MANILA: Iron ore futures slumped more than 4% on Monday, with the Dalian benchmark retreating from the 1,000 yuan a tonne level scaled last week when prices were underpinned by strong speculative interest in the steelmaking ingredient.

The most-traded May iron ore contract on China's Dalian Commodity Exchange fell 4.2% to 956.50 yuan ($146.29) a tonne in morning trade.

Iron ore's most-active January contract on the Singapore Exchange dropped 4.5% to $150.71 a tonne.

As iron ore had hit overbought levels, according to analysts, China's steel producers on Friday pushed for a regulatory probe into the skyrocketing prices and a crackdown on any wrongdoing.

The speculative buying in futures markets had pushed the spot price in China to the highest since February 2013 at $159.50 a tonne on Friday, SteelHome consultancy data showed.

Robust iron ore demand from steel mills stoked the latest price rally that was fuelled by growing risks of a supply crunch, as speculators bet on dimming prospects for Brazil's supply recovery and the impact from Australia's cyclone season in early-2021.

"Fundamentals suggest a price between $90 and $110/tonne is the fair value at the moment," said ANZ senior commodity strategist Daniel Hynes.

ING analysts expect an increase of up to 100 million tonnes in iron ore supply next year, and said a quick rollout of coronavirus vaccines could underpin demand and support prices above $100 a tonne.

"However, a gradual rollout means we would probably see more lacklustre demand growth, which could push the iron ore market back into surplus, weighing on prices," they said in a note.

Other Dalian steelmaking ingredients also retreated after recent strong gains, with coking coal down 6.6% while coke slid 2.1%.

Rebar on the Shanghai Futures Exchange fell 2.3% and hot-rolled coil slumped 1.1%, but stainless steel jumped 2.9%.