Chinese iron ore futures inched higher on Tuesday, but it is likely that any rebound will be curbed by expectations that demand in the world's top consumer would slow amid a supply glut.

China's government will cut crude steel capacity in the world's biggest producer by 100-150 million tons, reinforcing concerns over demand for iron ore, which has also been hit by rising supplies from Australia and Brazil.

"Iron ore remains in a weak position due to large port inventories and the government's resolution to cut steel capacity," said Bai Jing, an analyst with Galaxy Futures in Beijing.

Brazil's Vale SA, the world's largest iron ore exporter, may reopen its Tubarao port after a court-ordered shutdown last week on pollution concerns, easing supply risks.

The port handles about a third of Vale's more than 300 million tons of annual iron ore exports.

Separately, steel demand in China is expected to improve in the second quarter when construction activity picks up, while supplies keep contracting due to the Chinese central government's fight against overcapacity, giving a modest lift to prices.

"Steel demand will surely be better than now due to seasonal factors, so prices may rise after the Chinese New Year holiday," said a trader with a Shanghai-based fund.