Global mining companies took a hit Monday as the price of iron ore saw its worst one-day decline since the 2008 financial crisis.

The benchmark price of iron ore for delivery to China, which buys two-thirds of the world's seaborne iron ore, fell 8.3 per cent to $104.70 US a tonne, the lowest level since October 2012.

The drop was blamed on signs of weakening demand for steel in China following the release of trade data Saturday that showed an unexpected decline in exports.

China's exports tumbled 18.1 per cent in February over a year earlier, swinging the country's trade balance into deficit. The data underscored recent concerns about the outlook for China's economy, even though the lunar New Year holidays were blamed for the slide.

Iron ore big profit driver for mining companies

China's slowing economy has decreased demand for steel, of which iron ore is a key component, and other building materials, resulting in stockpiles of iron ore at Chinese ports totalling 105 million tonnes as of Friday, according to industry consultants Steelhome.

China's iron ore imports were up 11.9 per cent year-on-year in February to 63.2 million tonnes but were down sharply from January's record high of 86.8 million tonnes, Reuters reported.

Iron ore is China's most important import commodity by volume and accounts for more than half of the profits that global mining companies such as Vale, Rio Tinto and BHP Billiton make.

Iron ore's weak performance on Monday and China's disappointing trade figures dragged down other commodities such as oil and copper and resonated throughout global markets in Tuesday trading.

China-steel

Rolls of steel on a dock in Guangzhou in southern China. Demand for steel has decreased as China's economy has weakened, bringing iron ore prices down with it. (Greg Baker/Associated Press)

"Any poor news from China is always going to hit short-term market sentiment, especially in the mining sector, and fears of slower growth will hit base metals," said IPR Capital director Steven Mayne.

The commodity-sensitive Australian and Canadian dollars declined, both losing as much as half a per cent against the U.S. dollar during the day's trading.

The Canadian dollar fell 0.09 of a cent to close at 90.08 cents US, and the resource-heavy S&P/TSX composite index edged up 2.98 points to 14,302.06.

The S&P materials index lost 0.6 per cent.

China's CSI300 share index plunged 3.3 per cent to its lowest level in nearly nine months.

The Dow Jones industrial average fell 34.04 points to 16,418.68, the S&P 500 lost 0.87 of a point, falling to 1,877.17, and the Nasdaq Composite dropped 1.77 points to 4,334.45. 

Shares of Freeport McMoRan Copper & Gold lost 2.52 per cent to close at $31.38 as the signs of a slowing Chinese economy sent London copper to an eight-month low. Copper for delivery in May fell 1.7 per cent to $3.03 a pound.

European shares, as measured by the pan-European FTSEurofirst 300 index, closed down 0.5 per cent.

German steel maker ThyssenKrupp, down three per cent, was among the top losers in Europe.

Vale shares were down 1.76 per cent on the New York Stock Exchange, closing at $12.81. Rio Tinto stock lost 1.95 per cent to close at $52.35, and BHP Billiton shed 2.67 per cent, closing at $64.93.

With files from Reuters