Chinese iron ore futures fell more than 1 percent on Monday and steel struggled to stretch last week's gains amid worries over slower economic growth in the world's top user of the commodities.
Losses in Dalian-listed iron ore contracts tracked the weakness in equities in China and elsewhere in Asia as fears over a slowdown in the world's second-biggest economy and continued stimulus tapering by the U.S. Federal Reserve kept emerging markets under pressure.
The most-traded iron ore for May delivery on the Dalian Commodity Exchange closed 1.3 percent lower at 864 yuan ($140) a tonne.
It marked the resumption in decline for the contract after a three-day rebound that followed last week's slide to a contract low of 843 yuan.
"There's no fundamental support for the price. Chinese demand for steel cannot increase as much as before because the economy is going through a tough time," said Zhou Ting, analyst at Jinrui Futures in Shenzhen.
Steel consumption in China may only grow by 2 percent this year versus about 8 percent last year, said Ting, who expects the overall economy to expand at a slower pace of 7.5 percent this year, compared with 7.7 percent in 2013.
A Reuters poll of economists pegs economic growth this year at 7.4 percent as Beijing forges ahead with structural reforms and seeks to curb elevated debt levels to help create long-term sustainable growth. That would be the slowest annual expansion since 1990.
Steel prices were also under pressure, struggling to extend last week's bounce from record lows. The most-active May rebar contract on the Shanghai Futures Exchange settled up 0.1 percent at 3,472 yuan a tonne.
Dalian iron ore may drop to as low as 800 yuan in the near term while rebar could slip toward 3,300 yuan, said Ting.
There has been limited construction activity in China ahead of a week-long Lunar New Year break that starts on Friday.
That has curbed the appetite of steel mills to restock iron ore ahead of the holiday as they have done in past years and traders say uncertainty about the outlook for demand after the festival could keep buying interest in check.
Iron ore for immediate delivery into China's Tianjin port .IO62-CNI=SI gained 0.3 percent to $124.30 a tonne on Friday, according to data compiler Steel Index.
Spot iron ore fell on Tuesday last week to $123.20, its lowest in more than six months. It shed 2.4 percent for the week for its third weekly loss in a row.