SHANGHAI: Iron ore futures prices extended losses on Friday and were set for weekly losses, as sentiment soured amid sluggish spot buying appetite and bleak demand prospects in top consumer China.

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.74% lower at 803.5 yuan ($111.65) a metric ton, set for a weekly drop of 8.5%.

The benchmark April iron ore on the Singapore Exchange was 1.43% lower at $101.75 a ton, as of 0351 GMT, and down 12% for this week. “Weaker demand prospects are increasing possibilities of steel production cuts... less steel production means lower demand for iron ore,” analysts at ANZ bank said in a note.

Risks of faltering ore demand loomed after a few provincial steel associations issued statements to either call for a steel output cut or only vaguely propose local market players to jointly promote the healthy development of the steel industry, according to consultancies Mysteel and Lange Steel.

“Stockpiles for iron ore have almost replenished, with stockpiles now at a 12-month high. However, we expect iron ore prices to stabilise from cost of production perspective,” ANZ analysts added.

Iron ore stocks at 45 major Chinese ports surveyed increased by 1% on the week to around 142.9 million tons as of March 15, Mysteel data showed.

The state-backed China Iron and Steel Association (CISA) held a meeting with representatives from several major steelmakers, research agencies and the country’s state planners to discuss the new mechanism on controlling steel capacity and evaluate the capacity swap policy in the sector, without giving further details though, the association said in a statement on its WeChat account on Thursday. Weighing on sentiment is also the extended decline in new home prices for February in the world’s second-largest economy, suggesting the fragile property market.

Other steelmaking ingredients on the DCE were weaker, with coking coal and coke down 1.92% and 1.19%, respectively. Steel benchmarks on the Shanghai Futures Exchange were broadly down. Rebar shed 1.10%, hot-rolled coil slipped 0.59%, wire rod lost 1.32% while stainless steel gained 0.18%.