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PrintChina's iron ore futures extended losses to sink to a contract low on Wednesday as steel mills in the world's top consumer curbed purchases on high inventories and falling steel prices.
High stockpiles at main Chinese ports have restrained restocking interest by steel mills ahead of winter production and with expectations increased supply would weigh on prices.
"The physical market has actually been weak over the past few weeks and the previous gains in prices are groundless," said an iron ore trader in coastal Shandong province.
"We are holding 200,000 tonnes of iron ore stocks and we could not sell at a fair price as steel mills' cash flow is also tight."
Iron ore stockpiles at 34 domestic ports climbed to a year high of 85.25 million tonnes by Dec. 6, data from industry consultancy Umetal.com showed. It has stood above 80 million tonnes since mid-November.
Iron ore for May delivery on the Dalian Commodity Exchange shrunk to a contract low of 902 yuan ($150) a tone before paring losses modestly to 906 yuan at the close, down 1.1 percent.
Benchmark 62 percent grade iron ore for immediate delivery to China .IO62-CNI=SI fell for the fifth straight day and slipped 0.44 percent to $134.30 a tonne on Tuesday, its lowest since Oct. 31, according to data compiler Steel Index.
Weaker demand in China due to slower construction activities has dragged down steel prices to a three-week low.
The most active rebar futures for May settlement on the Shanghai Futures Exchange fell to 3,644 yuan a tonne, its lowest since Nov.26. It closed 0.5 percent lower at 3,656 yuan.
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