THE price of iron ore has fallen for a second day as investors continue to question the prospect of a surge in demand after Chinese New Year celebrations conclude next week.

At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US63.40 a tonne, down 0.3 per cent from its previous close of $US63.40 a tonne. The commodity remains 4 per cent above the five-and-a-half-year low of $US61.10 a tonne set a fortnight ago.

Ahead of the falls in the past two trading sessions, iron ore had been rising on hopes that Chinese demand would soar once Lunar New Year festivities wrap up later this month. However, traders appear unconvinced any demand boost will be enough to counter rising production.

The latest weakness comes as several iron ore exposed companies report weak results this week, with Arrium yesterday following the likes of Fortescue Metals Group and Mt Gibson Iron in outlining the drastic impact of price falls on the bottom line.

After declaring a $1.5 billion first-half loss, Arrium chief executive Andrew Roberts said the prospect of an imminent price recovery was slim giving the negative sentiment in the market that has seen analysts slash forecasts to the $US60-$US65 range for the next two years.

“We expect demand for seaborne iron ore to remain strong but prices in the second half to continue to be subject to the supply/demand balance and negative sentiment,” he said in a statement.