The China Iron & Steel Association has forecast that the price of imported iron ore will decline moderately in February mainly due to weakening demand and persistent oversupply, which is in line with expectations of Chinese market sources.

"China's crude steel output will probably decline further in February when the Chinese New Year holiday comes -- this will dampen demand for iron ore, and together with persistent oversupply, iron ore prices will decline moderately too," CISA said in a report released late Friday.

China's daily crude steel output among CISA's steel mill members had declined in January -- 1.72 million mt for the first 20 days of January, or down 1.6% or 27,500/mt month on month, CISA noted.

Procurement officials in some of the steel mills in north China's Hebei province said that a number of blast furnaces at their mills had completed or would undergo major maintenance for 30-60 days starting late January.

Under the circumstances, Chinese market sources expect iron ore prices to slide to $60/dmt CFR China in the near future, noting that the market has been dismal, and the Platts Iron Ore Pricing Index has been hovering at $61-62/dmt CFR China for the past week or so, showing no signs of strengthening.

"In the long term, iron ore prices will be in the downtrend, no doubt about that, and $60/dmt seems very likely and imminent," an iron ore trader based in Singapore said, explaining that the one-week Lunar New Year holiday in China starting February 18 would pressure imported iron ore prices.

Some imports by Chinese traders and mills in January and early February were more due to speculative buying on expectations of prices bottoming out, rather than real demand for steel production, he added.

By the end of January, China's imported iron ore prices fell 10.7% month on month to $62.9/dmt, sharper than a 2.2% month-on-month decline in China's domestic iron ore prices or a 7.4% drop in Chinese port stock prices, CISA said.

The latest statistics released by China's General Administration of Customs on Sunday also illustrated a decrease in the country's iron ore imports by 9.4% year on year, or 9.5% month on month, to 78.6 million mt for January.