Chinese steel futures fell to a record low on Monday amid subdued demand that has trimmed buying interest for iron ore and puts spot prices at risk of further losses after reaching a seven-month trough.
Iron ore prices have fallen almost 10 percent this year, taking a hit from worries over rising supply and slower economic growth in top consumer China.
The most-active rebar for May delivery on the Shanghai Futures Exchange fell to as low as 3,380 yuan ($560) a tonne, its lowest since the bourse introduced the contract in March 2009. The price of the construction steel product was down 0.2 percent at 3,413 yuan at 0309 GMT.
"Steel demand has still not recovered, the weather in the northern part of China is still quite cold and it would be difficult to expect much construction activity," said a trader in Shanghai.
The spot price of billet, a semi-finished steel product that can be processed to make products such as rebar, dropped to 2,790 yuan a tonne at the weekend, a level similar to that seen in September 2012, the trader said, when iron ore slumped to a three-year low below $90 a tonne.
The weaker steel market is likely to pile more pressure on iron ore with buyers scarce, traders said.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI slipped 10 cents to $120.90 a tonne on Friday, its lowest since July 3, according to compiler Steel Index.
Iron ore lost 1.4 percent last week, stretching its losing streak to a fifth week, its longest such downturn since August-September 2012.
"Mills are not in a mood to buy material because the steel market remains poor and port stocks continue to build up," said another trader in Shanghai.
"I think there's still some room for iron ore to drop further below $120."
Stockpiles of imported iron ore at major Chinese ports stood at 102.86 million tonnes last week, rising nearly 5 million tonnes from the previous week, based on data from industry consultancy Mysteel.
That volume, boosted by arrivals of iron ore contracted by mills under long-term deals, corresponds to about one and a half months' worth of China's imports and points to slow domestic consumption.
Traders are eyeing a spot sale tender of a 170,000-tonne cargo of Australian 61-percent grade Pilbara iron ore fines closing later on Monday for trading cues. The price was likely to be sold close to $120 a tonne, down from a previous sale of $122, the first Shanghai trader said.
At the Dalian Commodity Exchange, iron ore for delivery in May hit a session low of 846 yuan a tonne, a tad above its contract low of 843 yuan reached in January.