Chinese steel and iron ore futures extended their losing streak into a fifth day on Tuesday as investors continued to lock in gains after this year's searing rally with year-end approaching.

The losses add to iron ore's slide of more than 7 per cent from the previous session amid signs of ample supply as inventories of the steelmaking raw material at Chinese ports hit a two-year high of nearly 112 million tonnes.

Steel prices had also pulled back from last week's 32-month peak as demand in the world's top consumer tapers off during the seasonally slow winter period.

The most-active rebar on the Shanghai Futures Exchange closed down 2.8 per cent at 3162 yuan ($US455) a tonne. The construction steel product fell as far as 3118 yuan, a two-week low.

On the Dalian Commodity Exchange, iron ore also touched a two-week trough of 558.50 yuan per tonne before ending 1.9 per cent lower at 568 yuan.

The weakness in futures reduced transactions in the physical market, although despite Monday's 7-per cent slump in Dalian iron ore, the spot benchmark, only dropped marginally.

Iron ore for delivery to China's Qingdao port slid 2 per cent to $US79.56 a tonne on Tuesday, after China's government stepped in to restrict transportation and stop construction works on environmental grounds, thereby discouraging buying interest, according to Metal Bulletin.

Wang Di, analyst at CRU consultancy in Beijing, said since last week, the futures price has been at a premium over the spot price, "so that's probably why futures are coming down a bit", narrowing the gap with spot.

"From the fundamental side, total demand for iron ore is still holding steady at this point," said Wang. "Steel mills are still making money, so it indicates that end-user demand remains firm."

Despite recent weakness, spot iron ore has gained more than 80 per cent this year, while Dalian futures have surged 180 per cent.