Iron ore in China slumped the most in seven weeks amid concern that steel consumption in the world’s largest user was faltering, curbing demand for the raw material.

Futures on the Dalian Commodity Exchange sank 2.9 percent to 425 yuan ($68.46) a metric ton on Wednesday, the most since April 29. Ore with 62 percent content delivered to Qingdao fell 2.2 percent to $61.51 a dry metric ton on Wednesday, the lowest level in more than three weeks, according to Metal Bulletin Ltd.

Iron ore in Qingdao rallied 31 percent from a decade-low in early April after producer shipments missed expectations. Goldman Sachs Group Inc. is among banks predicting that prices will resume a decline as low-cost supply increases and demand decelerates. Steel consumption in China remains weak, and while production has declined, there’s still an oversupply, the China Iron & Steel Association said this week.

“Softness in the Chinese steel market continues to weigh on sentiment in the iron ore market,” Australia & New Zealand Banking Group Ltd. said in a note Wednesday. “With the market now moving into a seasonally weak period of demand, prices are likely to remain under pressure over the coming weeks.”

Steel rebar, used in construction, lost 0.9 percent to 2,223 yuan a ton on the Shanghai Futures Exchange, the lowest close since trading started in 2009. Spot rebar declined a 10th day to the lowest since at least 2003.

Price Decline

A downturn in construction in China linked to a weak property sector has hurt steel demand. Crude-steel production dropped 1.6 percent in the first five months of this year, while consumption fell 5.1 percent, the China Iron & Steel Association said on Monday.

“Chinese steel margins have turned sharply negative as steel prices continue to decline,” Citigroup Inc. analysts led by Ed Morse wrote in a report on Wednesday. “We thus expect iron ore prices to reverse sharply and decline over the coming months.” The bank sees the raw material at $48 a ton in the third quarter and $38 in the fourth.

Iron ore imports by China contracted 12 percent to 70.87 million tons last month from April and were 8.4 percent lower than a year earlier, highlighting weakening demand in the largest buyer. That’s the lowest monthly total since February.

Demand for seaborne ore will probably peak next year, Goldman said in a June 8 note, targeting a drop back below $50 a ton. While higher prices may continue in the short term, rates need to fall again to force the closure of higher-cost mines to balance the market, according to Goldman.