As steel mills in China, the world's top buyer of iron ore, continue to suspend buying sprees due to a weak domestic demand, this has caused spot prices of the raw material to plummet Monday.
On the Shanghai Futures Exchange, the most traded May steel rebar contract dropped to $650 per tonne on Monday, down 0.76 per cent from the previous close. On Friday, iron ore index with 62 per cent Fe grade slid 1.27 per cent to $132.1 per tonne, its lowest since Nov. 30.
Steel mills have been keeping minimal stockpiles of the steelmaking raw material following a gloomy outlook for steel demand in 2012.
But there are some traders who believe prices will regain normalcy in the coming weeks.
"The overall market remains very cautious, but I expect there should be a new wave of replenishing inventories by mills before the Lunar New Year," Reuters News quoted an iron ore trader as saying. "However, I expect iron ore prices will continue to fluctuate at current levels in the first quarter of next year."
Earlier, research and investing company Goldman Sachs & Partners Australia Pty Ltd said prices of iron ore will average $150 per metric tonne from 2012 to 2015, on expectations that Brazil's output of the raw commodity will slide "lower than expected" in 2012.