For the first time, the iron ore futures in Singapore slipped below $40 a metric ton. The increased concerns about China's economic slowdown put more pressure on prices. The slump in Chinese commodities market is easing the demand.

Further to the woes, supplies keep increasing putting more pressure on prices. The price drop in iron ore futures on Singapore and Dalian bourses is pulling lower the benchmark price for the spot as well. 

The increasing supplies are pushing prices of raw materials lower from early 2014. The low-cost producers such as BHP Billiton Ltd and Rio Tinto Group in Australia and Brazil's Vale SA are continuing their supplies.

Adding to this, the slump in China's commodity market is making it worse. 

According to Bloomberg report, the SGX AsiaClear contract for January dropped 2.7 percent to $39.67 per ton in Singapore.

This is lowest since April 2013. The futures for May on Dalian Commodity Exchange fell three percent to Yuan293.5 ($45.88) a ton, which is also a record low on the bourse. 

Major miners prefer to keep up the higher production as it helps them lower unit cost. The higher production will also enable the miners to maintain their market share as the present situation will force small players out of the competition.

Steel manufacturers in China are facing a turbulent situation as they're operating on thin margins as reported by The Economic Times.

Many mills with over capacity have decided to slash production level by three percent beginning from 2016, according to China Iron & Steel Association.

Iron ore with 62 percent content supplied to Qingdao rose 1.2 percent to $44.50 per ton. The price tumbled to $43.89 on 24 November lowest since May 2009. 

The benchmark rebar futures contract for May delivery on the Shanghai Futures Exchange dropped to Yuan 1621 a ton. Rebar prices tumbled 41 percent so far this year. Prices of steel billet fell 20 Yuan to 1480 yuan a ton. Steel billet prices dropped 40 yuan during the previous week.

The Sydney Morning Herald reported that spot prices fell 3.5 percent in China. The fears of oversupply in iron ore market are driving the prices lower. Prices fell 34 percent this year so far.

Local steel mills may reduce production level. The construction activity in China is slowing down forcing steel mills to slash their inventories of raw material. 

The price pressure in future contracts on Singapore Stock Exchange and Dalian Commodity Exchange is pushing benchmark price for spot lower. With an Australian vessel waiting offshore on 30 November is further indicating the surge in supply. The vessel is from Gina Rinehart's Roy Hill mine.

Gordon Johnson, an analyst at Axiom Capital Management Inc, said, these prices are "likely to continue taking it on the chin, trending into the $30s," while citing reasons for lower demand in China and rising supply including new supplies from Roy Hill.