Iron ore has entered a bear market.

According to Metal Bulletin, the spot price for benchmark 62% fines fell a further 1% to $74.71 a tonne on Monday, building upon the 6.8% decline registered on Friday that was the largest one-day loss in over a year.

From the multi-year high of $94.86 a tonne struck on February 21, the benchmark price has now lost 21.2%, leaving it in a technical bear market.

It also sits at the lowest level since November 30 last year.

As is so often the case, Metal Bulletin noted the weakness in iron ore was prompted by renewed pessimism in Chinese steel markets.

“China’s spot rebar prices kept their downward trend on Monday owing to weak trading,” it said.

“Futures dropped below 3,000 yuan ($US432) per tonne at one stage during the trading day before closing at the 3,000 yuan-mark, leading to bearish sentiment on the spot market.”

The group said that buyers, in anticipation of further price declines, suspended purchases which added to market weakness.

Vivek Dhar, mining and energy commodities analyst at the Commonwealth Bank, is not surprised by the weakness in steel markets seen recently, noting that the combination of higher prices and a sharp acceleration in Chinese production has weighed on end demand.

“Steel prices fell as the increase in Chinese steel output — up 6% year-on-year in January and February — proved too much for the market to absorb,” he wrote in a note late last week.

“China’s steel output, the primary driver of global iron ore consumption, faces downside risks as oversupply conditions build.”

Dhar expects Chinese steel demand will likely accelerate this year by around 3% in 2017 as policymakers look to backstop growth via infrastructure investment.

However, even with that increase, it is still lower than the lift in Chinese steel production seen in early 2017.

Given those concerns, along with record-high Chinese iron ore port inventories, an expected 5% increase in seaborne supply this year and the resumption of high-cost iron ore mines as a result of recent price strength, Dhar believes that will push iron ore markets into surplus territory, something that will continue to weigh on prices in his opinion.

“We expect iron ore prices will slide to $US60 a tonne (CFR China) by the December quarter.”

In overnight trade in Chinese futures, many steel and steel-related contracts finished well off their Monday day session lows, suggesting that the pessimism across the complex may be ebbing for the moment.