A rally in Dalian iron ore futures came to a halt as the Chinese exchange raised fees for some transactions in an apparent bid to curb speculation.
China's iron ore benchmark fell on Wednesday, ending a rally that had brought it to record highs, after the Dalian Commodity Exchange (DCE) announced increases in transaction fees for some futures contracts.
In a May 28 notice to its members, the DCE said the higher transaction fees, which cover several contracts including the current benchmark - the most active September 2019 contract - will take effect starting on May 30.
The move follows last week's notice from the DCE to members asking them to trade "rationally" after noting large fluctuations in iron ore and coke futures prices.
The most-traded DCE iron ore contract fell as much as 3.8 per cent to 731.5 yuan ($US105.80) a tonne shortly after trading began on Wednesday, and was down 3 per cent as of 1256 AEST.
Some market participants have opted to "reduce their positions and take some profits" following the DCE announcement, said Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong.
"That is a way to curb speculation," she said, describing the higher fees as a "tax burden" for market participants.
The current market sentiment has also weighed on the rest of China's steel complex, with rebar prices on the Shanghai Futures Exchange (ShFE) hitting their lowest in more than a week.
Iron ore futures on the Dalian exchange hit record highs in recent days, touching an all-time peak of 774.5 yuan a tonne on Tuesday, with "speculative money" flowing into the market amid worries about tight supply.
Spot iron ore for delivery to China, with 62 per cent fines climbed to a five-year high at $US108.50 a tonne on Tuesday, according to SteelHome consultancy.