Iron ore
A labourer shovels iron ore into a steel ladle at Wuhan Iron and Steel Group in the capital of central China's Hubei province, October 17, 2007. Reuters/Stringer

Iron ore prices appeared to suffer following a good run after the Lunar New Year holiday. On Thursday, stock markets sustained a downfall after a late drop was seen in Chinese futures.

The spot price for benchmark 62 percent fines dropped by 3.14 percent to $91.34 a tonne – the heaviest fall recorded for one day since Jan. 6. Higher and lower grade ores also suffered a drop, though they did not plunge as steeply. As Chinese futures experienced a plummet overnight, it seems the weakness could continue into the third session.

On Feb. 17, the inventories of imported iron ore at major Chinese ports had touched 127.55 million tonnes. SteelHome consultancy tracked this data to be the highest recorded since at least 2004.

“The rally to the highest level since 2014 has occurred at the same time as stocks have been rising, which has caused some producers to question the sustainability of the rise,” ANZ analysts said in a note. On Tuesday, the contract on the Dalian Commodity Exchange soared to a record-breaking 741.50 yuan ($107.85) a tonne. Since then, it has mellowed. On Thursday, Dalian iron went down by 2.1 percent at 708 yuan.

Chinese iron ores kept unwinding overnight. The session finished at 687 yuan per dry metric tonne, sustaining a fall of 4.05 percent for the session. It fell by 7.4 percent from 741.50 yuan struck on Tuesday. A number of factors have been held responsible for the downfall, including, but not limited to, surplus concerns and a cooler property market.

Losses were also witnessed across rebar and coal futures. Nevertheless, they were not as steep as iron ore.

"We believe that iron ore prices may hold up in coming weeks due to an absence of medium to high grade ore at Chinese ports and as seasonal factors weigh on seaborne trade," Commonwealth Bank of Australia analyst Vivek Dhar said. "Growing surplus risks in China's steel market should eventually weigh on iron ore prices as restocking demand eases."

On Tuesday, the construction steel product reached the highest recorded in three years – at 3,630 yuan. Meanwhile, the steel rebar future on the Shanghai Futures Exchange dropped 1.8 percent to end at 3,483 yuan per tonne.