The price for iron ore sold into the Chinese port of Tianjin fell 1.1 per cent to USD US 70 per tonne, taking momentum out of the recent rally in iron ore stocks.

Before the fall, iron ore prices had been experiencing a new year rally that offered hopes of a turnaround in the market after a horror 2014.

Iron ore futures on the Dalian Commodity Exchange sagged 1.2 percent to CNY 504 a tonne while benchmark 62 percent grade iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI fell for the third consecutive session below USD 70 to USD 69.8 a tonne on Friday, according to The Steel Index.

The latest fall in iron ore prices came as falling oil and freight prices and the weakening Australian dollar would benefitted Australia's iron ore miners.

Iron ore inventories have fallen below 100 million tonnes since mid-December, reaching 97.51 million tonnes last week.

On the supply side, an expansion in production by major iron ore mining companies such as Vale, Rio Tinto and BHP Billiton has created an oversupply situation. The worldwide surplus of seaborne iron ore supply is expected to rise to 300 million tonne in 2017, from an expected surplus of 175 million tonne and 72 million tonne in 2015 and 2014 respectively, and 14 million tonne in 2013.

In view of the persisting oversupply situation, iron ore prices are likely to remain subdued in the near term.