne. It turned flat by 0317 GMT.The front-month February contract on the Singapore Exchange, however, slipped 0.9% to $94 a tonne. Steel mills' restocking demand ahead of the Lunar New Year holidays later this month provided an additional boost to prices, although thin trading volumes in both spot and futures markets suggest that the inventory-building activity may be coming to an end.The spot price of the benchmark 62% iron-content ore, as tracked by SteelHome consultancy <SH-CCN-IRNOR62>, jumped $1.80 to $96.50 a tonne on Tuesday, the highest since mid-September last year. Supply-side concerns have resurfaced as iron ore inventory at China's ports had fallen
for two straight weeks to 127.90 million tonnes as of Jan. 10, the lowest since mid-December last year, based on SteelHome data. <SH-TOT-IRONINV> China's iron ore imports in January are expected to drop on a year-on-year basis as shipments from top suppliers Australia and Brazil declined last month, according to Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong. It normally takes around one month to ship Australian iron ore to Chinese ports, she said. "This, coupled with a declining inventory at ports - down 5% since November due to strong steel production - should continue to underpin iron ore price recovery," Lau said. Spot and futures prices have so far risen more than 3% this year, adding to last year's gains, driven by worries over supply and still-robust demand from China, which makes half of the world's steel supply.