The benchmark fell 5.2% on a weekly basis, its steepest drop in six weeks.
Increasing weakness in the global steel market worried investors already fretting about future demand for construction and manufacturing materials in China.
Three major US steel producers reported bigger losses this week amid weaker prices, according to ANZ Research.
"While not directly related to the Chinese market, it appears to be impacting sentiment following some weak economic data" in China, ANZ said in a note.
China's industrial production grew at the slowest pace in 17-1/2 years in August, a sign of increasing weakness in an economy hurt by a bruising trade war with the United States and soft domestic demand.
Without any further economic stimulus measures in China, "steel production in the last quarter may not be as strong as the first three quarters," said Richard Lu, senior analyst at commodities intelligence firm CRU in Beijing.
China's economic growth risks slipping below the lower end of Beijing's 2019 target of 6% in the third quarter or over the next year, analysts warn.
The downbeat demand outlook for iron ore outweighed reports of continued stockpiling of the material by steel mills in China in anticipation of port closures ahead of and during the National Day holidays in early October.
On the Singapore Exchange, however the front-month October iron ore contract rebounded from early losses, rising 0.3% at $88.89 a tonne in late trade, after Beijing's cautious monetary easing this week to support the domestic economy. Prices for spot cargoes of benchmark iron ore with 62% iron content for delivery to China dropped for the third day to $94 a tonne on Thursday, according to data from SteelHome consultancy. It hit a six-week high of $98 on Monday.