MANILA, March 23 Iron ore futures in China dropped to their lowest in more than two months on Thursday, pressured by a continued slide in steel prices amid concern over slower demand in the world's top consumer.
Chinese iron ore futures have lost more than 21 percent since touching a record high last month, and its slump has fuelled a 10 percent drop in spot iron ore prices during the same period.
The most-traded iron ore on the Dalian Commodity Exchange was down 1.3 percent at 584.50 yuan ($85) a tonne by 0315 GMT after falling to 577 yuan, its lowest since Jan. 10.
Iron ore tumbled nearly 16 percent on Wednesday, extending losses in overnight trading, as the most-active contract rolled over to September.
Heavy selling in iron ore futures was driven by concerns over weaker demand, ANZ analysts said in a note.
"However, with steel production expected to lift in coming months and disruptions to exports from Australia in recent weeks, we expect this selloff to be relatively limited," they said.
The most-active rebar on the Shanghai Futures Exchange was down 0.3 percent at 3,160 yuan per tonne, but had come off a session trough of 3,118 yuan.
Iron ore's rally this year was spurred by the surge in Chinese steel prices on hopes of stronger construction demand along with Beijing's efforts to curb excess steel capacity. A retreat in steel prices consequently pulled down iron ore as market focus switched back to high inventory of the steelmaking ingredient in China.
Iron ore stocked at China's major ports reached 131 million tonnes on Friday, the highest since at least 2004, according to SteelHome consultancy. SH-TOT-IRONINV
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB fell 3 percent to $84.99 a tonne on Wednesday, its weakest since Feb. 9, according to Metal Bulletin.
The spot benchmark touched a 30-month high of $94.86 a tonne on Feb. 21.
"We see iron ore prices falling to $60/tonne by year-end as rising seaborne supply offsets a modest lift in iron ore demand," Commonwealth Bank of Australia said in a note.
