The price of iron ore is down to its lowest level since mid-December, on a slump in steel prices following China's tightening of property restrictions.
According to Standard Bank analyst Melinda Moore, the steel de-stocking in China had continued among end-users attached to the housing sector.
She said no one knew how much steel to buy and neither did anyone know how much steel to make.
This month saw China's State Council unveil new taxes on property sales and increase requirements for down payments and repayments, aimed at cooling the real estate market.
Meanwhile, the price of iron ore was down 4.4 per cent overnight to $132.90 a tonne but it still continued to remain at a healthy level as against last September's shock fall below $90 a tonne.
Iron ore imports into China fell 14 per cent last month due to the high prices and the slowdown associated with China's Lunar New Year celebrations.
China, the world's largest buyer of iron ore, consumes around 60 per cent of the total production globally and last year imported a record 743 million tonnes, mainly from Rio, BHP and Vale.
However, demand for steel in China is expected to rebound from a four-year low.
Apparent consumption, including production and net imports, may rise 4.6 per cent to 708.8 MMT in 2013, according to six analysts surveyed by Bloomberg News. This would be up from 2012 when demand grew by 2.9 per cent to 677.8 million tonnes.
The growth would benefit Vale SA, Rio Tinto Group and BHP Billiton Ltd - the world's top three iron ore exporters - as China planned to spend 650 billion yuan ($105 billion) - the highest in threee years - on its railways. The strongest start to passenger car sales in China after 2010 was also helping mills such as Baoshan Iron & Steel Co raise prices to their highest levels since June.
Bloomberg quoted He Wenbo, chairman of Baoshan Steel, China's biggest listed steelmaker, as saying in an interview last week in Beijing that Baoshan supplied half the steel used in cars and home appliances in China.