Chinese iron ore and steel futures led a selloff across the nation's metals complex on Thursday after the government sought stricter oversight of commodity markets to curb exorbitant prices, sparking a broad-based correction.
September iron ore on the Dalian Commodity Exchange ended daytime trading 5.7% lower at 1,142.50 yuan ($177.40) a tonne, after earlier hitting a three-week low of 1,102 yuan.
Extending overnight losses, Dalian's most-active contract has fallen 16% from a record 1,358 yuan hit on May 12.
On the Singapore Exchange, the most-traded June iron ore fell 3% to $200 a tonne by 0706 GMT. It touched a record peak of $233.75 on May 12.
China, the world's biggest producer of steel products, has sharply increased consumption of iron ore and other steel ingredients while ramping up output for use in producing home appliances and construction materials, amid robust demand spurred by global stimulus measures.
That propelled prices to record peaks this month, with spot iron ore soaring beyond $200 a tonne.
On Wednesday, China's cabinet vowed to strengthen its management of commodity supply and demand to curb "unreasonable" price increases and protect consumers.
"Commodity prices have come under pressure overnight amidst the broader risk-off sentiment and as China's State Council warned about commodity prices," said Tapas Strickland, Sydney-based economist for National Australia Bank.
"Still, the pullback in commodity prices overnight needs to be seen in the context of the sharp run-up this year."
Richard Lu, senior analyst at commodity consultant CRU Group's Beijing office, said the skyrocketing steel prices "will frighten some consumers at some point."
Steel prices extended their losing streak to hit five-week lows, retreating from record peaks last week. Rebar on the Shanghai Futures Exchange shed 4.7%, while hot-rolled coil dropped 4.5%.
Stainless steel slumped 2.8%.
Dalian coking coal tumbled 8% while coke lost 4.8%.