Spot iron ore tumbled nearly 7 percent on Tuesday in its steepest decline in eight months as steel prices faltered, reflecting renewed pessimism towards the over-supplied market. The losses followed iron ore futures in China sliding almost 5 percent to pull away from a 14-month high as last week's rally fizzled.
Iron ore for immediate delivery to China's Tianjin port dropped 6.9 percent to $51.70 a tonne, according to The Steel Index, marking a fifth straight day of declines.
It was the biggest single-day drop for the spot benchmark since July 2015 when it lost more than 11 percent.
Many traders and analysts had expected a pullback in iron ore, attributing the recent rally that sent the steelmaking commodity soaring by a record 19.5 percent on March 7 to speculative buying interest that defied the market's still weak supply-demand fundamentals.
"In our view, we hit a near-term peak in pricing, and expect a slow bleed lower for the rest of the month. With that said, we don't see prices moving materially lower until Q2," analysts at Clarksons Platou Securities said in a note.
The most-traded May iron ore on the Dalian Commodity Exchange closed down 4.8 percent at 413 yuan ($63.47) a tonne, after hitting a session low of 410.50 yuan. The contract peaked at 454 yuan on Monday, its strongest since January last year, before ending lower.
"The recent rally continues to unwind as a weak Chinese steel market keeps buyers on the sidelines," ANZ Bank said in a note.
Chinese spot steel prices have fallen after last week's surge to multi-month highs as weekend data showed China's crude steel output dropped 5.7 percent from a year ago to 121.1 million tonnes in January-February.
On the Shanghai Futures Exchange, construction-used rebar slipped 2.6 percent to finish at 1,972 yuan a tonne, having touched an eight-month peak of 2,138 yuan on March 10.