Spot iron ore prices in China inched up Wednesday but traders said the underlying poor health of the steel sector would continue to restrain demand.

"The whole market is poor and prices still aren't ideal - we won't be able to meet our sales target for this month," said the manager of an iron ore trading firm based in southern China.

Iron ore with 62 percent iron content edged up 0.2 percent to $135.40 a ton on Tuesday, according to reference price provider Steel Index.

Slow steel demand in China, the world's biggest producer and consumer, has curbed the appetite for iron ore and caused the raw material's prices to decline by more than 2 percent so far this year after falling by nearly 19 percent in 2011.

"Demand ultimately depends on steel mills and they just can't accept our prices right now, and we can't go lower because our costs are too high," the trader said, adding that he didn't expect the market to recover until next month.

Reuters - Global Times