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By Bloomberg

Iron ore extended a drop to the lowest level in five years as slowing economic growth in China increased concern that demand from the biggest user may weaken, expanding a global oversupply.

Ore with 62 percent content delivered to Qingdao in China retreated 0.5 percent to $75.08 a dry ton today, extending this year’s loss to 44 percent, data compiled by Metal Bulletin Ltd. showed. That’s the lowest level since June 2009.

The raw material used to make steel is heading for the biggest annual loss in at least five years after surging low- cost supplies from BHP Billiton Ltd., Rio Tinto Group and Vale SA spurred a worldwide glut just as steel demand growth slowed in China. Prices may plummet to less than $60 next year as global production increases further and demand remains weak, according to Citigroup Inc.

“Weak demand in China as well as the continued excess supply from the seaborne market are weighing on prices,” Paul Gait, an analyst at Sanford C. Bernstein & Co. in London, said before today’s price data was released. “The majors are clearly engaged in a strategy at the moment of using price to gain market share,” he said by e-mail.

The market needs to absorb a surplus of about 110 million tons next year, almost double the 60 million tons in 2014, Goldman Sachs Group Inc. estimates. High-cost mines in China will shut should prices drop toward $70, potentially creating a base for prices, Australia & New Zealand Banking Group Ltd. said.

Stockpiles held at ports in China climbed 1.3 percent to 108.75 million tons as of Nov. 14, the biggest increase since May 16, according to data from Shanghai Steelhome Information Technology Co. Inventories expanded 26 percent this year.

China’s bad loans jumped by the most since 2005 in the third quarter as a property slump and slowdown in investment growth put the world’s second-largest economy on course for the weakest full-year growth since 1990. The country buys about 67 percent of seaborne ore.