[SHANGHAI] Iron ore prices hit their lowest in 5-1/2 years on Monday as some loss-making Chinese steel mills curbed output, ore supplies remained abundant and concerns persisted about the outlook for economic growth in China this year.
Cooling Chinese steel demand forced some steel mills to bring forward plant maintenance, which usually takes place during the Chinese New Year, which falls on Feb 19.
Mills looked to curb oversupply that helped knock nearly a third off prices last year in the world's top producer of the alloy.
"Steel mills have had to cut production as they have suffered losses as high as 200 yuan (US$32) a tonne and the timing (for maintenance) was earlier than expected," said Xu Huimin, analyst at Huatai Great Wall Futures in Shanghai.
Ms Xu expected rebar futures could fall further this year as growing supplies of iron ore further weigh on prices.
The benchmark 62 per cent grade iron ore for immediate delivery to China fell 3.9 per cent to US$63.30 a tonne to its lowest level since May 2009, according to data compiled by the Steel Index.
Iron ore futures for May delivery on the Dalian Commodity Exchange closed 2.1 per cent lower at 470 yuan a tonne, down for a fourth consecutive day and posting the biggest daily drop since Dec. 23.
Steel output in China's biggest producing province of Hebei fell 0.6 per cent in 2014, with a drop in demand plus campaigns against pollution and overcapacity forcing many local mills to cut production, according to data compiled by the National Bureau of Statistics.
The fall in Hebei's output came as China's imports of iron ore in 2014 rose 13.87 per cent from a year ago to a record high of 932.5 million tonnes, with shipments from Australia accounting for 58.8 per cent of the total, versus 50.9 per cent in 2013, customs data showed on Friday.
Giant miners like Rio Tinto and BHP Billiton are ramping up production to grab a bigger market share, leading to a flood of exports to the world's largest consumer and dragging down prices.
On Friday, investment bank Goldman Sachs reduced its iron ore forecast by 18 per cent to US$66 per tonne for this year. The bank sees the raw material falling further to US$61 per tonne in 2016 and US$60 in 2017.
The most-traded May rebar contract on the Shanghai Futures Exchange touched a low of 2,441 yuan a tonne, its lowest since Nov 26. It closed 1.3 per cent lower at 2,450 yuan.