The most-traded iron ore on the Dalian Commodity Exchange , for January 2020 delivery, slumped as much as 5.7% to 658 yuan ($93.46) a tonne, the weakest intraday level since June 26. It ended down 5.4% at 660.50 yuan after flirting with the day's downside limit.
Slipping into bear-market territory, spot cargoes of benchmark 62% iron ore for delivery to China <SH-CCN-IRNOR62> finished at $101 a tonne on Tuesday, based on SteelHome consultancy data. That reflects a more than 20% drop from last month's five-year peak.
"Steel mills are reluctant to buy iron ore, waiting for prices to further go down," a Shanghai-based trader said.
Market participants were cautious while keeping an eye on the U.S.-China trade war developments and the sliding yuan, the trader added.
Dalian iron ore lost more than 12% since the start of August with signs that the global supply crunch is easing and the seasonal tepid demand for steel during summer in China fuelling its pullback from record highs.
Amid the recovery in shipments from Brazil and Australia, stockpiles of the steelmaking material at Chinese ports <SH-TOT-IRONINV> rose for a third week in a row to 121.05 million tonnes, as of Friday, SteelHome data showed. That was the highest since June 6 this year.
Iron ore's reversal of fortune and the escalating trade war prompted Jefferies to lower its ratings on several miners and reduce its commodity price forecasts.
"A slowdown in construction and a decline in Chinese manufacturing and exports due to trade wars would be significant negatives for metals' demand, even if fiscal/monetary stimulus leads to some recovery in the broader Chinese economy," the brokerage said in a note on Tuesday.
FUNDAMENTALS
* Singapore iron ore futures also fell on Wednesday, with the September 2019 contract back below $90 a tonne.
* Jefferies reduced its 2019 price forecast for iron ore fines by over 10% to $88 per tonne, while that of iron ore lump was cut to $106 per tonne.
* The most-active construction steel rebar contract on the Shanghai Futures Exchange edged down 0.9% to 3,711 yuan a tonne, its weakest finish since June 18 this year.
* Hot-rolled steel, used in cars and home appliances, slipped 0.7% to 3,657 yuan a tonne, its lowest close since June 19 this year.
* Other steelmaking ingredients were mixed, with Dalian coking coal down 0.8% at 1,395.50 yuan a tonne, while coke gained 0.9% to 2,066.50 yuan a tonne.
* Global investors are on edge over whether a sudden slide in the yuan to 11-year lows will turn into the next front in the deepening U.S.-China trade war, engulfing other currencies.