The Steel Index said privately traded cargoes worked with softer offers on electronic trading platforms to see its benchmark 62% iron fines fall $1.40/t to $129.50/t yesterday.

The index is used as the basis for many physical term contracts and also for the settlement of swaps, options and futures listed on the Singapore Exchange and other major markets.

With current prices softening, TSI said the forward curve for iron ore on the Singapore Exchange was also trending downwards to drop under $120/t by May.

TSI said the fall came as iron ore stocks in major ports hit a 12-month high of more than 86 million tonnes and growth in Chinese steel production stalled at around 2Mt per day.

The downward pressure comes on the back of relatively good conditions at the end of last year.

In November Chinese iron ore imports reached a record 77.9Mt

Record exports were also made from Port Hedland in December.

Despite the good end to the year, prices for raw steelmaking materials in Asia have been under pressure recently, with TSI’s premium hard coking coal prices for Australian exports being lower than its benchmark iron ore index in four of the last six trading days.

“It is a long-held rule of thumb that coking coal prices are higher than those of iron ore,” TSI said.

The premium hard coking coal index has trended downwards since reaching $151.10/t in September last year and yesterday sat at $131/t.

Bulk and container prices for steel scrap in Asia have also been under pressure, failing to match stronger demand in the US.

Recent icy conditions in the US have seen prices surge as the weather makes it difficult to collect and deliver scrap.

“Perhaps the only market participants to feel comfortable with the current price trends are steelmakers,” TSI said.

“While raw material prices have been on the wane, finished steel price have been stable or rising recently, opening up some much needed margin.

“2013 saw the China Iron and Steel Association noting average profitability among large mills in China to be under 0.5%.”

European and US hot rolled cold steel prices have also shown upward momentum, which has also swung energy away from raw material providers.