Seaborne iron ore prices fell off a cliff on Monday, causing prices to hit their lowest point in the past six months.

The Kallanish KORE 62% Fe index and the KORE 65% Fe index slumped by $7.57/t and $7.65/t respectively on Monday to $109.03/dry metric tonne cfr Qingdao and $120.79/dmt cfr. The KORE 58% Fe index plummeted $9.96/t to $94.81/dmt cfr. Sources report that 170,000 tonnes of Carajas Fines and 80,000t of Newman Fines were sold at $121.25/t and $107.7/t with laycans of 21-30 March, and 1-10 April respectively.

On the Dalian Commodity Exchange (DCE), the most-traded May 2024 iron ore contract lost CNY 28/t ($3.89/t) to CNY 850.5/t ($118.39/t). On the Singapore Exchange, April 62% Fe futures and 65% Fe futures settled $7.93/t and $7.98/t lower respectively at $107.25/t and $120.53/t. The same contract for 58% Fe futures meanwhile dropped by $7.72/t to $96.2/t.

Scrap and billet prices also report declines. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta dropped by CNY 48/t to CNY 2,815/t. Tangshan billet meanwhile kept declined by CNY 30/t at CNY 3,410/t.

A slump in China's steel spot market led the decline in iron ore, even as the coke producers try to resist lower prices and curb production. Some Chinese steel mills also issued statements last week that they would keep ex-factory prices unchanged to support the market, even if market trading prices fell.

The weak steel market trend has put the traditional "Golden March" demand season in crisis. More and more Chinese steel mills are announcing production cuts to avoid losses. LY Steel, a subsidiary of Hunan Valin Steel Group, suspended the operation of two rebar production lines, reducing rebar production by approximately 1,500 t/day. Anhui Ma'anshan Iron and Steel and Henan Zhoukou Iron & Steel have also planned maintenance of rebar production lines and blast furnaces respectively.

Chinese steel market participants say that the price of domestic iron ore needs to fall to CNY 800/t to be in line with the current steel price level.