Iron ore returned to a bear market in the longest run of losses in 10 months, after a rebound in Chinese port stockpiles hurt the outlook for prices as the biggest miners increase production and demand slows.

Ore with 62 per cent content delivered to Qingdao retreated 5.4 per cent to $US52.28 a dry metric ton on Monday, extending last week's 11 per cent tumble, according to Metal Bulletin Ltd. Prices, which entered a bull market in April, fell an eighth day in the longest losing streak since August 29.

The drop eroded gains in the second quarter, when prices climbed from a decade-low as producers' shipments missed expectations. Holdings at ports in the largest buyer rose last week for the first time since April amid a deeper slowdown in China's steel industry and further increases in low-cost output from BHP Billiton and Vale. Prospects for a widening global glut may cause prices to plunge into the $US30s this half, according to Capital Economics and Citigroup.

"Inventories should start to pick up again," Daniel Kang, an analyst at JPMorgan Chase in Hong Kong, said by phone on Monday before the release of the price data, citing increased exports. "That should in turn put some pressure on iron ore."

Prices are down more than 20 per cent from a high set June 11, meeting the common definition of a bear market. They'd rebounded from as low as $US47.08 on April 2, aided by lower-than- expected shipments from Australia and Brazil and tumbling stockpiles in China, according to Goldman Sachs Group.

Inventories at Chinese ports climbed 2.8 per cent last week to 81.55 million tons after 11 weeks of declines, according to data from Shanghai Steelhome Information Technology Co. The stockpiles contracted 21 per cent in the three months to June, supporting iron ore's 16 per cent rally over the same period.

Falling steel prices and output in China will make it difficult for iron ore prices to rally again, according to the China Iron & Steel Association. Local iron ore output climbed 13 per cent in May, the association said in a monthly report on Monday, signalling that some higher-cost Chinese mines took advantage of the second quarter rally to boost production.

The drop in iron ore prices on Monday came as investors sold raw materials as China's attempts to halt a stock crash and Greece's vote against further austerity shook confidence in global economic growth. The Bloomberg Commodity Index fell as much as 2.6 per cent.