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[MANILA] Spot iron ore slipped to near its weakest level in almost six years, reflecting tepid demand for the commodity in top consumer China, where steel prices have been hit by slower consumption.
Soft sales have forced more Chinese steel mills to curb production after the Feb 18-24 Lunar New Year break and hold back on purchases of the steelmaking raw material, traders said.
Iron ore for immediate delivery to China's Tianjin port dropped 0.3 per cent to US$62.80 a tonne on Monday, according to The Steel Index.
The benchmark price, down 12 per cent this year after sliding 47 per cent in 2014, touched US$61.10 in early February, its lowest since May 2009.
"I heard some mills are expecting prices to fall further this month so they are looking at prompt cargo," said a Shanghai-based iron ore trader.
This week's parliament meeting in China could focus on environmental protection reforms in the vast steel sector, which could lead to more mills being shut, reducing demand for iron ore, the trader said.
China's environment ministry has ordered local governments in two key steel-producing cities to take tougher action against polluters from the sector as part of efforts to improve air quality.
Chinese steel prices have fallen this week, with rebar futures in Shanghai hitting a three-month low on Monday. On Tuesday, the most-traded May rebar contract closed up 0.5 per cent at 2,468 yuan (US$393) a tonne.
A cut in Chinese interest rates over the weekend aimed at perking up the economy did little to boost sentiment in commodities. "The muted reaction to Chinese interest rate cuts suggests real evidence of improving demand is required before prices react," Australia and New Zealand Banking Group said in a note.