Chinese steel and iron ore prices fell further on Tuesday, with buyers unconvinced by efforts to tackle a supply glut and worried that weak manufacturing is adding to the damage caused by a property slowdown in the world's top steelmaking nation.

A tightened credit environment, which has made it difficult for steel mills to continue producing, is also unlikely to ease after China's major banks revealed an increase in non-performing loans in the first half of the year.

The most traded rebar contract on the Shanghai Futures Exchange fell 0.58 percent on Tuesday morning to hit a new low of 2,907 yuan ($473) per tonne. It has plunged by more than a fifth since the beginning of the year. The most active iron ore contract on the Dalian Commodity Exchange finished at 625 yuan per tonne, up 0.6 percent.

Despite entering into what is traditionally a peak season, China's biggest privately-owned steel firm, the Shagang Group, said it would cut the prices of its major products in early September, with rebar set to fall 100 yuan per tonne. Iron ore prices resumed their slide on Monday, with benchmark 62 percent iron ore for immediate delivery into China .IO62-CNI=SI ended Monday down 0.9 percent at $87.1 per tonne, wiping out the gains of last Friday.

"We don't see any bright spots right now - steel mills aren't making profit and I don't expect any new stimulus coming from the government any time soon," said a trader based in the major steel producing city of Tangshan in Hebei province. He said most traders have switched to exporting steel products, where profit can still be made, but industry consultancy Custeel warned last week that the 36.9 percent surge in steel exports in the first seven months of the year was unlikely to be sustained.

Iron ore supplies continue to rise, with imported stocks at China's ports rising 1.15 million tonnes to 110.85 million tonnes by the end of last week, the second weekly increase in succession, according to data compiled by industry consultancy SteelHome. SH-TOT-IRONINV

Traders said the scale of the recent decline in iron ore prices points to "structural" changes in the market that cannot be reversed, and after flocking to the market from 2009 onwards, dealers are now abandoning the sector in large numbers.

"It isn't just because of weak demand but also because anyone can now get hold of import licenses, and anyone can buy iron ore on platforms like the Beijing Metals Exchange - there's hardly any advantage in being a trader now," a Beijing-based trader said.

Rebar and iron ore prices at 0333 GMT

Contract Last Change Pct Change

SHFE REBAR JAN5 2907 -17.00 -0.58

DALIAN IRON ORE DCE DCIO JAN5 625 +4.00 +0.64

SGX IRON ORE FUTURES OCT 86.88 +0.29 +0.33

THE STEEL INDEX 62 PCT INDEX 87.1 -0.80 -0.91

METAL BULLETIN INDEX 87.62 +0.00 +0.00

Dalian iron ore and Shanghai rebar in yuan/tonne

Index in dollars/tonne, show close for the previous trading day

(1 US dollar = 6.1444 Chinese yuan)