The iron ore price was pummelled overnight, extending its losing streak into a seventh consecutive session.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by 4.08%, or $1.68, to $39.51.
It was the first time the spot price settled below the $40 a tonne level since December 17, and extends the seven-session slump from January 4 to 11%.
Indicating further weakness in the spot price may arrive this evening, Dalian iron ore futures continued to drift lower overnight with the May 2016 contract slipping by an additional 0.33%.
According to Metal Bulletin, there are several factors behind the renewed price rout.
“Headwinds for the iron ore price are mounting from several areas,” wrote analysts from the group.
“Mills are reportedly experiencing poor steel sales and tight cash flow, pushing them to control their production rates and inventory levels. As such, they are not buying any more raw material than what they need. Furthermore, at major Chinese ports stockpiles of iron ore continue to increase. The level reached 98.1 million tonnes today, compared with 97.8 million tonnes yesterday.”
The increase in Chinese port inventory levels corresponds with news that Chinese iron ore imports rose to a record high level in December.
According to Chinese customs data, imports totalled 96.27 million tonnes over the month, blowing away the previous record high of 86.83 million tonnes set in January 2014.
As a result of the strong increase in December, total iron ore imports soared to 953.36 million tonnes over the year, also a record high.
Weakening Chinese steel demand, led by a slowdown in the nations residential construction sector, along with a sharp increase in iron ore seaborne supply, has contributed to benchmark price tumbling over 75% over the past four years.