Chinese steel and iron ore futures sank to their lowest in more than six weeks, extending a five-day losing streak as speculative investors continued their exodus amid mounting concerns about demand and growing inventories.

Iron ore had its biggest one-day drop since mid-December as stockpiles at major ports in China, the world's top steelmaker, rose for a second week, topping 132 million tonnes last week, the highest since at least 2004, according to SteelHome consultancy.

The most-active rebar contract on the Shanghai Futures Exchange closed down 2.9 per cent at 3057 yuan ($US444.57) per tonne.

During the session, it fell as far as 3003 yuan, its lowest since February10 as funds and other speculative investors exited long positions and placed fresh bearish bets.

"China's steel market is showing signs of price weakness and the move of (hot-rolled-coil) prices into a discount relative to domestic rebar prices is a sign of further weakness ahead," said Barclays Capital.

"We feel that there is further downside risk for the benchmark (iron ore) price."

The bank expects iron ore prices to average $US70 per tonne in the second quarter, down from around $US80 currently.

The spot price of iron ore dropped 4.1 per cent to $US81.57 a tonne at its Monday fix, according to Metal Bulletin.

The latest sell-off threatens the months-long rally and was triggered by concerns about demand from the building sector after Beijing imposed fresh curbs on lending in real estate in China last week.

Last week, rebar lost 5.5 per cent and iron ore fell 7 per cent, the biggest weekly drop for both contracts since December.