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[SHANGHAI] Spot iron ore plunged more than 2 per cent on Monday to another record low and Chinese futures hit a contract low as tepid demand from top consumers and growing supplies put heavy pressure on the raw material.
Benchmark 62 per cent grade iron ore for immediate delivery to China fell 2.2 per cent to US$52.90 a tonne, data from The Steel Index showed. The price is the lowest since TSI began compiling records in late 2008.
Iron ore futures for September delivery on the Dalian Commodity Exchange closed down 2.4 per cent at 409 yuan (S$91) a tonne. The contract hit a low of 408 yuan, the lowest since it was launched in October 2013.
"Global miners will continue to ramp up production this year, while demand has not improved much. Port inventories rose further last week, meaning the buying interest remained weak," said Hu Xiaodong, an analyst at Nanhua Futures in Hangzhou.
Stockpiles of imported iron ore at China's major ports reached 97.06 million tonnes by March 27, up 710,000 tonnes from the previous week, according to industry consultancy Umetal.
The most-traded October rebar contract on the Shanghai Futures Exchange surrendered gains to close down 0.2 per cent at 2,451 yuan.
China has vowed to deepen its war on pollution, particularly in Hebei province, which surrounds the capital Beijing and is the country's largest steel producer. The move has forced many inefficient steel mills to cut output.
China will aim to cut as much as 80 million tonnes of excess steel capacity in the next three years to tackle a massive supply glut.
Meanwhile, China's plan to create a modern Silk Road would surpass US$2.5 trillion in a decade and industries expected to benefit from the plan include mining as the route encourages exploration for minerals.