Iron ore business is going through a roller coaster ride as some months back it was having sluggish growth. Even its biggest importer China was not too keen to refill its inventory and major cause of it is said to be the soaring prices.

The prices have gone down a bit and its effect could be seen on increased buying. In November, China bought 64.2 million metric tons of iron ore which is 29% increase since last eight months.

It is expected that the amount would increase further as Chinese New Year is approaching and if they have to go on holiday then they have to refill their inventories time ahead.

The 2012 Lunar New Year would come in February and holidays would start from January 22 so it would be essential for them to replenish their inventories in advance. One of the iron ore traders from Singapore said, “We expect the Chinese mills to come in and buy to restock as we approach the Chinese New Year. If the mills want to go on holidays they're going to have to do all their buying in December”.

The experts are of the view that there would be rise in demand, but not to that extent which was seen last year. As per IG Markets’ Chris Weston iron ore prices would not increase more than $120 a ton.

Current price for 62% iron ore at China’s Tianjin port is $139.4 a ton and it is 19% increased price from October. Vale, the world’s largest iron ore producer said there is no doubt that demand has not been that great due to increased prices. But it would not act as a pressure factor for the industries to reduce prices.

Iron ore prices could never go down beyond $120 a ton next year and if it goes then suppliers would go out of work.