The malaise in China's property sector casts a long shadow over iron ore and coking coal, two key steelmaking ingredients. 

Last month, the chairman of China's Baowu Steel Group, the world's biggest steelmaker, said the industry faces a "harsh winter" as the world's second-biggest economy grapples with a downturn in its housing market. That market is a key source of demand for steel and a driver of the broader economy, which consumes even more of the alloy.

"In China, which has thrown the wettest of blankets over the global steel sector, steel inventories remain elevated at … seasonal levels not seen since 2014, which was a demonstrably terrible year for the steel industry," said Matthew Warder, CEO of energy-, metals- and mining-focused consultancy and analytics firm Seawolf Research.

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To try to lower those inventory levels, China has increased its exports of steel, much to the consternation of the global steel industry. At the same time, Chinese steel producers continue to crank out their products and restock inventories, which is supporting the nation's imports of iron ore and metallurgical coal.

Still, the markets for metallurgical coal indicate traders don't expect much of a rally in either iron ore or coking coal anytime soon.

Coking Coal

China's steel industry "trying to produce its way out of the doldrums" even as it pressures global steel prices with cheap exports doesn't bode well for long-term coking coal demand, Warder said.

On Monday, coking coal futures in China were at their lowest point in more than a year.

There are also seasonal factors at play.

Metallurgical "coal prices continued to trend downward as end-use demand for steel continues to contract in China and India, with monsoon rainfalls likely to continue impacting Indian imports and construction activity until mid- September,” RBC Capital Markets analysts said.

Iron Ore

Seasonality is also affecting iron ore prices amid the longer-term pressure from the downturn in the Chinese property sector.

The most actively traded benchmark iron ore futures contract in Singapore on Monday fell below $100 per metric ton, the general level where higher-cost producers will begin to cut back on production. 

While that support may kick in and boost iron ore prices back above that key mark — as has happened recently — it's not out of the question that prices could fall well below what some miners can bear.

BHP Group (NYSE:BHP), one of the biggest iron ore miners in the world, recently maintained its estimate of $80 to $100 per metric ton. 

It arrived at that range because of support from higher-cost junior miners in Australia, Brazil and elsewhere who need more than $100 combined with Chinese producers that can handle $90-$100 and low-cost Indian supplies between $80-$90.

"As we have entered the second half of the calendar year, prices have dipped further into the range over the seasonal low demand period," BHP said. "Meanwhile, shipments from some high-cost suppliers have also declined in tandem.”

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