Iron ore market continued on the corrective course by the weekend chipping of 5% value in May.

A thudding 18% fall since February there doesn’t seem to be any light down the tunnel. Surprisingly the import volume touched an all time high of 67 million tonne in March despite shrill about high finished inventory and cascading impact on steel price.

A new trend of Chinese steel producers selling iron ore cargoes back into the market, cutting inventories to manage costs as slow demand for steel in the world's top consumer keeps profit margins under pressure.

Over the past two weeks, traders estimate that Chinese steel mills have resold 2 million to 3 million tonnes of cargoes bought under long-term contracts from miners into the spot market. The sales have boosted available spot supplies, helping drive down prices to the lowest level for the year, and suggest Chinese mills may soon cut steel output as a slower than expected economic recovery dampens demand.

Recent announcement about housing sales in China were down 13% in April furthered dipped sentiments (although this may be due to the one dwelling per person regulation).

Production cut imminent in the iron ore levels are unlikely to resurrect in the short term as mills would shy away from buying. Stockpile at the port though remained at modest 70 million tonne with offers being spurned.