MANILA: Iron ore futures dipped more than 3 percent on Monday, as China’s subdued trade data for May dampened the market’s enthusiasm about demand prospects.

Falling steel prices and the resulting margin squeeze, also weighed on overall sentiment, analysts said.

China, which accounts for more than half of the world’s steel output, imported 89.79 million tonnes of iron ore last month, substantially lower than the 98.57 million tonnes it bought in April and 102.11 million tonnes in March.

The data also showed China’s May steel exports plunged 33.9 percent from a month earlier to 5.27 million tonnes.

The most-traded iron ore for September delivery on China’s Dalian Commodity Exchange ended the morning session 3.1 percent lower at 1,133 yuan ($177.03) a tonne, giving back earlier gains.

Iron ore’s most-active July contract on the Singapore Exchange slumped as much as 3.2 percent to $192.50 a tonne.

“The sharp drop in steel prices...has led to a sharp drop in the profits of steel mills,” analysts at Sinosteel Futures said in a note.

Steel demand in China has slowed down, causing” a “large, short-term market volatility”, they said.

Still, iron ore prices remained relatively high, with the most-liquid Dalian contract having risen 15 percent from the May 27 low, while the benchmark 62 percent material stayed supported above $200 a tonne in the physical market, based on last Friday’s data from SteelHome consultancy.

Tight global iron ore supply remains a key issue that has kept prices high. On Friday, Brazilian miner Vale SA announced fresh mine closures that would reduce its output by 40,000 tonnes a day. Construction steel rebar on the Shanghai Futures Exchange slumped 3 percent in morning trade, while hot-rolled coil dipped 3.1 percent. Stainless steel slipped 0.6 percent.

Dalian coking coal edged down 0.3 percent while coke shed 3.2 percent.