Spot iron ore prices hit their lowest since late December on Wednesday, as steel mills in top market China slow purchases, prompting some traders to unload stocks of the raw material.
Record high steel output and inventories, as well as nagging concerns over Beijing's latest property curbs, have raised doubts about the strength of demand in the world's largest steel producer.
Iron ore has lost more than 9 percent since hitting a 16-month high in mid-February after Chinese steel mills eased up on restocking, given rising inventories of steel products that pointed to weak end-user demand.
Some traders have rushed to sell shipments as weak demand forced some small steel mills to cut output. China's average daily production surged to a record 2.208 million tonnes in February.
"There has been some panic selling since Tuesday, as many steel mills are making losses currently, and we also plan to clear our stocks as soon as possible, as we expect prices to fall further," said a Shanghai-based iron ore trader.
Demand typically improves in China from March as manufacturing and construction activities pick up after the Lunar New Year break and a winter lull.
But this year demand is not picking up as strongly as market participants had expected late last year, when iron ore surged to a three-year high of about $158 a tonne in December.
"The sentiment has become worse, and some traders are desperate to sell their cargoes quickly," said a second trader in Shanghai, who does not hold any stockpiles at the moment.