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The price of iron slipped to a new four-month low on Monday night, as demand from China for Australia's biggest single export continued to soften amid slowing steel production in the world's second-largest economy.

Iron ore for delivery to Qingdao port was marked down 0.83 per cent, to $US47.74 a tonne, its lowest level since early July, when it was priced at $US44.59 after an abrupt 10 per cent fall.

After recovering to above $US58 in mid-September, iron ore, and other industrial metals, have come back under pressure in recent weeks on growing signs of cooling industrial activity in China, the world's biggest consumer.

 

 

The London Metal Exchange index plunged to a six-year low last week as prices for copper, aluminum and zinc fell. Iron ore, meanwhile, has lost more than 30 per cent this year.

Analysts and economists have warned that Chinese exports of surplus steel are set to decline next year, and internal demand will continue to soften as infrastructure and property development slows in favour of a more consumer-driven growth model.

"When we look at the direction the Chinese government wants to take the economy in the next five years, the emphasis is very much on new forms of growth in the services and consumer sector," UBS's global commodity strategist Lachlan Shaw said on Monday at the bank's Australasia conference in Sydney.

"From that point of view, the construction and the manufacturing boom that we've seen in China for the last 10 or 15 years – growth in those sectors won't be anywhere as strong as we've enjoyed," he said.

China's economy grew by 6.9 per cent year-on-year in the three months to the end of September, the slowest quarterly expansion since the start of 2009. For the full year, growth is set to be the slowest since 1990.

"Only a major pick-up in Chinese demand is likely to be sufficient to balance metals markets such as copper and aluminum," Goldman Sachs analyst Max Layton wrote in a note last week.

 "This is because metals supply generally continues to grow, while Chinese demand does not, so demand has to work hard to catch up."