Iron Ore-Key indexes stay high but buying wanes

* Import market wanes as mills stop buying

* Shanghai rebar slipped half a percent

* Market eyeing India export policies

(Adds trader's quote, details)

SHANGHAI, Jan 26 (Reuters) - Offers to sell iron ore to China remained unchanged on Wednesday as steel mills stopped buying in the final week before the Lunar New Year holiday, although key indexes continued to hover near record highs on Tuesday.

China's iron ore market has gradually ground to a halt this week as the Feb. 2-8 Lunar New Year holiday approaches, and offers of Indian ore with 63.5 percent iron content selling to China stood little changed at about $190 per tonne.

"Our steel mill customers have already stopped buying raw materials this week; there is no market at all right now," said an iron ore trader in Shanghai.

Year-end restocking by Chinese steel mills since early January has boosted prices of imported iron ore to nearly $200 per tonne including freight, a level last seen in February 2008.

"There is not much time left to open letters of credit if you buy forward bookings now, and steel mills have stocked up already," said another Shanghai-based trader.

However, a few larger steel mills continue to buy the raw material from ports. Prices are cheaper than forward bookings and buyers are also concerned that costs will rise further after the holiday.

The Platts 62 percent iron ore index IODBZ00-PLT remained steady at $186 per tonne on Tuesday, still close to last Thursday's record of $186.50.

The Steel Index 62 percent benchmark .IO62-CNI=SI rebounded 40 cents to $185.4 per tonne, holding close to last Friday's record of $185.70.

The Metal Bulletin Iron Ore Index .IO62-CNO=MB bucked the trend again by falling about $1 to $183.48 per tonne on Tuesday after gaining for 12 consecutive sessions.

SUPPLY CHAOS

India's high court is expected to lift the ban on exports from the southern Karnataka state in February, which might ease supply shortages and trigger a fall in prices.

"Supply will increase if the ban is removed and there may be a psychological impact too. Prices are so high now and we are all waiting for it to peak and fall," the second trader said.

However, India Railways raised train freight costs for iron ore for exports by 50 percent from Thursday to take advantage of solid global prices, and that might push prices even closer towards $200 a tonne. [ID:nSGE70O07P]

Orissa state, India's top iron ore producer, is also looking at a ban on exports, which adds more uncertainties to the physical market.

The most active rebar futures on the Shanghai Futures Exchange SRBK1 slipped around half a percent in the morning trade to close at 4,967 yuan ($754.6) per tonne, after rising to a record for the sixth time in eight sessions on Tuesday.

Port Hedland, Australia's biggest iron ore export terminal, suspended loading ships on Wednesday with the approach of Cyclone Bianca, which is forecast to worsen on Thursday.[ID:nL3E7CQ03U] ($1=6.582 Yuan) (Reporting by Ruby Lian and David Stanway; Editing by Chris Lewis and Ken Wills)